Option Investor
Newsletter

Daily Newsletter, Sunday, 09/19/1999

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*******************************************************************
MARKET STATS FOR LAST WEEK AND PRIOR WEEKS
*******************************************************************
         WE 9-17          WE 9-10           WE 9-3          WE 8-27
DOW     10803.63 -224.80 11028.43 - 50.02 11078.45 - 11.72  - 10.44  
Nasdaq   2869.64 - 17.32  2886.96 + 43.85  2843.11 + 84.21  +110.57  
S&P-100   704.96 -  7.83   712.79 -  1.10   713.89 +  5.92  + 11.38  
S&P-500  1335.42 - 16.23  1351.65 -  5.59  1357.24 +  8.97  + 11.66  
RUT       434.46 -  6.73   441.19 +  5.22   435.97 +  3.52  -  1.93  
TRAN     2999.79 - 91.04  3090.83 - 66.07  3156.90 - 14.45  + 20.62  
VIX        24.22 +  1.87    22.35 -   .96    21.39 -  1.82  -  0.85  
Put/Call     .67              .52              .57              .73
*******************************************************************

Warnings, witches, warlocks and hurricanes

Sounds like a new action movie from Steven King but it pretty
well sums up the action for the week. The good, the bad and the 
ugly came in the form of earnings warnings and downgrades from 
some big name companies. The big names from earlier in the week
were followed on Friday by a downgrade on IBM but the market
seemed to say "enough is enough." A Merrill Lynch analyst cut
growth estimates on IBM hardware revenues from +6% to +4% and
IBM dropped -$5 on the news. IBM is a Dow component and the drop
took -25 points off the Dow at midday. HWP was caught in the same
downdraft for -$3 to take another -15 points off the index. The
Dow had been up +120 points at midday after a terrible first four
days this week. 

Triple witching option expiration Friday was credited with some
of the big swings on Thr/Fri and we are likely to see some carry
over into Monday. This option cycle was somewhat more rocky than
most. September is normally considered the worst performing month
of the year and many traders take negative positions in 
anticipation of a market drop. Don't look now but we are only
trading -25 points from where we started the month and most of
the last two weeks was spent over 11,000. Not exactly a down
month in anybody's book. With the exception of the the first 
four days of the week the market has been holding it's own very
well. In fact the Nasdaq is only 30 points from a new high. Not
too shabby!

The Fed warlocks tried their best to curse the bull this month
but their fire and brimstone speeches are impacting the market
less and less. Prosperity is still breaking out all over and
inflation is still weak at best. We had a benign CPI, soft
August jobs and on Friday a drop in housing permits. All market
friendly events. The drop in housing permits should mean a
corresponding drop in housing starts in the coming months. 
This means the interest rate hikes and their impact on mortgage
rates is having the desired result of putting the brakes on the
economy. An article in the Washington Post on Friday by John
Berry was very positive that the Fed would not raise rates at 
the Oct 5th FOMC meeting. (full text of article)
www.washingtonpost.com/wp-srv/business/feed/a8199-1999sep17.htm
The market celebrated with a resounding bounce off it's 
Thursdays lows. Some Fed watchers think the Fed has moved from 
a pre-emptive stance to a reactive stance. Instead of acting in
advance of inflation the Fed appears to be reacting to the actual
appearance of inflation in economic reports. This is a major
change in Fed policy and could mean a more erratic Fed policy 
in the future.

Hurricane Floyd caused only minimum disruption in the market with
flood related problems. The flood of negative earnings warnings
caused more damage but even so the expected third quarter profits
are still very strong. The quantity of earnings warnings was 
much more than expected but many of the warnings came from 
non-S&P-500 companies and have no impact on the +20% or so
profits expected in the third quarter. This 20% profit growth 
will not be lost on investors and in fact is probably what is
holding the market so close to record levels. I still look for
the market to rise into the October earnings cycle but the next
hurdle will be the earnings from banks and brokers next week.
These will be scrutinized for signs of weakness and then factored
into the October outlook. 

Alan Greenspan spoke before the Presidents Council on Y2K Friday
and he basically said he was not concerned about the problem
with computers as much as he was concerned with the actions of
the public in preparing for the possible disruptions. (text)
http://www.bog.frb.fed.us/BOARDDOCS/SPEECHES/1999/19990917.htm
This is what I have been saying for over a year. There may not
be a crisis at all on 1/1/2000 but the worry by the investing
public is the real problem. I talk to more and more people
every day that are moving out of stocks and into money market
funds. The thought is simple. Yes, we could lose another 5-10%
profits in the stock market if the sell off never materializes
but that is lost "profit" not lost "money". If the sell off in
the market DOES start in October then Dow 9000 is easily possible.
Better safe than sorry appears to be the plan and I have yet to
speak with anyone who plans to keep all their money in the market
and ride it out. The exception to this is of course those who
would suffer a substantial taxable event by selling. If your own
Dell at a cost of $5 or MSFT at $10 then it is best for you to
ride out any dip and hope for a quick rebound in January. There
are many funds that will take advantage of any rally over the 
next three weeks to sell into strength and hope for the mother
of all blue light specials in December to open new positions
at a significant discount. Check out the great article in today's
newsletter on Y2K by one of our editors.

Speaking of mothers, the mother of the bull rally, Abbey Cohen,
came out and restated her bullish stance again on Friday. She
feels the current worry about another Fed increase in October 
is over blown and even if they do raise rates she feels it will
be the last for some time. 

Probably the best news on Friday was the rebound of the dollar
against the Yen. The dollar posted a +2.03 gain against the
Yen and closed at 107.13. Abbey Cohen thinks the dollar slide
is actually positive long term since it means the global economy
is improving. 


 
Note the Advance/Decline line stopped skidding. Temporary?
 

 
The Nasdaq is only a few ticks away from another new high.

My outlook for the week is positive. The Yom Kippur holiday on
Monday is sure to wreak havoc on volume again. There are no
economic events of note for the week so interest rate worries
are likely to subside due to lack of new data. Traders should
be cautious long term since we only have three more weeks
before the start of the October earnings cycle and a possible
market event. Make your planning short term and go with the
flow.

If you think education is expensive, how much does ignorance
cost? With the many trading tools and strategies available it
is simply very costly not to have the latest tools and information
at your disposal. With one bad trade you can lose several thousand
dollars. Multiply that by two or three or ?? trades and how much
did the lack of education cost? Yes, there is a point to this.
I am sure you have seen the new seminar schedule on the website.
We have put together the very best options education available
and made it available at a city near you. The seminars are 
different every time as we incorporate the new information and
techniques. George Fontanills and Tom Gentile are professional
optional educators and bring the latest tools to show you how
to trade profitably. Have you been having trouble trading in
this choppy market? Do you seem to lose money routinely? Are
you ready to learn how to do it right? Here are the fall dates:

Oct 17/18 Chicago
Oct 24/25 New York
Nov 8/9   Miami
Nov 14/15 San Francisco

For complete details http://www.OptionInvestor.com/seminar/

There is a 100% money back guarantee and you can take a friend
for free. What else could you ask for?

A parting thought. You have seen those ads that say "there are
only xxx shopping days until Christmas" well in case your 
interested there are only 71 trading days before Y2K.

Pick your entry points and sell too soon.

Jim Brown
Editor



Some comments from OIN readers that attended the summer seminar
series.


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Philip Arana, NY



JIM'S PLAYS
***********
Week ending 9/17/99

I got back into Denver at 10:PM Wed night and just in time to
catch the big market drop on Thursday morning. In my book this
was a textbook entry point. With the Dow down over -500 points
from its high from last Friday, a technical bounce was almost
a guaranteed event. I immediately looked at my targets from
last week and saw several opportunities.


SFA - Target $52

 

My previous target on SFA had been $52. With the stock soaring
the possibility for profit taking had been good. The drop with
the market on Thursday filled that critera. The OCT 80 call
traded as low as $4.63, down from the $9.63 high on Sept 14th.
I waited longer than I should to confirm the market and the
stock were going to recover. I am now the proud owner at $5.88
and hoping for a continued rebound next week.


AMZN - Target of $60 

 
It never hit $60 again and bounced off $67 twice. I removed
AMZN from my watch list in sympathy to the EBAY sell off.
Guilty by association maybe?

EXDS - Target of $80 and hold.

 
EXDS did bounce over $80 but failed to hold after the sell off
from the week before. I have removed EXDS from my watch list
until a new trend appears.


SUNW - Target of $82

 
Excellent, excellent, excellent!! I had missed SUNW at $82
the prior week and then again last Thursday because I was 
leaving town for a week. When it bounced off $82.25 with
the market on Thursday, I stepped up to the plate and it
looks like a home run with the split announcement after the
close on Friday. I picked up the OCT-80 calls SUQ-JP for $6.25
and they closed today at $11.00. I will probably sell at the 
open on Monday and then look for another pull back to re-enter
the position again.  

QCOM - Target $160

 
This is really painful. I had a target of $160 for two weeks
and then dropped it for non-movement last week. If you had
maintained a $160 target and bought on the bounce, you would
be a happy camper. I missed it because I was out of the office
and when I saw the chart on Thursday I was sick. A picture
perfect play, perfect entry point, perfect bounce. Study this
and look for other charts like this. We have consolidation,
capitulation and rebound all in ten days.

Remember, if we had forced a trade on QCOM during the prior
week we might have been scared out of the trade for a loss 
on Monday of this week when the sell off came. If we had forced
a trade on SUNW on any day except the prior Tuesday we would
probably have exited for a loss. Every stock moves in cycles 
and profit taking ALWAYS follows rapid gains. Wait for stocks 
and they will NORMALLY come to you. If they don't, you did not 
lose any money. If you got tired of waiting and bought high 
then the eventual dips will make you crazy. 



Targets for this week.

YHOO - I am a buyer above $166. 

 

I want to play the YHOO earnings run again like we did last
quarter but After the downtrending weakness last week I want
to see it trade and hold above $166 before I take a position.
If it dips any on market weakness I plan to sell 150-155 puts
as well. I think an earnings run into Oct-7th will hold it
above $160 so the plan would be to sell puts now and cover the
day or two before earnings at hopefully the $175 level. I am
a call buyer if we break $166 and hold. I would sell these on
any run to $175. I will also sell naked calls on any strong
run at earnings and look for YHOO to drop again after earnings.


NXTL - $75

 
I think NXTL is a play. Strong chart with good daily bottoms
which provide support. If NXTL does not sell off after the
opening flurry on Monday I will probably take a small position
and look to target shoot an equal amount at about 75% of the
current ask. That way if a dip does come I can average down
the current position. If no dip then I am in play.


TXN - Above $91 and holding

 

TXN took some heat last week but came off the bottom well.
If it can break $91 again and hold over it then I would be 
a buyer. I am concerned that $91-92 may become resistance
and Buying here at $90 would only set me up for another 
broken play. Holding above $91 is no guarantee but it is
just another point in our favor.

Good luck, sell too soon.

Jim



COMING EVENTS   

Monday: 

none scheduled

Tuesday:

International Trade       July   Forecast: -$22.3B Previous: -$24.6B
BTM Schroders             9/18   Forecast:   --    Previous:  0.3%
LJR Redbook               9/18   Forecast:   --    Previous: -0.1%
API Oil Stocks            9/17   Forecast:   --    Previous: -1.29M

Wednesday:

none scheduled

Thursday:

Jobless Claims            9/18   Forecast:  283k    Previous: 288K 
Help Wanted Index         August Forecast:  --      Previous:  85    
Money Supply              9/13   Forecast:  --      Previous: -$10B

Friday:

none scheduled


Next week's economic releases (preliminary)

Sept 27 Existing Home Sales - August
Sept 28 Consumer Confidence - Sept
Sept 29 Durable Goods Orders - August
Sept 30 GDP - Final - Q2
Sept 30 APICS Survey - Sept
Sept 30 Chicago PMI - Sept
Sept 30 New Home Sales - August
Oct 1   Personal Income - August
Oct 1   Construction Spending - August
Oct 1   NAPM Index - Sept


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

Sunday, September 19, 1999

The Four Horsemen!

Ever since the market had a precipitous selloff several months 
ago, we have continuously noted the strengths and weaknesses in 
numerous sectors. The breadth has continued to be poor, however, 
the 4 sectors that continue to lead the way are Semiconductors, 
Software, Hardware, and Networking. The four horsemen continue to 
defy gravity, while sectors such as banking, insurance, brokerage, 
internet, airlines, and retail all continue to lag far behind, and 
some even continuing on their downtrend. This divergence is 
becoming greater by the day. Here at Pinnacle, we have also noted 
for many weeks, that this market would be trading range bound, 
which it has. If you own and index fund or any static product, you 
have made absolutely nothing during these last several months. The 
Dow, SPX, and OEX have all traded in a very narrow range. The real 
money has been made in the four horsemen, and buying the dips in 
these few sectors. We noted on Thursday how quickly these stocks 
can drop, so always use a little caution. However, as long as this 
market trends, (which it looks like it will at least until OCT),
continue buying the leaders on a dip, and you shall do fine. If 
the market does finally break out, look for the four horsemen to 
post impressive numbers.  


 

The market had a nice rebound on "Triple Witching" Friday. The 
weakness in the market the previous couple of days were probably 
attributed to option traders clearing out positions ahead of 
Friday. The September options are now all done, and we move on to 
October. Based on the sentiment in the OEX, should this market 
have any follow-through, we could see 720-725 as the next stop. 
Put/call ratio's on many of the sectors that we follow here at 
Pinnacle Capital are currently favorable, and may indicate further 
upside potential. As long as inflation stays put, and the 30yr 
bond doesn't make new highs, we should be back on a upswing within 
the range.

Bullish Signs:

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 recently, including the 
Nasdaq 100, Morgan Stanley High Tech, Software, Hardware, 
Semiconductors and Networking.


Mixed Signs:

Interest Rates:
The yield on the 30-yr Treasury is above the 6% benchmark and 
nearing the 6.272% high. It has shown signs of basing, however, 
any negative economic indicator can easily knock the long bond 
into new highs.



BEARISH Signs:
  
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 
these last two weeks.


Advance/Decline Line:
The A/D line continues to be poor and is getting worse.


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.


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%
Friday, September 10     144,711        +249.9%


October Expiration Cycle
OEX OTM Call Analysis (Open Interest October 710-800)
Date                 Open Interest     Change %    Alert

Friday, September 17      34,361          - 

Market Sentiment at a Glance     Friday    Tues     Thurs  
Indicator                        (9/17)    (9/21)   (9/23)  Alert

Pinnacle Index (OEX):          

Underlying Support  (710-730)      2.4
Underlying Support  (660-690)      1.6

Put/Call Ratios:

CBOE Total P/C Ratio                .7
CBOE Equity P/C Ratio               .6
OEX P/C Ratio                      1.2

Peak Open Interest (OEX):

Puts                              640          
Calls                             680          
P/C Ratio                         1.02

Market Volatility Index (VIX):	

CBOE VIX                         24.22

Investors Intelligence:

Bullish                         41.50%  *
Bearish                         31.40%  *


The Power of Sentiment Analysis

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

 
OEX  Pinnacle Index             Friday      Tues       Thurs
Benchmark                       (9/17)      (9/21)     (9/23)

Overhead Resistance (710-730)     2.38

OEX Close                       704.96

Underlying Support  (660-690)     1.62
 
Average ratings: 
Resistance levels 2.0 / Support Levels .5

What the Pinnacle Index is telling us:
Overhead sentiment resistance is light at the 710-730 range.

Put/Call Ratio                  Friday     Tues       Thurs
Strike/Contracts                (9/17)     (9/21)     (9/23)

CBOE Total P/C Ratio             .69
CBOE Equity P/C Ratio            .57
OEX P/C Ratio                   1.18

Peak Open Interest (OEX) Friday           Tues            Thurs
Strike/Contracts         (9/17)           (9/21)          (9/23)


Puts                   640 / 6,356    
Calls                  680 / 6,234
Put/Call Ratio             1.02

Market Volatility Index (VIX)                    Major
Date           Major 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 17, 1999                      24.22 


 

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

Sept  1, 1999                         42.9        31.9 
Sept  8, 1999                         44.1        30.5 
Sept 15, 1999                         41.5        31.4  *



MARKET POSTURE

As of Market Close - Friday, September 17, 1999 

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

DOW Industrials   10,500  11,320  10,803    Neutral   7.20    
SPX S&P 500        1,350   1,420   1,335    BEARISH   9.16       
OEX S&P 100          675     735     705    Neutral   8.13     
RUT Russell 2000     440     465     434    BEARISH   9.14       
NDX NASD 100       2,320   2,400   2,536    BULLISH   9.03   
MSH High Tech      1,120   1,200   1,262    BULLISH   9.03   

XCI Hardware       1,035   1,050   1,123    BULLISH   8.24    
CWX Software         750     800     895    BULLISH   9.03         
SOX Semiconductor    515     520     565    BULLISH   8.24      
NWX Networking       555     610     622    BULLISH   9.17  *      
INX Internet         500     580     455    BEARISH   7.20    

BIX Banking          690     710     589    BEARISH   7.23    
XBD Brokerage        410     440     370    BEARISH   7.23    
IUX Insurance        645     660     597    BEARISH   7.23         

RLX Retail           915     960     834    BEARISH   7.23     
DRG Drug             365     390     361    BEARISH   9.16      
HCX Healthcare       745     785     732    BEARISH   9.16   
XAL Airline          180     190     137    BEARISH   5.21      
OIX Oil & Gas        285     310     306    Neutral   9.16       


 
Posture Alert    
Triple witching Friday brought nice buying across the board, as 
investors snatched up just about everything, expect airlines and 
internet stocks. Insurance was the biggest winner Friday, posting 
a +3.31% gain, followed by Software (+3.06%), Networking (+3.00%) 
and Semiconductors (+2.41%). With Friday's action, we have turned 
BULLISH on Networking.




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DISCLAIMER

This newsletter is a publication dedicated to the education 
of options traders. The newsletter is an information service 
only. The information provided herein is not to be construed 
as an offer to buy or sell securities of any kind. The 
newsletter picks are not to be considered a recommendation 
of any stock or option but an information resource to aid the
investor in making an informed decision regarding trading in 
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buy or sell securities presented. All investors should consult 
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information provided has been obtained from sources deemed 
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The newsletter staff makes every effort to provide timely 
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delivery times due to factors beyond our control.

The Option Investor Newsletter              9-19-99
Sunday                   2  of  7


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

The Intelligent (Option)Investor

In his book, The Intelligent Investor, Benjamin Graham, who taught 
Warren Buffet everything he knows, wrote: "An investment operation 
is one which, upon thorough analysis promises safety of principal 
and an adequate return. Operations not meeting these requirements 
are speculative." I am sitting at a sushi place in San Francisco's 
Richmond district, watching the last hour of trading on an 
expiration Friday, thinking about Graham. I have some thoughts on 
investing (instead of speculating) on options. First, here are
my trades:

JDSU Sept 110. Sold at 1 1/8. Bought at 4 3/4 two weeks ago. - 76% 
Loss. No post Labor Day Rally. I waited, and waited... Of course, 
for all these plays, holding until expiration is completely wrong 
from the standpoint of risk management. Since I am now trying to 
set some kind of example for our readers, I won't be doing this 
again, though I hope my honesty hopes you to see your plays in a 
realistic light.

MSFT Sept 95. Sold at average price of 1 1/8. Bought at average 
price of 2 1/8 two weeks ago. - 45% Loss. I added to this position 
a few weeks ago, when the price dipped. This was a mistake because 
I didn't confirm that the market and stock really had turned back 
up again.

CSCO Sept 70. Sold last contracts at 2 1/8. Bought at 1 1/4 at two 
separate points two weeks ago. 70% Gain. Probably my best overall 
play. I added to this play when the market took a big dip, but 
CSCO was very strong compared to the rest of the market.

SUNW Sept 80. Sold last contracts at 5 7/8. Bought at 1 5/8 two 
weeks ago. 360% Gain. I failed to add to this position when the 
price started to go up, even though all my analysis said this is 
still going higher. Also a mistake, but the opposite of the MSFT 
mistake, above. My intent on this contract was to back up the 
truck, but instead I only loaded the passenger seat in the VW 
Bug on this killer play.

Over the last few weeks, I have been watching the profit/loss 
in my trading acount bounce around by multiples of a semester's 
tuition. Up 3 semesters on the Friday before Labor Day. Down 1.3 
semesters Wednesday. Up a semester today. Overall, down 1.5 
semesters over the last 3 weeks. I've second guessed myself. 
Could have held those SUNWs for a 4+ bagger this afternoon as 
it broke through resistance at 88. Could have held CSCO and 
MSFT to the close for another semester. I'm sure a lot of you 
have similar experiences, especially if you subscribed to the 
Inevitable Post Labor Day Rally thesis. 

But despite this performance, I'll be right back at option trading
next week (but not necessarily on Monday), wiser for my experience. 
I have 10 semesters of tuition in my core stock portfolio, which 
is the first lesson that any successful trader needs to learn: 
never risk more money in speculation than you can afford to lose. 
I also have 9 semesters of tuition in my option trading portfolio, 
which is completely separate from my core stock holdings -- another 
important lesson: never mix the two types of accounts so that you 
are never tempted to replace your option trading losses with money
from your stocks (or mortgage, or kid's tuition). Warren Buffet 
would never agree, but I hope to "invest" rather than "speculate" 
in options by following these rules: (1) Use 15% to 25% of my 
option portfolio in every play. (2) No more than 3 plays at once. 
(3) Pick good entries by looking for positive index movement, 
positive ticks, positive sector movement, and positive stock 
movement (for calls). (4) take 25% profit on half of EVERY position. 
(5) Set a second limit sell at 75 - 100% profits. (6) Have a 
specific stop loss point and follow it. (7) Have a 1-4 day drop
dead time limit on each play. I consider every play that I Iisted 
to be a failure (even SUNW) because I broke these rules. I could 
have booked profits on the losers, and saved myself from fatigue. 
Graham points out this pitfall: speculating seriously instead of 
as a pastime, when you lack proper knowledge and skill for it. I 
have build up my option trading portfolio while maintaining a 
totally separate stock portfolio at the exact same level. But as 
the last 3 weeks demonstrates, I still lack the knowledge and skill 
to be a real master at this craft. But, I am learning from my 
mistakes and improving. Good Luck & let me know how it's going.

Janar Wasito
janar@OptionInvestor.com


**************
EDITORIAL
**************

The sky is falling, the sky is falling!

Here we go again.  It is time to sell your home, sell your car,
sell your furniture, sell your dog.  What ever it takes to 
generate as much cash as possible to buy a year's supply of 
food and clothing.  Grab your kids and head for the hills.  
The end of the world is coming!  Am I supposed to be scared 
or what?

So the CPI came out better-than-expected...it almost always 
has for the past 4 years.  And so the market didn't rally...we 
can't go up everyday.  Let's face it, if we couldn't hold a 
rally after the more important employment numbers and PPI numbers 
of the past 10 days, then we never really had a chance today.  
Besides smart money knew there would be no surprise in the 
August CPI as it is a product of the PPI anyway.  Gasoline had 
the biggest price increase and Airfare had the biggest price 
decrease for the month.  Hmm, like you couldn't have guessed 
that if you had been following the market for the past couple 
of months.  It was a suckers rally from the get-go.  But don't 
feel bad though because this market isn't going anywhere.  That 
is what the term range-bound means.  And yes folks, if you haven't 
noticed, we've been range-bound since May 1st.  Don't get me 
wrong, we've had some great moves within the range during this 
period.  Even some moves that have resulted in new highs for 
lots of stocks and some indices but nevertheless we are stuck 
in a range.  

So was Wednesday's bear market the real deal?  Simply put, no.  
(as you may have guessed from Friday's rally)  But there may be 
some reasons to be worried.  For instance, Wednesday's close put 
us well below the 100-dma on the Dow Industrials.  We have seen 
dips below the 100-dma a couple times in the last 6 weeks but 
it was usually an intraday dip before we rallied to close at or 
above that key support level.  Wednesday's close was different.  
We had been holding on all day and tried to rally the market in 
the final hour only to have a major reversal in the final 20 
minutes to send the Dow right past the 100-dma to close at the 
low for the session.  It is this kind of technical picture that 
has analysts and investors alike trembling. 

Another worry is the all the worrying that is going on.  Why 
are we so bent on avoiding a big market bust?  Some traders act 
like they have their hand in the cookie jar and are just waiting 
for dear ol' Mom or Dad to come around the corner to catch us.  
So what is our escape plan...drop the cookie quick and run out 
the door!  Right, that usually works.  It's hard not to feel 
guilty though with the returns the market has given us this decade.  
Now with Y2K (i.e. Mom or Dad) rapidly approaching we are all 
ready to drop the hot-potato head for the door.  Some investors 
are expecting a crash similar to 1987's Black Monday or, even 
worse, dare I say 1929.  There is no question we would all 
rather avoid such catastrophes in our investments but according 
to my calculations (1987-1929 = 58 years) we still have 46 more 
years to go before the next major debacle.   

I think secretly we all want the a big shake out in the markets.  
We have become used to the fall clearance sale on stocks.  A 
chance to pick up your favorite tech and internet plays for a 
50-to-70% discount from old highs.  A chance to stock up while 
you can.  The problem is we don't have a catalyst like we had 
the last couple seasons.  There are no more failing economies 
in the east, no more fear of high P/E ratios and no more wild 
currency fluctuations in Brazil.  In reality, Japan is doing 
quite well.  Take a look at how the Yen has been hammering the 
Dollar lately.  P/E ratios went out the door when Internet stocks 
came to town.  And no more pegged currency in Brazil has forced 
currency speculators to find a new racket, thus leaving more 
money at home for Brazil to cure their ailing economy.  So we 
are left to hope that Y2K will scare small time investors to 
give up their shares of AOL, EBAY, YHOO, CSCO, SUNW and DELL for 
fractions of their true value so we can swoop in like vultures 
and clean up.  

But, at last, it may only turn out to be a dream this year.  If 
2 interest rate hikes, a possibility of another hike in October 
and the big, bad Y2K can't do more than keep us range-bound 
then tomorrow might be the cheapest we ever see our favorite 
stocks.  Where are we really going to go from here?  10,600, 
where we have ample support.  10,500, where we have enormous 
support.  That may be it, folks.  The Fed can't keep raising 
rates either on "fears" of inflation.  Do you really think Alan 
Greenspan would risk such a bold move and run his chances of 
being the greatest Fed Chief in history?  Not likely.  

So we will just have to keep dreaming of another great garage 
sale on Wall Street.  Our only hope is for some trigger, some 
catalyst, some collapse that will help us to break the behemoth 
we call 10,500.  If that happens, then get your hand out of 
the cookie jar because 10,000 here we come.  Then it is time 
to step aside.  Then it is time to start planning your buying 
strategy.  But you will only have a short-time to get ready so 
be prepared.  Can we can conclude this is our dream?  To see a 
four-digit close on the Dow instead of five-digits.  Something 
like 9999.99 or less.  If so, I will be the first one in line 
to back up the truck and take all I can get.


Ryan Nelson
Asst. Editor

 

**************
BROKERS CORNER
**************
TRADING PSYCOLOGY 101

SCARED MONEY RARELY MAKES MONEY 

We always have a healthy respect for the market. There is a fine 
line between being respectful and being fearful. Scared money 
trades based on emotion not reason. Traders without confidence 
in their abilities are destined to lose because they fail to 
act with a plan. They react and more often overreact emotionally.

Human nature forces traders to enter the market because they do 
not want to miss an opportunity. The reality for option traders 
is that there are always opportunities with over 4000 optionable 
stocks available. Plan your trades based on your research and 
always be prepared to live with the worst-case scenario. For 
option buyers the worst thing that can happen is that the option 
expires worthless, but that happens much too often because people 
fail to plan. Plan your entry, exit, and stop loss to relieve 
trading stress and to free your mind for positive thoughts. Those 
people that are convinced that they are going to fail often do.

Think about how important the entry point is for any trade and 
many times you are better to miss a trade than to enter at a BAD 
price or to chase the market. If you become consumed with winning 
and losing: option trading becomes personal not logical. Do not 
be afraid of losing money, it is no reflection on you as a person 
or how smart you are. The market cannot be controlled; only your 
risk and exposure can be managed.

As long as you do not allocate more than 15 to 25 percent of your
account to any one trade even the "disastrous " event of an option
expiring worthless will hurt your pride more than your pocketbook. 
The reality of not having the discipline of a stop-loss should be 
as disappointing as the monetary loss. Take your small loss and 
move forward not dwelling on something you cannot control. Your 
assumptions on the market were incorrect but you took your lump, 
hopefully learning more about the markets and more importantly 
learn more about yourself.

Do not be afraid of losing money, that is part of trading. Control 
your emotions and make a simple plan and consistency will follow. 
Simply put, any profit is better than losing money regardless of 
how much money you could have made. If you plan on playing the 
game set your own disciplined rules before you put on a trade and 
the results should not scare or surprise you.

Call us for assistance in choosing the best options: strike price 
and time duration to be successful based on a solid plan of attack 
and a trading style you can be comfortable with.

Alan Knuckman and Andrew Aronson
andrewoption@hotmail.com



*******************
TRADING CLUB UPDATE
*******************
September 19, 1999

FALL HAS BEGUN AND THE TRADING CLUBS HAVE STARTED EXPLODING!!
If you would like to join contact us at Visit@OptionInvestor.com 
and Organize@OptionInvestor.com.

UPDATE FROM ATLANTA, GA:
*****************************

There were a few people interested in selling leaps as covered 
calls. I asked (OI newsletter) to give us some selling facts 
(basic). If you will look on September 12th (Sunday's) 
newsletter, section 7, it's first off the bat. I have never done 
one, but I am looking seriously. I will report more at our 
September 25th meeting at Sandy Springs library at 11:30 in 
Atlanta, GA. The library is looking into letting us meet on
either a Monday or Tuesday night from 6:00-8:00 right after the 
3rd Friday of each month (Options cutoff date). We will have 
refreshments.

We will have a paper trade contest for the month of October, 
month of November and month of December. I can not tell you what 
the prize will be of yet, since I am working on that. However, we 
want each person to pick 10 covered calls for each month. An 
example in our newsletter this weekend has 6 already listed for 
October. What you need to do each Sunday or Monday is send me 
your list with the additions up to the 3rd Friday in October.

Example: Out of the 6 listed I could pick 4 of my 10 as
CS, MOGN, DCTM, SOFN.  I could then add 3 more next Sunday and 3
more the following Sunday and that would be my 10 for the month. 
We'll see who has the most winners. I will not tell everybody's 
results; just the top 3.

I got an inquiry on "where do I find stock losses or target stock
losses" to help to reduce the chance of a huge loss after buying 
the stock at a certain price. One of the best is in the same area 
where you do your charts within OI with the corporate snapshot. 
When I get the corporate snapshot showing the graph, the top 
window which normally says selected company report, this is where 
I normally get my options list.  Another choice within that 
selected company report is called Macro World Price Forecast. 
You normally will get a 2 1/2 page report, showing the chart with 
predictions of a four week price, plus a 5 week alert showing
where your stock loss should be. At the end of the report is a 
forecast for the next 4 months. It's a great section to do some 
research with figures. I hope this is clear; if not, we will 
cover it at great detail on the 25th and for those of ya'll who 
can not be at our meeting, if you send me your address, I'll mail 
it to you. I will not e-mail it because my scanner is not 
working.

Looking forward to our meeting on the 25th in Atlanta. Anyway I 
can help, let me know!

(removed)





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

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

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

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

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

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



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


Daily Results

Index     Last    Week
Dow    10803.63 -224.80
Nasdaq  2869.62  -17.44
$OEX     704.96   -7.83
$SPX    1335.42  -16.24
$RUT     434.45   -6.74
$TRAN   2999.79  -91.18
$VIX      24.22    1.87

Calls

DCLK     116.25    8.50  New, the company was granted a patent
CTXS      67.25    7.41  New, the stocks a flyer, one to watch
NTAP      74.94    7.19  This stock has a mind of its own
AMAT      84.81    6.06  New, if a rally exists, it will find it
ADI       60.44    4.19  The stock hit another all-time high
NXTL      75.19    3.19  New, showing signs of rally potential
DISH      97.00    3.00  Dish's new bird is about ready to fly
INKT     131.19    3.00  Resisting the bears, waiting to rally
SUNW      88.69    3.00  The energy and driving force is strong
EMC       71.00    2.88  The stock bounced just like we planed
CKFR      41.63    2.75  New, announces a deal with ExciteAtHome
CSCO      73.50    2.75  New, this is a leader and it shows
NT        49.75    1.88  New, fitting the profile of a real bull
SFA       56.50    0.81  Dropped, it stalled and ran out of gas
INTU     103.00    0.00  Have we reached the short-term bottom?
TXN       89.88   -0.75  Short-term stall but looking to move
SFE       71.19   -1.31  Dropped, not a convincing effort here
ERTS      74.75   -1.44  Dropped, no artful touch to make money
JDSU     110.50   -1.50  Dropped, close but no cigar, its gone
BGEN      86.44   -2.56  Leadership and momentum are present
AMZN      63.81   -2.69  There may be some buying opportunities
QLGC      92.75   -3.44  Dropped, there's no more waves to ride
YHOO     163.38   -7.38  Earnings are coming, lets make a run
CMGI      80.00   -9.81  Dropped, not much of an earnings run

Puts

WLP       68.75   -8.00  New, fell through long-time support
LLY       67.00   -5.38  Downgrades and weak sector plague stock
ELNK      40.13   -4.88  New, depressed valuations hurting stock
JNJ       96.06   -3.44  Falling industry = falling stock
COST      67.50   -2.38  Was it a head fake or was it for real??
GPS       33.63   -2.06  Odds are there going to come up short
KO        54.13   -1.13  Dropped, this drink has lost its fizzle
HNZ       43.88    1.25  Dropped, this games over, were done
SWY       45.38    2.44  Dropped, set foot on stable ground



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

CALLS:

NT
AMAT
CTXS
CSCO
CKFR
DCLK
NXTL

PUTS: 

WLP
ELNK

***************************
PICKS WE DROPPED THIS WEEK
***************************
Remember that historically, when we drop a pick it will go up 
10 to 15% the very next week. It is part of Murphy's Law.
Just because we drop a stock as a pick does not mean we are
advocating a "sell" on any position you have. We are simply
dropping our recommendation as a new play. Existing plays
can and do continue on and are usually profitable.

Calls

QLGC $92.75 (-3.44) We lost our wave!  If you have ever body
surfed, you know it's critical to catch the wave right in 
order to have a good ride.  Well our wave seems to have died 
on us with QLGC.  A look at the chart shows resistance at 
around $98.  Despite Friday's bounce, QLGC did not want to 
participate.  Considering a turn in our indicators, showing 
the momentum's gone, it's time to find a new wave to ride.  
Investors may get a boost next week but why risk this ride 
when the conditions are not right.  To be the best you need 
to recognize when the play turns and focus your resources
on plays with power.  Hopefully you were able to protect the 
small $2 gain we saw since our pick.  Good job if you did.

CMGI $80.00 (-9.81) We're disappointed with CMGI's recent  
performance ahead of its earnings date on September 27th 
(after the bell).  Historically this stock has been a solid 
runner ahead of earnings.  However on Thursday we brought 
it to your attention that CMGI was walking a tight rope on 
the long-term 200-dma.  Well to our dismay on Friday, CMGI 
didn't advanced betwixt the broad market rally and the 
strong tech sector.  Instead it slid under this bottom 
support level of $82.71 on moderate volume.  Perhaps it'll 
spike up again next week but, at present, the indication is 
that it's not going anywhere fast and we must drop it.

SFA $56.50 (+0.81) Even though we had a nice technology rally 
to end the week, SFA was one of the lagers and ended the day 
only fractionally higher.  Wednesday's and Thursday's profit- 
taking was too much for SFA, taking the stock below its 10-dma, 
which should have acted as support but did not.  Unfortunately, 
by Friday what once was its support became its resistance.  
While other technology stocks rallied and recouped losses from 
the previous day, SFA tried but stalled near its 10-dma.  
Because the stock could not rebound convincingly, we are lead 
to believe that the tides may be turning.  It was a nice little 
ride while it lasted but due to profit-takers and signs of 
weakness in the stock we have decided to end the play and 
concentrate our efforts elsewhere.

SFE $71.19 (-1.31) On Friday the bulls came to life, charging 
forward and leaving few unconvinced that today was their day 
of glory.  Many stocks rallied recouping losses from earlier 
in the week.  SFE participated in the rally, however not to 
the extent we had hoped.  Without much conviction, the stock 
managed to break above its 10-dma and end the week just above 
its support.  With a whole week of consolidating between 
$69 and $72, Friday's outcome was no surprise.  Lack of 
direction and slowing momentum was enough to convince us it 
is time to end the play. 

ERTS $74.75 (-1.44) ERTS no longer has the artful touch to make 
us money so we're dropping it.  For the last 3 days ERTS has 
been unable to get back above its 10-dma, which wouldn't be so 
bad if the market were tanking. . .except that the market was 
up substantially on Friday with no participation by ERTS.  ERTS 
volume has been lacking lately, indicating that interest in this 
issue has waned with investors.  Technical indicators have headed 
south on us too.  Time to exit, especially if you can sell into 
any strength, perhaps during amateur hour on Monday.

JDSU $110.50 (-1.50) Close, but no cigar.  JDSU showed us no 
strength in Friday's trading as the rest of the NASDAQ tacked on 
62 points.  You may recall we put JDSU on double-secret probation 
Thursday, giving it just one more chance to perform on Friday.  
Though it had a $2.88 recovery, it still lacked volume and 
failed to rise out of its trading range, which tells us that 
immediate interest has dried up.  For continued insubordination, 
we're expelling it from the list.


DROPS - CONTINUED IN SECTION 3

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




The Option Investor Newsletter          9-19-99
Sunday             Part 3 of 7

**************
DROPS - CONTINUED
**************

Puts

HNZ $43.88 (+1.25) Heinz actually went down in a positive
market Friday, so why are we dropping it?  To many positives
create to much risk and as investors, we don't want to be
classified as gamblers.  It's not a game that we play.  Our 
technical indicators show a positive breakout on both the
stochastic and the MACD.  We have positive news that HNZ is
looking to merge with another company.  And we hope we have
a positive outlook to the market next week.  All these stack
up against our HNZ as a put play and unless you want to
gamble with fate, it is better to drop this and play for
something else.

SWY $45.38 (+2.44) For the new readers, we picked up SWY 
last Sunday after watching it decline a steep 7% amid 
bearish trading patterns and company-specific news events. 
Unfortunately as this week progressed SWY played tag with 
its overhead resistance at the 10-dma.  By Friday SWY had 
firmly established that its descent was over for the time 
being.  Therefore we must drop SWY to make room for more 
definitive movers.

KO $54.00 (-1.13) Coca-Cola has lost its fizzle and has ended 
the weak flat.  With a move to the downside of little over a 
point this past week, we are ready to take our money and move 
it into more profitable situations.  As the Dow goes so goes 
Coke and the technicals are presenting us with information that 
looks like we have reached a near-term bottom in the Dow, the 
risk reward to the downside with this one is no longer in our 
favor.  And it is burning up our time period with these painfully 
slow declines.  Although Coke might continue to drift in the days 
to come, without much news to report and a recovering Dow, lets 
close out any open positions at this point. 



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

None this week.



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

Symbol - Stock         Splits/Date  
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
INTU - Intuit          3:1 09-30-99 ex-date 10-01
VOD  - Vodaphone       5:1 10-01-99 ex-date 10-04
HLIT - Harmonic        2:1 10-14-99 ex-date 10-15
TYC  - Tyco            2:1 10-21-99 ex-date 10-22
VTSS - Vitesse Semi    2:1 10-21-99 ex-date 10-22
ADBE - Adobe Systems   2:1 10-26-99 ex-date 10-27
CNXT - Conexant        2:1 10-29-99 ex-date 11-01
SEBL - Siebel Systems  2:1 11-12-99 ex-date 11-15
SUNW - SunMicro        2:1 12-07-99 ex-date 12-08



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


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

Call plays of the day:
**********************

CTXS - Citrix Systems Inc $67.25 (+7.41)

See details in sector list

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

******

NT - Nortel Networks Corp. $49.75 (+1.44)(+1.88)

See details in sector list

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

******

Put play of the day:
*******************

WLP - Wellpoint Health $68.75 (-8.00)

See details in put list

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





***********
CALLS PLAYS
***********
Software
***********
INTU - Intuit Inc. $103.00 (+0.00)(+9.19)

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.

In choppy market conditions you are going to have a lot of 
buyers and a lot of sellers battling it out to see who will 
finish on top.  Seeing that the technical and fundamental 
picture for Intuit are both very strong, you would think that 
after announcing a 3:1 stock split on September 10th, that 
you would not have a chance to be involved in the inevitable 
run up in the stock price after an announcement such as this.  
Especially if you did not enter into a position immediately.  
Wrong!!  You can be thankful for the choppy market conditions 
(that we believe have reached a bottom short-term) for providing 
you with another opportunity.  After a week of uncertainty in 
the market, Intuit finished the week exactly where it started 
at $103.  On numerous occasions the stock bounced off of good 
support, just below the $100 level.  If you have not already 
taken a position in this one, now may be the time.  With 
approximately nine more trading days until the payment date on 
September 30th, we are looking for positive price movement in 
the stock ahead of this event.

Furthermore, analysts have been in favor of their business 
model and feel that they are firing on all cylinders.  One 
current price target is $115 on the stock.  In a market that 
has a bias to the upside for this week, look for Intuit to 
test the 52-week high of $110.75 if volume and momentum pick-up 
in the sector.

BUY CALL OCT-100*IQU-JT OI=3428 at $9.88 SL=7.50
BUY CALL OCT-105 IQU-JA OI= 768 at $7.50 SL=5.75
BUY CALL OCT-110 IQU-JB OI=1192 at $5.63 SL=3.75

Picked on Sep 12th at   $103.00     P/E = 17
Change since picked       +0.00     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  


****

INKT - Inktomi Corp. $131.19 (+3.00)(+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.

As the Thursday's rally continued into Friday along for the 
ride was our play INKT.  While some stocks like to blaze there 
own trail, Inktomi would rather follow the lead of the broader 
markets.  The last two sessions there is a distinct pattern 
between the stock and the NASDAQ, with one exception.  The 
exception being INKT shows more resilience to the down side.  
Investors are rallying behind the stock anytime bargains are 
available, which last week was around its 10-dma at $123.  
Thanks to the end of the week rally, the stock trades well 
above this level and may continue to rise if conditions permit.  
If the markets continue its rally into next week expect INKT 
to be a participant.  For those investors placing new trades, 
watch for dips in the stock.  Even though the bulls have the 
upper hand at this point, inflation woes still exist making 
for volatile market conditions.  Continue using the recommended 
stops and you may want to tighten them as the stock approaches 
$140, it next resistance point.  

To reiterate last week's news, there was a press release on 
Thursday stating that Inktomi agreed to a definitive deal to 
buy WebSpective Software, a maker of software used for 
Internet content distribution and tracking, for about $106 
million in stock.  The deal will help Inktomi offer Web site 
content management services to firms that rent computer 
capacity to companies and manage Web sites on their behalf. 
WebSpective software will also allow it to begin serving 
corporate customers directly, later this year.

BUY CALL OCT-125 QYK-JE OI=2029 at $14.00 SL=11.25
BUY CALL OCT-130 KYQ-JF OI= 669 at $11.38 SL= 8.75 
BUY CALL OCT-140 KYQ-JH OI= 869 at $ 6.75 SL= 4.75

Picked on Sep 10th at   $128.19     P/E = N/A 
Change since picked       +3.00     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

****

NTAP - Network Appliance Corp. $74.94 (+7.19)(-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. 

NTAP has seemed to have a mind of its own this past week.  With
the sentiment in the broader markets depressed, seemingly looking
for anything negative to hang their hat on, shares of NTAP have
have managed to move higher.  With nothing new on the news front,
investors have continued to buy stocks in the tech and networking 
sectors.  Shares of SUNW, EMC, CSCO all shared in the limelight 
this week as well, with each ending the week on the plus side.  
Volume has been somewhat light, which makes us question the 
overall strength of the move.  However a move up of over $7
is still a positive, regardless of the volume supporting it. 
After bouncing off its 10-dma at the $67 area early Tuesday 
morning, NTAP gave us a great opportunity by mid afternoon to 
jump on board as the price increased as did the volume.  We 
would be remiss if we did not point out that technically NTAP 
is beginning to become overbought and could be due for a 
pullback.  After a move of over $25 since its early August lows 
in the $50 area, we could see the bulls decide to take some 
money off the table at any time.  On the other hand, there are 
scores of investors that will not consider buying a stock until 
it has taken out old highs and made a move similar to the move 
made by NTAP.  We do believe that NTAP will continue higher but 
picking your entry point could be tough.  If we see a pullback, 
there is good intraday support for NTAP in the $71 area and then
again at $69.  If you are in a play on NTAP move your stops up 
close to protect your profits.  In considering a new play be 
patient, consider your risk profile and look for a positive move
by the stock and others in its industry.   

No other news at this time.

BUY CALL OCT-65 NJQ-JM OI= 145 at $11.13 SL=$8.75
BUY CALL OCT-70*NJQ-JN OI=1406 at $ 7.25 SL=$5.50
BUY CALL OCT-75 NJQ-JO OI=  65 at $ 4.38 SL=$2.50 low OI
BUY CALL DEC-70 NJQ-LN OI=  83 at $11.88 SL=$9.50 low OI
BUY CALL DEC-75 NJQ-LO OI= 168 at $ 8.75 SL=$6.75

Picked on Sep 11th at    $67.75    P/E = 138
Change since picked       +7.19    52 week high=$75.25
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 = 1.10 mln
Chart = http://quote.yahoo.com/q?s=NTAP&d=3m

****

CTXS - Citrix Systems Inc $67.25 (+7.41)

Citrix provides application server products and technologies 
that allows networked computers to run Windows-based programs 
from a central server.  This gives their clients effective 
and efficient management of their applications.  Its WinFrame 
software is used by well-known companies such as Sears Tire 
Centers and Hewlett-Packard Europe.

The Citrix iForum on September 9th, a technological conference 
on application server-computing, was well received by the 
industry and investors.  The keynote address by Chairman Edward 
Iacobucci focused on "digital independence".  In other words, 
freedom to reliably access applications from "anywhere, anytime" 
over any connection with speed.  Trading volume has since 
surged to levels as high as 65% above the normal ADV and share 
price has increased $7.41, or 14%.  At this point CTXS is being 
added as a pure momentum play.  If CTXS climbs to the $80 range 
it will be a considered a split candidate too.  That'd work 
out just fine with earnings coming up next month around October 
19th.  Bottom support appears to be at $60-61 with overhead 
resistance now at the new 52-week high of $68.75 set on Friday.  
Look for intraday volatility to find a daily low or wait for 
a possible pullback to find an entry point.  

Following the Citrix iForum last Friday on September 10th, 
Banc of America Securities reiterated a Buy rating and issued 
a $75 price target. 

BUY CALL OCT-60 XSQ-JL OI= 932 at $ 9.88 SL=7.50
BUY CALL OCT-65*XSQ-JM OI=1471 at $ 6.38 SL=4.75
BUY CALL OCT-70 XSQ-JN OI=  60 at $ 3.88 SL=2.50 low OI
BUY CALL DEC-65 XSQ-LM OI= 307 at $10.88 SL=8.75
BUY CALL DEC-70 XSQ-LN OI=1422 at $ 8.13 SL=6.25

Picked on Sep 19th at    $67.25    P/E = 48
Change since picked       +0.00    52 week high=$68.75
Analysts Ratings      6-2-0-0-0    52 week low =$23.12
Last earnings 07/99   est= 0.31    actual= 0.32 surprise +3.2%
Next earnings 10-19   est= 0.34    versus= 0.22
Average Daily Volume = 1.40 mln
Chart = http://quote.yahoo.com/q?s=CTXS&d=3m

*************** 
Semi-Conductor
***************
ADI - Analog Devices Inc. $60.44 (+4.19)(+2.69)

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 
instruments.  

Once again ADI had another positive performance, despite it 
being a Triple witching Friday and the uncertainty during the 
week in the semiconductor sector.  Friday the sector continued 
the uptrend and the stock was up $3.38 to close at $60.44 on 
just about average volume.  With Friday's gain, ADI has now 
once again hit a new all-time-high $60.44.  The stock continues 
to look strong technically and is in a sector that has momentum 
on its side.  The PHLX semiconductor Index continued higher and 
was up strong 13.29 points to close at 565.22.  Gauging sector 
performance once again we see that Texas Instruments, Applied 
Materials and National Semiconductor were also bullish again on 
Friday as the NASDAQ took off.  ADI once again bounced nicely 
off of its 10-dma, which has provided the stock with good 
support. 

If you are looking to enter this play, it looks as though a 
short-term bottom has been reached and we could see higher 
prices from here, including the possibility of a new high.  
As always, watch the market direction on Monday before picking 
your entry point.  Tight stops are always a good idea at new 
high levels.

BUY CALL OCT-55 ADI-JK OI=2427 at $7.25  SL=5.50
BUY CALL OCT-60*ADI-JL OI= 553 at $4.13  SL=2.50
BUY CALL DEC-55 ADI-LK OI= 424 at $10.00 SL=7.50
BUY CALL DEC-60 ADI-LL OI= 728 at $7.25  SL=5.50

Picked on Aug 28th at    $51.31    P/E = 66
Change since picked       +9.13    52-week high=$60.44
Analyst Ratings       8-6-1-0-0    52-week low =$12.00
Last earnings 08/99   est= 0.29    actual= 0.30
Next earnings 12/02   est= 0.35    versus= 0.16
Average daily volume = 1.08 mln
Chart = http://quote.yahoo.com/q?s=ADI&d=3m

*****

AMAT - Applied Materials $84.81 (+3.38)(+6.06)

So who's responsible for this information and technology 
age we live in?  Arguably, AMAT could be listed as one of 
the companies who has contributed most.  Supported by the 
Smithsonian Institutions display of their equipment.  AMAT 
designs and builds systems that make semiconductors and 
microchips available.  Specifically focusing on wafer boards 
and display film equipment, their success over the last 30 
years has placed them as the world leader in this market.  
The company has positioned itself to service the world 
community with offices in the U.S., Europe, Middle East and 
Asia.  As the information age continues to develop, it does 
so with the help of AMAT's innovation.

AMAT has weathered the market storm of this last week quite 
well, as it continues it's upward trend on positive news and 
outlooks.  Friday's technical bounce added more fuel to AMAT's
fire, sending it to a new 52 week high and widening the MACD.
This indicates any continuation in a market rally, should drive 
AMAT higher on momentum.  Again, the 10-dma is holding at 
support very nicely at $79.  Wednesday the stock pulled back to 
support and has been on a climb since, confirming this stock as 
a play.  Indications of a positive market and stock direction
will provide an entry but, watch out in case the September 
sell-off rears it's head.  We are hoping for an improvement in
the trading environment however, be cautious as the market has
been unpredictable lately.

The semiconductor industry has been extremely strong lately due 
to forecast growth in sales.  David Wang, Senior V.P. of Applied 
says a recovery is at hand and forecasts look very good for 
the next few years.  This due in part to increased sales in PC's 
and telecom equipment.  This optimistic outlook now for the 
sector prompted BB Robertson to upgrade AMAT to a Strong Buy 
on Wednesday.  In fact, spot prices for chips hit multi-year 
highs this week at $15.50.  Analysts say that when the cycle 
turns positive, like it is now, it usually lasts for at least 
6 months.

BUY CALL OCT-75 ANQ-JO OI=3360 at $11.50 SL=8.88
BUY CALL OCT-80*ANQ-JP OI=5341 at $ 8.13 SL=6.25
BUY CALL OCT-85 ANQ-JQ OI=4575 at $ 5.13 SL=3.25
BUY CALL OCT-90 ANQ-JR OI=2009 at $ 3.13 SL=1.50

Picked on Sep 19th at   $84.81    P/E = 131
Change since picked      +0.00    52 week high=$84.94
Analysts Ratings   15-15-3-0-0    52 week low =$21.56
Last earnings 07/99  est= 0.53    actual= 0.61 
Next earnings 11-16  est= 0.63    versus= 0.07
Average daily volume = 7.5 mln
Chart = http://quote.yahoo.com/q?s=AMAT&d=3m

****

TXN - Texas Instruments Inc. $89.88 (-0.75)(+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.  

As an investor, whether you're fortunate or unfortunate 
depends on which side of the fence you're on when the stock 
falls.  It's all part of the game but it sure does sting if 
you're on the wrong side of the fence.  This was the case for 
many TXN investors last week as they watched gains disappear 
as fast as the came.  An increasing demand for PC's and rising 
chip prices helped rally both computer and semiconductor stocks 
only to be foiled by profit-takers.  TXN was no exception, 
leaving the stock fractionally lower for the week.  Despite 
this slight setback our views remain bullish on TXN and the 
semiconductor industry.  Fundamentally the stock is sound, 
with the price of DRAM chips on the rise and computer sales 
skyrocketing, TXN is in a very good position.  Technically 
speaking, the stock continues to trade above all its moving 
averages, indicating the strength of the stock.  Despite 
strength in the stock, with inflation fears still in the air 
and the existence of profit-takers, there should be plenty 
of opportunities to buy on the dips.  Confirm the market 
direction before placing new trades and use the recommended 
stops.

An interesting article was released on TXN last week that may 
influence our play.  Chinese telecommunications equipment 
maker Eastern Communications announced it had set up a joint 
venture with TXN.  The venture, with a registered capital of 
$7 million, was primarily for research, development and 
design of digital information products.

BUY CALL OCT- 85*TNZ-JQ OI=1990 at $8.13 SL=6.25
BUY CALL OCT- 90 TNZ-JR OI=3554 at $5.00 SL=3.25
BUY CALL OCT- 95 TNZ-JS OI=1354 at $2.75 SL=1.25
BUY CALL OCT-100 TNZ-JT OI=1429 at $1.63 SL=0.75 

Picked on Aug 31st at    $82.06    P/E = 77
Change since picked       +7.81    52-week high=$93.44
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

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

EMC - EMC Corporation $71.00 (+2.88)(+3.25)

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. 

Our strategy using the 10-dma as support and signal has served
us well on EMC.  The play is now on a successful track since
our pick, as we bounced nicely off support of $66 on Wednesday.
Powering ahead on better than average volume, we reached a 
new 52-week high on Friday of $71.88.  This bullish confirmation
from Wednesday's dip has turned all indicators positive and is
showing break-out potential.  We expect the rally to continue
next week, as we continue a technical bounce from last weeks
storms and unrest.  We can't let all this good news go to our
head however.  The market is an expert fighter and just when
you feel most confident, it will teach you a lesson.  Be
humble and anticipate the market's moves before it hurts you.
EMC is profitable so protect your gains with trailing stops.
As Jim so wisely teaches us, sell too soon.  This advice is 
especially relevant after what happened to IBM on Friday.  
The stock started to plummet around 2:00 ET after comments 
from a Merrill Lynch analyst said he lower than expected 
results could plague the Hardware sector in the 3rd quarter.  
This is the same sector that EMC is in.  So do not let a 
successful play turn negative!  EMC is approaching the
expected earnings announcement on 10-19.  This will also help
move the stock, as EMC is usually a good run candidate.  It's 
too early however to play the stock on this merit alone.  
Confirm a positive move in the price and market before playing. 

News on Friday talked of the new trend into storage array.  A 
scaled down, work group approach to central storage.  This
is a move away from the enterprise storage that EMC focuses on.
For this reason, EMC has been thinking about Data General as
a possible interest.  EMC was also listed Friday as one of 
NASDAQ's most active stocks.  This indicates that it is
a good participator in any tech rally that may ensue.

BUY CALL OCT-60 EMB-JL OI= 8174 at $12.25 SL=9.50
BUY CALL OCT-65*EMB-JM OI= 7270 at $ 7.75 SL=5.75
BUY CALL OCT-70 EMB-JN OI=11957 at $ 4.38 SL=2.75
BUY CALL OCT-75 EMB-JO OI= 2117 at $ 2.13 SL=1.00 

Picked on Sep 12th at    $68.13    P/E = 74
Change since picked       +2.88    52 week high=$71.88
Analysts Ratings     14-9-1-0-0    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 = 5.50 mln
Chart = http://quote.yahoo.com/q?s=EMC&d=3m

****

SUNW - Sun Microsystems $88.69 (+3.00)(+1.19)(+8.31)

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 
sales.

This momentum play has continued to provide players with 
money-making opportunities since we first picked it up on 
August 28th.  SUNW's energy and driving force have since 
carried into its earnings' season.  We certainly expect a 
profitable run and especially now that SUNW announced a 2:1 
stock split after hours on Friday!  Shareholders' approval 
to increase authorized shares to 3.6 bln is expected at the 
company's Annual Meeting on November 10th.  After the split 
the number of outstanding shares will be approximately 1.56 
bln.  This is the 2nd time in a calendar year SUNW has had 
a stock split - just recently in April the shares also 
split 2:1.  It's notable that SUNW has more than tripled 
its share price over the past year. 

We were watching for SUNW to give us further confirmation 
of its upward movement after slinking down to support at 
$82 mid-week.  Well we certainly got it!  SUNW set another 
new 52-week high on Friday on double its normal trading 
volume (and this was before the 2:1 split announcement). 
You can't beat that for confirmation.  The previous day, 
analyst Daniel Kunstler at J.P. Morgan Securities 
reiterated his Buy rating and issued a 12-month target 
price of $105.  It's expected SUNW will continue to rise 
under reasonable conditions next week.  So you'll likely 
have to target shoot for an intraday low to get a sensible 
entry into the play.  Earnings are in a few weeks around 
October 14th and this date will be confirmed ASAP.  This 
play is a potential gold-mine - remember the strong 
earnings' run last quarter?  It'd be great to see history 
repeat itself in this case.

BUY CALL OCT-85*SUQ-JQ OI=7132 at $ 7.50 SL=5.75
BUY CALL OCT-90 SUQ-JR OI=4864 at $ 4.63 SL=3.00
BUY CALL OCT-95 SUQ-JB OI=1596 at $ 2.56 SL=1.25
BUY CALL JAN-90 SUQ-AR OI=4939 at $10.63 SL=8.25
BUY CALL JAN-95 SUQ-AB OI=2613 at $ 8.38 SL=6.50

Picked on Aug 28th at    $76.19    P/E = 69
Change since picked      +12.50    52 week high=$89.75
Analysts Ratings      9-8-3-0-0    52 week low =$19.19
Last earnings 07/99   est= 0.47    actual= 0.48 surprise +2.1%
Next earnings 10-14   est= 0.31    versus= 0.25
Average Daily Volume = 7.87 mln
Chart = http://quote.yahoo.com/q?s=SUNW&d=3m


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




The Option Investor Newsletter             9-19-99
Sunday                4  of  7

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

*************** 
Networking
***************

CSCO - Cisco Systems $73.50 (+2.75)
 
Cisco builds 85% of the routers and switches that make the 
Internet work.  They are the leading supplier of products that 
link local and wide area networks.  The company's other products 
include dial-up access servers and network management software.  
Cisco has been on an acquisition binge (about 37 since 1993) to 
broaden its product line.  It also derives revenue by licensing 
products as it seeks to widen the influence of its Cisco 
Internetwork Operating System (Cisco IOS) software, in hopes of 
making it an industry standard.  Strategic relationships with the 
industry's biggest players (including Alcatel, Microsoft, Qwest, 
and U S WEST) are boosting Cisco's influence on the networking 
industry.  In short, Cisco Systems is the worldwide leader in 
networking for the Internet.
 
Murphy is alive and well, this time in our favor.  It was just 1 
week ago we sent the Cisco Kid back to the playpen due to lack 
of performance.  It appeared that interest (indicated by volume) 
had waned in the issue.  CSCO really showed us its stuff, as 
it ran from its low of the day (and week) on Thursday from 
$69.75 to a new all-time high and close of $73.50 on Friday.  
Backing it up (and convincing us the move was for real) was 
huge volume of 26 mln shares.  That's a 44% increase over its 
ADV of 18 mln.  Looks like the funds are buying again.  While 
Cisco has a great story to tell in that it's the leader in 
providing equipment for development of the Internet backbone, 
we think it will run on momentum this week (though it doesn't 
hurt either that they acquired a new growth engine in the recent 
purchase of Cerent and Monterey Networks 2 weeks ago and their 
recent announcement of an equipment and patent exchange with 
IBM).  Confirm market direction before playing.
 
We're putting CSCO on our split candidate list.  The last 
announcements have come between $69 and $83.  We're there now 
and likely headed higher as earnings approach.  The announcement 
will likely come between now and earnings on November 9.  They 
currently have 5.4 bln shares authorized, which would allow them 
their usual 3:2 split.  However, this doesn't leave them with 
much stock currency for further acquisitions.  Thus in their pre-
proxy statement (no final proxy yet), one of the items on the 
agenda is to increase the outstanding shares to 10 bln., which 
would allow them either a 2:1 or two 3:2 splits without another 
vote.  A 2:1 is outside their normal M.O., thus a 3:2 is more 
likely.  Stay tuned.
 
***No November strikes available yet***
 
BUY CALL OCT-70*CYQ-JN OI=31821 at $5.38 SL=3.75
BUY CALL OCT-75 CYQ-JO OI=20961 at $2.38 SL=1.25
BUY CALL JAN-70 CYQ-AN OI=30057 at $9.63 SL=7.25
BUY CALL JAN-75 CYQ-AO OI=11802 at $6.75 SL=5.00
 
Picked on Sep 19 at       $73.50    P/E = 114
Change since picked        +8.44    52 week high=$73.56
Analysts Ratings     21-12-0-0-1    52 week low =$20.56
Last earnings 08/99    est= 0.20    actual= 0.21 surprise +5.0%
Next earnings 11-09    est= 0.22    versus= 0.16
Average daily volume = 18.19 mln 
Chart = http://quote.yahoo.com/q?s=CSCO&d=3m



*************** 
Biotechnology
***************
BGEN - Biogen Inc $86.44 (-2.56)(+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.

Biogen initially started out as a simple momentum play when 
it broke out on September 3rd (remember that explosive 
market?).  Since then BGEN has climbed to new heights 
reaching $90.44 at one point showing strength in the biotech 
sector even when there is scuttlebutt amongst investors.  
This leadership and powerful momentum are now also good 
components for a potentially strong earnings run.  Biogen 
confirmed it will report its earnings on October 7th, after 
the bell.  That only leaves a couple weeks for us to make our 
plays because it's never recommended to hold over an earnings' 
announcement.  It appears bottom support has established itself 
at about $84.  The range between this mark and the 10-dma at 
$86.38 is certainly a solid entry point into this play.  Look 
for a strong market to give this stock another boost.

This week was full of wonderful surprises.  Foremost Biogen 
announced on Wednesday that it will report $0.02 higher-than-
expected for the 3Q - First Call has a $0.36 EPS consensus 
for the company.  This news is a result of the increased sales 
from AVONEX, the best selling treatment for relapsing Multiple 
Sclerosis.  Sales figures are expected to report in at $160 mln 
for Q3.  Also that day, Elise Wang from PaineWebber reiterated 
a Buy rating and upped the target price for BGEN to $105 from 
$90.  Ms. Wang also adjusted the fiscal 2000 and 2001 estimates 
to $1.72 from $1.70 and $2.00 from $1.96, respectively.  On 
Thursday two more analyst came forward with reiterations.  
Raymond James reiterated their Buy rating and issued a target 
price of $100 and US Bancorp Piper Jaffrey reiterated a Buy 
rating but set their target price only at $90.  Then during 
the bullish market on Friday, analyst Todd R. Nelson at Dain 
Rauscher Wessels reiterated Buy rating.  He also issued a $112 
price target.   As the play moves forward in time it's evident 
that the conditions surrounding BGEN continue to become more 
and more favorable.  

Side note:  When BGEN reached $80 it once again became a split 
candidate.  Granted the stock just split 2:1 on June 25th and 
with only 220 mln shares authorized and 150 mln shares 
outstanding, there's not quite enough for another 2:1 stock 
split.  Nevertheless these circumstances should be brought to 
your attention.  The last Annual Stockholder's Meeting was on 
June 11th and thus far, there's no word on a special meeting. 

BUY CALL OCT-85 BGQ-JQ OI=1073 at $5.63 SL=4.00
BUY CALL OCT-90 BGV-JR OI= 539 at $3.13 SL=1.50
BUY CALL OCT-95 BGV-JS OI=  69 at $1.50 SL=0.75 low OI
BUY CALL JAN-90 BGV-AR OI=1191 at $8.00 SL=6.25
BUY CALL JAN-95 BGV-AS OI= 103 at $6.25 SL=4.50

Picked on Sep 9th at     $89.19    P/E = 66
Change since picked       -2.75    52 week high=$90.44
Analysts Ratings     9-12-5-0-0    52 week low =$25.18
Last earnings 07/99   est=-0.32    actual= 0.34 surprise +6.3%
Next earnings 10-07   est= 0.36    versus=-0.25
Average Daily Volume = 1.97 mln
Chart = http://quote.yahoo.com/q?s=BGEN&d=3m



*************** 
Internet
***************
AMZN - Amazon.com $63.81 (-2.69)(+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. 

Why are we keeping AMZN if it was down on Friday (for the third 
day in a row) while all the rest of the market was up?  Good 
question.  The short answer is that AMZN found good support on 2 
different occasions over the last week and again on Friday at 
$62.50 to $63.  Thus we consider the current level of $63.81 a 
buying opportunity.  With big economic fears temporarily out of 
the way, we look for this week to be generally up, which should 
carry AMZN with it.  For the long answer, we would add the new 
online auction consortium of Dell, MSFT, Lycos, etc., concocted 
to take on e-bay (who got clobbered on Friday), sparked a 
sympathetic reaction in AMZN, since they too are in the online 
auction business.  We think the sympathy thing is overdone 
though and expect upward movement as investors should soon 
realize e-bay has 5 times as many users as "E-PEC" (borrowed from 
OPEC), which is in formative stages only.  For the play, note 
that resistance is at $68, giving us a few dollars of upside 
potential.  We caution too that AMZN is a risky play but if you 
fancy your style a bit more conservative, wait for the breakout 
over $68 backed by strong volume before taking a position..

The really big news is contained above in the Dell, Microsoft, 
Lycos, Excite at Home, and a number of other on-line vendors are 
going to combine their resources to form an online auction 
alliance to take on e-bay.  From Associated Press, "The combined 
customer reach of the FairMarketPlace alliance could top 50 
million a month, dwarfing the 6 million who use industry pioneer 
eBay.  eBay, however, would still have greater volume, with about 
3.5 million individual items for sale, compared to 70,000 on 
FairMarketPlace sites."  This is only important in that AMZN has 
an on-line auction site too but will not participate in "E-PEC".

BUY CALL OCT-60*YZZ-JL OI=6053 at $ 7.88 SL=6.25
BUY CALL OCT 65 YZZ-JM OI=7174 at $ 5.00 SL=3.25
BUY CALL OCT-70 YQN-JN OI=9344 at $ 3.13 SL=1.50
BUY CALL JAN-65 YQN-AM OI=6279 at $11.13 SL=8.75
BUY CALL JAN-70 YQN-AN OI=4417 at $ 9.25 SL=7.00

Picked on Sep 12th at    $66.50    P/E = N/A
Change since picked       -2.69    52 week high=$110.62
Analysts Ratings     10-7-4-0-0    52 week low =$ 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 = 9.29 mln 
Chart = http://quote.yahoo.com/q?s=AMZN&d=3m

****

YHOO - Yahoo! $163.13 (-7.38)(-5.31)

Yahoo! Inc. is a global Internet media company that offers a 
branded network of comprehensive information, communication and 
shopping services to 80 million users worldwide.  As the first 
online navigational guide to the Web, YHOO is the leading guide 
in terms of traffic, advertising, household and business user 
reach and is one of the most recognized brands associated with 
the Internet.  The company's global Web network includes 19 
World properties.  Yahoo has offices in Europe, the Asia Pacific, 
South America, Canada and the United States and is headquartered 
in Santa Clara.  

Along with AMZN, YHOO is another online auction site did not 
join the consortium of MSFT, DELL, LCOS and XCIT (along with 
more than 100 other companies), designed to squash e-bay.  The 
market decided that if a company was not part of the solution, 
it was part of the problem, which kept a lid on YHOO all day 
Friday, while the rest of the NASDAQ mounted a 62-point gain.  
Fortunately, online auctions aren't responsible for a big portion 
of YHOO's revenue, which should serve to keep investors squarely 
focused on earnings (October 6 after the close, and the basis of 
this play), now just over 2 weeks away.  Historically over the 
last 4 quarters, YHOO has made nice earnings runs prior to the 
announcement, then surprised to the upside.  Of course, around 
that time, the price takes a nosedive anyway, which is why we 
don't recommend holding over earnings.  In this case, you may 
even want to be out by Friday, October 1, since news from the 
FOMC meeting on October 5, the day before YHOO announces 
earnings, may spark some selling jitters into this play before 
the actual earnings announcement.  This is a true case of "buy 
the rumor, sell the news".  If you've been following the play, 
entry points in the $160 range and below have been plentiful.  
Market willing, we're looking for the run to begin this week.  
Pick your entry carefully, hopefully on intra-day weakness and 
confirm market direction.

Since this is an earnings play, news generally won't affect the 
sentiment as much during this earnings run period.  However, 
we'd be remiss if we didn't point out that the online auction 
community formation known as FairMarketPlace will affect not 
just e-bay but others in the online auction business, including 
YHOO, though we think the short-term negativism is overdone.

***No November strikes available yet***

BUY CALL OCT-160*YHV-JL OI=3146 at $13.88 SL=11.00
BUY CALL OCT-165 YHV-JM OI=1329 at $11.75 SL= 9.25
BUY CALL OCT-170 YHV-JN OI=4316 at $ 9.38 SL= 7.00

Picked on Sep 14th at   $165.19    P/E = 392
Change since picked       -2.06    52 week high=$244.00
Analysts Ratings     9-17-5-0-0    52 week low =$ 40.81
Last earnings 07/99   est= 0.08    actual= 0.09
Next earnings 10-06   est= 0.09    versus= 0.05
Average daily volume = 9.07 mln
Chart = http://quote.yahoo.com/q?s=YHOO&d=3m

****

DCLK - Doubleclick Inc, $116.25 (+8.50)

Doubleclick provides comprehensive global Internet advertising 
solution.  With headquarters in New York, the online firm 
uses its DART technology that measures Web traffic and ad 
effectiveness and in turn provides data to both the Web 
publishers and the advertiser.  With over 1300 sites in its 
network Doubleclick delivers ads in such search engines as 
AltaVista, Egghead.com and U.S. News Online.  Two of its
bigger advertisers include AT&T and IBM.  Doubleclick has 
agreements to buy consumer-purchasing data information provider
Abacus Direct and software firm NetGravity.  DCLK competes
primarily with America Online, 24/7 Media and Flycast Comm.

Shares of DLCK are on the move again.  As all investors should 
know stocks in the Internet industry can be extremely volatile.  
DCLK is no different so check your risk profile at the door 
before entering.  Monday shares of the Internet advertising 
company traded at a low of $104 and a high of $114.75.  Those 
levels held throughout the week until Friday, when the interest, 
the volume and the price of DCLK began to increase.  Shares of
DCLK climbed $7.63 Friday on volume of 4.1 mln shares.  With 
the net stocks getting soaked for most of the week, DCLK seemed
to find its way out of the doom and gloom surrounding Wall 
Street for most of the week when analyst Perry Boyle at Thomas
Weisel Partners reiterated his Buy rating.  After meeting with
DCLK's management Boyle came away with lots of warm fuzzies and 
confidence in his near term earnings estimates.  He expects 
DCLK to beat his estimates for third quarter gross revenues by
$50.6 million or approximately 9%.  DoubleClick announced Monday
it was granted a patent for its method of delivering advertising
over the Internet.  The technology called "DART" delivers ads
over in Internet through a third party server to one or a 
network of Web sites.  We are looking for DCLK to continue its
recent moves higher.  Again we bring up the word VOLATILE! 
Should we see a pullback, the $112-$113 area could provide 
support, followed by the $108-110 levels.  This is not a play 
everyone should consider.  Keep your stops close and hang on.

No other news at this time.

BUY CALL OCT-110*TDU-JB OI= 807 at $13.13 SL=$10.50
BUY CALL OCT-115 TDU-JC OI= 558 at $10.63 SL=$ 8.00
BUY CALL OCT-120 TDU-JD OI=1145 at $ 8.25 SL=$ 6.25
BUY CALL OCT-125 TDU-JE OI= 446 at $ 6.50 SL=$ 4.75 High Risk!

Picked on Sep 18th at   $116.25    P/E = N/A
Change since picked       +0.00    52 week high=$176.00
Analysts' ratings     8-6-0-0-0    52 week low =$  6.75
Last earnings 07/99  est= -0.13    actual= -0.13 surprise=0% 
Next earnings 10-08  est= -0.13    versus= -0.14 
Average daily volume = 2.83 mln
Chart = http://quote.yahoo.com/q?s=DCLK&d=3m

****

CKFR - CheckFree Holdings Corp. $41.63 (+2.75)

CheckFree Holdings subsidiaries offer electronic data 
interchange systems that allow customers to make routine 
payments and collections, do paper-based financial transactions 
electronically and make secure purchases on the Internet.  
Serving More than 2.5 million consumers and hundreds of financial 
institutions, CheckFree also provides electronic banking services 
(balance checking, stop payments), electronic bill payments, 
collections and other types of electronic commerce.  Other 
subsidiaries provide investment services and software for 
financial applications.  Yahoo!'s Bill Pay service operates via 
an agreement with CheckFree.  Intuit owns nearly 20% of CheckFree.

CheckFree announced its third deal with an Internet company 
last week when it announced the deal with ExciteAtHome.  It 
already has deals with Internet media network Yahoo! and 
Quicken.com of Intuit Inc. to have bills presented and paid 
through their respective Web sites.  CheckFree's CEO, Pete 
Kight, said in a recent interview that the company was in 
talks with all major Internet companies but stopped short of 
acknowledging analyst assertions that it had approached America 
Online Inc.  This technology will enable consumers to sign up 
for and immediately begin using electronic billing and payment 
services.  This adds to CheckFree's current arsenal of 100 
billers and 3 million payees.  On the news, shares of CheckFree 
added on 2.75 points to end the week comfortably above its 
10-dma at $38.  The shares consolidated nicely in the earlier 
part of September before resuming the current uptrend.  Look for 
volume and momentum to pick-up under current market conditions.  
The sector has seemed to have hit a short-term bottom but market 
direction and sector momentum must be confirmed before entering 
a play on Monday.  Look for an entry point above Friday's intra-
day high of $42.13 backed by strong volume.  If profit-takers 
step up to the plate this week look for some support and a 
bounce at the 38-39 level.

There were a few other news articles this week of alliances 
and products but none that would really move the stock so 
we have left them out.  If anything of importance comes out 
we will be sure to let you know.

BUY CALL OCT-35 FCQ-JG OI=195 at $7.75 SL=6.00
BUY CALL OCT-40*FCQ-JH OI=466 at $4.38 SL=2.75
BUY CALL NOV-35 FCQ-KG OI=408 at $8.88 SL=6.75
BUY CALL NOV-40 FCQ-KH OI=477 at $5.75 SL=4.25

Picked on Sep 19th at    $41.63    P/E = 221
Change since picked       +0.00    52week high=$69.13
Analysts Ratings      6-5-2-0-0    52week low =$ 5.75
Last earnings 07/99  est=  0.05    actual=  0.05
Next earnings 10/26  est= -0.07    versus= -0.05
Average daily volume = 1.55 mln
Chart = http://quote.yahoo.com/q?s=CKFR&d=3m

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

NT - Nortel Networks Corp. $49.75 (+1.44)(+1.88)

Nortel is a one stop answer shop for communication companies.
Offering products to customers in wireless, carrier, IP and
telephony networking, NT is unique and the first to offer
network package solutions of this kind.  Their product line 
allows them to bring together network solutions for public and
private carriers, ISP's, PCS and cellular companies.  NT has
expanded with manufacturing facilities worldwide.  Revenues grew
26% to $4.5 billion in the first quarter of this year.  This
continues a revenue growth trend over the last three years.  

NT is a technical play.  It broke through it's prior resistance 
of $44 on Sep 7th and has since powered ahead to a new 52-week 
high of $50 on Friday, forming a new trend.  Even more impressive 
is it's recent break through ability, turning positive quite 
convincingly on the MACD and Stochastics.  This is pointing to 
a sustained rally in the stock.  Remember that bulls demonstrate 
convincing strength to penetrate previous levels on momentum and 
volume.  NT fits this profile.  Stocks breaking new 52-week 
highs are considered leaders in the market.  If investors are 
convinced to follow, then a general market rally occurs.  Given 
the technical bounce last Friday, this could be the week the 
traders follow.  Again, be cautious of a historical September 
sell off.  Protect your positions with stops and confirm positive 
direction in both the stock and market before playing.

AT&T and British Telecom confirmed their confidence in NT Friday
stating that it would be influential in bridging the technology
gap that now separates the worlds communications.  Continuing
their expansion plans, NT acquired $210 million to build a 
network for data and voice, linking 50 cities.  The Motorola and 
General Instrument merger, spawned rumors that NT may also be 
looking for a partner to expand in the communication equipment 
industry, along with the likes of Lucent and Scientific-Atlanta.  
We'll wait and see.

BUY CALL OCT-45 NT-JI OI=2372 at $5.50 SL=3.75
BUY CALL OCT-50*NT-JJ OI=1490 at $2.13 SL=1.00
BUY CALL DEC-45 NT-LI OI= 639 at $7.50 SL=5.75
BUY CALL DEC-50 NT-LJ OI= 932 at $4.38 SL=2.50

Picked on Sep 19th at    $49.75    P/E = N/A
Change since picked       +0.00    52 week high=$50.00
Analysts Ratings     9-16-2-0-0    52 week low =$13.38
Last earnings 06/99   est= 0.25    actual= 0.28
Next earnings 10-26   est= 0.26    versus= 0.21
Average daily volume = 2.14 mln
Chart = http://quote.yahoo.com/q?s=NT&d=3m

****

NXTL - Nextel Communications $75.19 (+3.19)

Nextel provides customers with solutions to many wireless 
nightmares, providing fully digital service world wide.  By 
offering items such as no roaming charges, flat rate long 
distance, second rounding, superb quality and service, NXTL 
has increased their customer base to 3.5 million subscribers.  
Revenues have hit $1.5 billion for the first half of this year.  
That's a 95% increase! Although still not in the black, with 
a net loss of $800 million, NXTL is on the right path.  With 
wireless communications continuing to grow stronger and 
customers looking for more cost effective solutions.  NXTL is
positioned to capture the two way digital market.  

NXTL is a play because of new price targets and it's new trend.
Because of NXTL's impressive revenue growth, analysts have 
raised their price target to $82 by year end.  This plus 
continued growth projections propelled the stock price higher 
to a new 52-week high, continuing a bullish 45 degree trend 
started on Sept. 3rd.  When investors can find confirmed 45 
degree lines in trends and indicators, it's good news and signs
that the rally has momentum and potential.  NXTL also turned 
bullish with 45 degree lines on the MACD and Stochastic
indicators.  A sign that now may be a good time to participate 
in a further bull run.  We think so, on a continued tech rally
through next week.  NXTL is also scheduled to announce earnings
on Oct. 14th.  Although a bit early to expect an earnings run, 
considering the companies positive outlook, it can only help. 
Confirm the rally in both stock and market before playing.  
Friday's gain was not significant so watch for a slow down.  
Don't get caught in a trap.  September's famous for bear traps.

As mentioned, Tim analyst Tim O'Neil raised his year end price 
target to $82 for NXTL.  NXTL had very positive comments on 
Monday regarding continued growth in customer base.  This should
bode well for revenues and earnings.  NXTL also signed a three
year contract with LHS group, to continue it's customer service
and billing program.

BUY CALL OCT-70 FQC-JN*OI=1255 at $7.63 SL=5.75
BUY CALL OCT-75 FQC-JO OI= 958 at $4.88 SL=2.75
BUY CALL OCT-80 FQC-JP OI= 392 at $2.69 SL=1.25
BUY CALL NOV-75 FQC-KO OI= 463 at $7.00 SL=5.25
BUY CALL NOV-80 FQC-KP OI=  79 at $5.13 SL=3.25 low OI

Picked on Sep 19th at    $75.19    P/E = N/A
Change since picked       +0.00    52 week high=$76.00
Analysts Ratings     10-9-3-0-0    52 week low =$15.38
Last earnings 07/99  est= -1.35    actual= -1.27
Next earnings 10-14  est= -1.09    versus= -1.56
Average daily volume = 4.98 mln
Chart = http://quote.yahoo.com/q?s=NXTL&d=3m

*************
Miscellaneous
*************

DISH - EchoStar Communications $97.00 (+3.00)(+8.13)(+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.

The rocket launches!  Well, almost.  Though the new satellite, 
once imperiled by hurricane Floyd, is safe on the ground the 
launch has been rescheduled for Wednesday, September 22 at 1:08 
a.m.  That DISH's new bird isn't yet flying didn't keep investors 
from gradually bidding up the price on Friday.  Because the total 
Friday volume was low, we suspect there was a "buy on close" 
order of pretty good size, which served to spike the price by $2 
in the final 15 minutes for a total gain of $6 on the day.  With 
that much profit in one day, don't be surprised to see some 
profit-taking following what might be a good-looking amateur 
hour.  After setting another all-time high on Friday of $97.25, 
and closing within $0.25 of its all-time high, any weakness 
should be considered a buying opportunity.  DISH has good support 
at $90 and no upper resistance right now if it wants to move up 
right from the start.  If there is a pullback, resistance might 
be encountered at $97.25.  Be on the lookout Tuesday for the 
"sell on fact" crowd following the launch of the new satellite.  
Technically, this play is still strongly in the positive part 
of the graph.  Pick your entry carefully and sell too soon.  
DISH is still a volatile play with lots of inherent risk.

The new satellite launch will create the nation's first TV 
company offering 500 channels from which to choose.

BUY CALL OCT- 90 UAB-JR OI=354 at $11.88 SL=$ 9.50 Higher Delta
BUY CALL OCT- 95*UAB-JS OI=200 at $ 9.38 SL=$ 7.00 
BUY CALL OCT-100 UAB-JT OI=116 at $ 6.63 SL=$ 4.75 
BUY CALL DEC- 95 UAB-LS OI=  5 at $15.50 SL=$12.50 low OI
BUY CALL DEC-100 UAB-LT OI= 61 at $13.75 SL=$11.00

Picked on Sep 4th at   $85.88    P/E = N/A 
Change since picked    +11.13    52 week high=$97.25 
Analysts Ratings   10-6-0-0-0    52 week low =$ 9.75 
Last earnings 07/99 est=-0.93    actual=-0.80 surprise +13.98% 
Next earnings 11-10 est=-0.83    versus=-0.68 
Average daily volume =  759 K 
Chart = http://quote.yahoo.com/q?s=DISH&d=3m

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

*****

COST - Costco Wholesale Corporation $67.50 (-2.38)(-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.  

It took a broad market rally on Friday to tarnish our almost 
perfect week.  COST was trying to reach five straight days in 
negative territory only to be foiled by anxious investors 
rushing back into the market after Thursday's massive sell-off.  
What needs to be decided is whether Costco's gain on Friday 
was a head fake or the beginning of the end for our play.  
Most likely it was a head fake brought about by the broader 
markets.  Despite this slight setback the overall picture 
remains the same, retail stocks remain in poor standings with 
investors and the prognosis for any changes in the near-term 
are bleak.  COST is trading below its 50-dma and 200-dma 
indicating the prolonged weakness that unfortunately investors 
have had to endure.  Whether their endurance continues to hold 
remains to be seen.  For those individuals placing new trades, 
watch for opportunities to buy your puts on the spikes.  As 
seen on Friday, broader market movements can influence the 
stock so please use caution with this trade.       

BUY PUT OCT-70*PRQ-VN OI=1061 at $4.88 SL=3.00
BUY PUT OCT-65 PRQ-VM OI= 510 at $2.50 SL=1.25	

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

****

GPS - Gap Stores $33.63 (-2.06)(-3.19)

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.

Now that support at $35 is out of the way, GPS has looked weak 
and continues its descent.  Even the market rally on Friday 
didn't do much to save the stock.  Hopefully you weren't scared 
out of the play by Friday's morning rally in Gap which turned 
out to be just that.  A morning rally followed by GPS rolling 
over.  GPS traditionally has support and resistance at the 
psychological numbers like 30, 35, 40, etc.  Now that we are 
past $35, we don't expect the decline to stop until $30, barring 
any unforeseen news.  The rumors are that Gap stores are in the 
process of offering markdowns and sales to try and beat some 
very tough comparable sales numbers from last year.  Maybe 
there is a strong enough market for vests and cords this year 
but odds are they will come up short.  Needless to say, we 
prefer riding the momentum which is still signaling for a 
lower stock price.  Intraday bounces like the one of Friday 
should be considered for an entry point and place stops just 
in case investors come flocking back to GPS based on its 
valuation and previous incredible performances.

BUY PUT OCT-40 GPS-VH OI= 403 at $6.88 SL=5.25
BUT PUT OCT-35*GPS-VG OI=3084 at $2.94 SL=1.50 huge volume Fri 

Average Daily Volume = 2.25 mln
Chart = http://quote.yahoo.com/q?s=GPS&d=3m



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


The Option Investor Newsletter             9-19-99
Sunday                5  of  7


Puts Continued
**************

LLY - Eli Lilly and Company $67.00 (-5.38)

Eli Lilly is a major U.S. drug company that discovers, develops, 
manufacturers and sells products in the Life Sciences industry.  
Some of Lilly's products include Prozac, to treat depression, 
Zyprexa, used in treatment of schizophrenia, Permax, a treatment 
for Parkinsons disease and Gemzar used for treatment of a 
pancreatic cancer.  Also the company produces a wide range of 
antibiotics, growth hormones, cardiovascular therapy medications, 
anti-ulcer agents, vitamins and animal health products.  The 
company also has subsidiaries through which it provides health 
care management services in the U.S.

The weakness for Lilly continues despite a strong market on 
Friday.  The entire sector seems to be stuck in the mud and 
not many drug stocks participated in rebound.  LLY is actually 
suffering more than most stocks as bad news continues to trickle 
in.  On Friday, LLY got their second downgrade of the week, this 
time from Gruntal & Co.  They downgraded LLY from Outperform 
to Market Perform.  Gruntal said they expect the entire sector 
to be weak while discussions of healthcare plans intensify this 
fall.  You may recall this is the second downgrade this week 
as Banc of America Securities nailed LLY with a downgrade on 
Tuesday.  This reinforces our play and we could easily see 
$65 before hitting support.  From there it may bounce slightly 
but it doesn't hit major support until $61, which is what we 
are subconsciously targeting for this play (but, of course, we 
will let the momentum dictate).  You may have noticed a slowing 
in the decline since Thursday afternoon despite the downgrade.  
This is because we have now hit an oversold condition on the 
Bollinger Bands.  This has brought some investors back to the 
buy side.  We are less concerned with this indicator on Lilly 
though since it did this in July and still dropped another $5 
after hitting this same indication.  In fact, it was at this 
same price during the decline in July.  Look for entry points 
on any sector or stock rally that is not accompanied by news 
or volume.

BUY PUT OCT-70*LLY-VN OI=1886 at $4.63 SL=2.75
BUY PUT OCT-65 LLY-VM OI=2628 at $1.88 SL=1.00 

Average Daily Volume = 2.84 mln
Chart = http://quote.yahoo.com/q?s=LLY&d=3m

****

JNJ - Johnson and Johnson $96.06 (-3.44)

J&J is the world's largest and most diversified maker of health 
care products.  They are engaged in the manufacturing and sale 
of their products through 3 distinct divisions.  They are 
pharmaceuticals, consumer products and professional products.  
The pharmaceuticals are in the allergy, antibacterial, pain 
management contraceptive and dermatology.  The consumer products 
include Tylenol and Motrin analgesics, Reach toothbrushes and 
Band-Aid bandages.  The professional division includes ACUVUE 
contact lenses, surgical instruments, joint replacements which 
assist physicians, nurses, therapists, hospitals and clinics.

We are still curious about what's going on in the drug sector.
That curiosity extends to JNJ as well.  We have takeover rumors 
and approvals of drugs and technology coming from the FDA and we
have stocks that are going south.  After peaking in late August
at $105.88, shares of JNJ have declined in an orderly fashion 
but declined none-the-less.  In recent days we have seen JNJ 
receive marketing clearance from the FDA for its Mammotome Hand 
Held device to diagnose breast abnormalities, which is an 
alternative to an open surgical biopsy.  They also received 
approval to market its new CrossFlex LC coronary stent this 
past Wednesday.  Friday Business Week reported that Chiron Corp 
(CHIR) could be a takeover target of Novartis AG and Johnson & 
Johnson.  JNJ currently has a joint venture in operation with 
Chiron.  The negative news is the industry seems to suggest an 
industry wide slow down, in certain segments.  One example is 
shares of Boston Scientific Corp. which tumbled nearly 20% on 
Wednesday after they warned of a third quarter sales shortfall.  
This is probably an example of being guilty by association rather 
than a sign of serious problems at JNJ.  JNJ bounced off its 
100-dma Thursday but at this point we really don't see any signs 
of a bottom.  Considering the recent positive events surrounding 
JNJ, shares of the drug company have still declined.  A bounce 
up to the 10-dma in the $99 area is possible but without some 
serious new buying entering the market place, we expect JNJ to 
continue its slide.  Consider your risk profile, before entering
 a new play on JNJ and set your stops accordingly.  

BUY PUT OCT-100*JNJ-VT OI= 946 at $5.25 SL=3.50
BUY PUT OCT- 95 JNJ-VS OI=1535 at $2.63 SL=1.50

Average Daily Volume = 2.04 mln
Chart = http://quote.yahoo.com/q?s=JNJ&d=3m

****

ELNK - EarthLink Inc $40.13 (-4.88)

Earthlink provides Internet access and other related 
services to 1+ mln subscribers in the US and Canada.  The 
company provides Internet access through a network of leased 
high-speed dedicated data lines and over 1,700 dial-up 
access sites.  Sprint owns 29.5% stake in EarthLink and the 
ISP services are co-branded as EarthLink Sprint Internet.  
They stand behind America Online, Microsoft Network and 
AT&T WorldNet and are in competition with MindSpring for 
the #4 spot among US ISPs.

We can talk about the rough week in the market and the 
volatility of Internet shares or even eBay's downward spiral 
that of course didn't help the ISPs but let's go right to the 
root of things.  Since incredible highs last Aprils when ELNK 
hit $99.37, its share price has dropped about 60% in about 5 
months.  You can see that from taking a look at a chart.  Well 
after Elliot Prince and Marlowe Burke, analysts from Wit Captial, 
examined a few of ISP companies including EarthLink (ELNK), 
OneMain.com (ONEM) and Prodigy (PRGY), they believe they know 
why.  Now obviously they took into consideration the interest 
rate fears and other general economic factors but specifically 
the risk of increasing competition is causing depressed 
valuations.  This risk factor is growing and especially noted 
is the companies who offer free access in exchange for being 
able to advertise.  Therefore, they concluded that from an 
investment point of view "until the impact of industry risks 
is clearer" they don't anticipate any sustained rally.  Now for 
our put play.  Losses have been steady all month and technically 
ELNK is perched on its near-term bottom support.  Of course, 
it's a safer bet to wait for it to slip under this level and 
move closer to the ultimate 52-week low at $29.50 but this is 
still a good entry point for the more HIGH RISK players who 
are looking for a higher reward. 

BUY PUT OCT-45 QKL-VI OI=449 at $7.00 SL=5.25
BUY PUT OCT-40*QKL-VH OI=328 at $3.63 SL=2.00
BUY PUT OCT-35 QKL-VG OI=363 at $1.63 SL=0.75

Average Daily Volume = 1.31 mln
Chart = http://quote.yahoo.com/q?s=ELNK&d=3m

****

WLP - Wellpoint Health $68.75 (-8.00)

Wellpoint Health Networks serves about 32 million individuals 
in the U.S. through HMOs, PPOs, and special networks such as 
dental, vision and mental health plans.  The company operates 
as Blue Cross in California and UNICARE through the rest of 
the nation.  Wellpoint also sells life insurance and third 
party administration to self-employed businesses.  In 1997, 
they acquired the group health and related life business of
John Hancock Mutual. 

It's back and were playing it again.  We couldn't help it, it 
was right in front on us and we decided to grab it.  The stock 
I am referring to is Wellpoint Health Networks.  The reason why 
we decided reestablish the stock on our put list is obvious to 
anyone that has been following long-term health care stocks.  
The sector has been beat to a pulp and one of the front runners 
is WLP.  Even the monster rally on Friday was not enough to 
convince its investors to take a chance.  The stock closed near 
its low for the day, which has become the norm for the past 
week.  If you look at a five-day chart, you notice a nice 
sloping pattern ending at Friday's close.  This is just a 
morsel to what actually happened.  We expected a bounce on 
Thursday at $70 (historically speaking has been its main 
support) and it did.  However, after rising only two points 
the stock rolled and never looked back, breaking the long 
lasting support of $70.  Another interesting fact is the stock 
does not show any real support until $60 so there is plenty of 
room to fall.  When placing new trades on the stock, watch for 
slight pullbacks however, if the indication points south, go 
with the flow.  Even though we do not expect a turnaround, we 
always recommend using the stop loss orders to be safe.  Just 
to let you know and contrary to our feelings on Friday, ABN AMRO 
announced it was making WLP its top stock pick of the health 
management organization sector, based on valuation.  They also 
reiterated a Buy rating and price target of $98.  In the long-
term this may be true however near-term is highly unlikely.

BUY PUT OCT-70*WLP-VN OI=56 at $3.88 SL=2.00 low OI
BUY PUT OCT-65 WLP-VM OI=78 at $1.56 SL=0.75 low OI

Average Daily Volume = 322 K
Chart = http://quote.yahoo.com/q?s=WLP&d=3m 


************************
SPREADS/STRADDLES/COMBOS
************************

Inflation Fears Swept Away By Hurricane Floyd...

Friday, September 17

The market rallied Friday on strength in technology stocks and a
rise in the almighty dollar. The Dow rose 66 points to close at
10,803 while the Nasdaq composite index moved 62 points higher
to 2,869. The S&P 500 index closed up 16 points at 1,335. In the
broader market, 1,687 advancers beat 1,216 decliners on strong
volume of 842.6 million shares on the NYSE. The 30-year treasury
bond rose 12/32, pushing its yield down to 6.05%.

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

IDT Corporation     IDTC  DEC17C/DEC25C	 $3.38  debit  bull-call
Network Associates  NETA	DEC12C/DEC17C	 $3.62 	debit  bull-call

Both of our new positions were difficult plays to open at the
suggested entry price. There was plenty of movement for those
who leg-into spreads but neither of the plays were observed at
the debit targets (based on a simultaneous order) at any point
during the day. The best prices were probably available early
in the session when the issues had greater potential for large
movements. Our estimated entries are based on quotes obtained
during the first hour of trading.

Portfolio plays:

September has been another great month for the spreads/combos
portfolio and our star performer this week was the short-term
speculation play on Sprint (FON). The position that we opened
on Wednesday at $2.38 debit was easily closed Friday morning
for $3.25 credit, a three-day profit of $0.88. That's not much
in the world of (directional) option trading but it's certainly
a favorable return based on the small amount of risk involved
in the position. Our other communications issues continued to
rebound today in the broad market rally and Bell Atlantic (BEL)
finished right where it should have. Those of you who took the
early morning (safe) exit should have achieved at least $1.62
credit for the move to October ($65) options.

Our calendar spreads on 3Com Corp (COMS), Peoplesoft (PSFT),
and Occidental Petroleum (OXY) all consolidated to the sold
(short) positions towards the end of the week, demonstrating
the need for downside protection. We also had a few issues that
pulled back too far, leaving our overall cost basis well above
the current value. Those include: General Dynamics (GD), The
Limited (LTD), Motorola (MOT) and Philip Morris (MO). The one
stock that we may have missed the chance to recover on is Sun
Micro (SUNW) and it's probably worse now that they have set a
2-for-1 stock split (payable on 12/7/99). We adjusted a few of
the long-term plays prematurely; Polaroid (PRD) was probably
the worst, but we also made some good moves with stocks like
Cabletron (CS) and Computer Associates (CA), provided they
remain in their new trading ranges.

Our debit and credit portfolios were outstanding but most of
that performance can probably be attributed to good luck as
the market was quite unpredictable this month. The flagging
health sector produced three winning (bearish) plays in IMS
Health (RX) and Liposome (LIPO) while the interest rate scare
toppled the great financial giant J.P. Morgan (JPM). Our deep
ITM debit spread on that issue (SEP140P/130P) was one of the
more rewarding (personally) plays of the month as it took a
great deal of stamina to watch it repeatedly test resistance
at $135. Our combination straddle on Doubleclick (DCLK) has
performed better than expected, moving near the maximum profit
range a month before expiration and two of the recent "readers
request" positions, Intuit (INTU) and Conexant (CNXT) were also
closed early for excellent short-term returns.

As you know from last Sunday's narrative, we recently decided to
close the majority of our older positions; including those that
are significantly profitable (or beyond reasonable salvation) in
order to reduce the workload in tracking the portfolio. We hope
this move will allow us to focus more on individual plays and the
techniques that are used to evaluate each play for probability of
profit, along with the common entry/exit strategies and methods
of adjustment. The end result should be a much better product for
the majority of our readership.

Good Luck!

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


*************
STRANGLES
*************

This week, we are offering a small assortment of neutral credit
strangles to compliment the long list of debit straddles. These
plays are considered highly speculative and are generally used
by large portfolio traders. In this case, I tried to find some
issues that would be favorable to own if they broke through the
downside support in their current trading range. The premium for
the sold options will reduce the cost basis for the purchase of
the underlying stock, if you should choose to own it.

Credit Strangle: A credit strangle is an options strategy which
involves the sale of a call and a put that are both slightly out
of the money and have the same expiration date. This strategy is
similar to a credit straddle but utilizes OTM positions to reduce
risk. This strategy is intended to take advantage of overpriced
options in range bound issues. The upside potential is limited to
the two premiums received. The downside risk is unlimited unless
STOPS are used to reduce potential losses. The idea is that the
stock will trade between the sold strike prices. When initiating
this strategy, it is important to calculate the margin required
and the maximum gain in order to determine if the risk/reward is
suitable for you portfolio.

These plays are based on the current price or trading range of
the underlying issue and the recent technical history or trend.
The probability of profit from these positions is higher than
other plays in the same strategy but current news and market
sentiment will have an effect on the underlying issue. Please
review each play individually and make your own decision about
the future outcome of the stock price.

****

MER - Merrill Lynch  $71.94

Merrill Lynch is a holding company that, through its subsidiaries
& affiliates, provides investment, financing, insurance & related
services. Such services include underwriting, trading & brokering,
investment banking and corporate finance, investment advisories,
trading of foreign exchange, commodities & derivatives, banking,
lending, and insurance sales.

PLAY (aggressive - neutral/credit strangle):

SELL CALL OCT-80 MER-JP OI=7487 B=$1.31
SELL PUT  OCT-65 MER-VM OI=4469 B=$1.37
INITIAL NET CREDIT TARGET=$2.88 ROI(max)=25%
UPSIDE B/E=$82.88  DOWNSIDE B/E=$62.12

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

****

JNJ - Johnson & Johnson  $96.06

Johnson & Johnson is engaged in the manufacture and sale of a
broad range of products in the health care field. Johnson &
Johnson's business is divided into three segments: Consumer,
Pharmaceutical & Professional. The Consumer segment's principal
products are personal care and hygienic products while the
Pharmaceutical segment's are in the allergy, antibacterial,
antifungal, contraceptive, dermatology, gastrointestinal, and
pain management fields. The Professional segment's products are
used by physicians, nurses, therapists, hospitals, diagnostic
laboratories and clinics.

PLAY (aggressive - neutral/credit strangle):

SELL CALL OCT-100 JNJ-JT OI=5077 B=$1.43
SELL PUT  OCT-90  JNJ-VR OI=1327 B=$1.00
INITIAL NET CREDIT TARGET=$2.50  ROI(max)=20%
UPSIDE B/E=$102.50  DOWNSIDE B/E=$87.50

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

****

HWP - Hewlett-Packard  $100.81

Hewlett-Packard & subsidiaries designs, manufactures & services
equipment for measurement, computation and communications. They
offer a variety of systems and standalone products; computer
systems, printers, calculators, electronic test equipment,
medical electronic equipment, & instrumentation for chemical
analysis. Services such as systems integration and outsourcing
management, consulting, education, product financing & rentals,
as well as customer support & maintenance, are also an integral
part of the company's offerings.

PLAY (aggressive - neutral/credit strangle):

SELL CALL OCT-115 HWP-JC OI=1440 B=$1.00
SELL PUT  OCT-90  HWP-VR OI=724  B=$1.31
INITIAL NET CREDIT TARGET=$2.50 ROI(max)=20%
UPSIDE B/E=$117.50  DOWNSIDE B/E=$87.50

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


**********
DISCLAIMER

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


The Option Investor Newsletter            9-19-99
Sunday                6  of  7

************************
SPREADS/STRADDLES/COMBOS - continued
************************

*********
STRADDLES
*********

It was a good week for straddles as volatility ruled the market.
The event-driven play on Liposome (LIPO) that we mentioned in
Tuesday's narrative surpassed all expectations. LIPO stock lost
nearly half its value after an advisory panel to the FDA voted
not to recommend the company's breast-cancer drug, Evacet. The
stock price plummeted over $8 on volume of 9 million shares, 12
times the average daily volume. The ATM straddle traded at $6.50
on Thursday afternoon and opened at $11.25 Friday morning. A big
move was forecast but I don't think anyone expected that outcome.

Thursday's new plays (positions/prices):

The Williams Cos.   WMB   JAN40C/JAN40P  $8.12  debit
Ames Dept. Stores   AMES  JAN30C/JAN30P  $8.88  debit

We actually opened only one new position on Friday but there were
a few occasions where the quoted debit on the AMES straddle was
within $0.12 of the listed target. We will record it at the best
observed price and follow its progress for educational purposes
only. The WMB position traded at our suggested entry during the
session and it appears that at least one reader opened the play
for a debit of $8.00.

Strategies..

As you know, I have recently assumed the duties previously held
by Tom Gentile, lead instructor for the OIN/Optionetics seminar
series and well-known professional trader, while he attends to
duties as the father of a newborn child. I must say that I was
a tried and tested McMillan follower until Tom came along with
his unique style of trading. I truly read with interest his new
ideas on how to profit from straddles and I think its important
to understand the differences between the two approaches. Tom's
method involves issues that are consolidating. These shrinking
markets act as springboards to new highs and lows. He also looks
for cheap options (a must for almost any successful straddle),
and the final requirement is impending news or events that might
alter the character of an issue. These three criteria will help
you increase profits, while limiting risk on straddle positions.

Tom did a great job educating OIN readers in this technique and
if you would like to learn more about delta-neutral trading, as
well as many other option strategies, then join him this fall in
another round of OptionInvestor/Optionetics seminars. There will
be shorter-term segments including trading the earnings reports,
stock splits, and momentum plays. Many of these techniques will
be straight from Jim's personal treasure chest of strategies.

Find out more at:

http://www.OptionInvestor.com/seminar/
******************************************************************
                          - NEW PLAYS -

Here are some new positions, based on the Optionetics method for
straddles; Consolidating markets, inexpensive options and the
probability of upcoming news or events. As with all candidates,
review each play carefully and make your own decision about the
future outcome of the underlying issue.

Good Luck!
******************************************************************
UNH - United Healthcare  $60.93

United HealthCare is a national leader offering health care
coverage and related services to help people achieve improved
health and well-being through all stages of life. The company
operates in all 50 states, the District of Columbia, Puerto
Rico and internationally. The Company also offers specialized
health care management services and products such as behavioral
health services, workers compensation and disability services,
utilization review services, specialized provider networks,
employee assistance programs, and knowledge and information
services.

Rumors of reorganization and layoffs, mergers, buyouts & other
significant issues including lawsuits. With all that going on
in the background, its amazing how the recent technical trend
is wedging to the $60 range.

PLAY (conservative - neutral/debit straddle):

BUY  CALL DEC-60 UNH-LL OI=76 A=$6.38
BUY  PUT  DEC-60 UNH-XL OI=13 A=$4.62
INITIAL NET DEBIT TARGET=$10.75 (or better)

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

****

EGRP - E*trade Group  $22.43

E*trade Group is a leading provider of cost-effective, secure
online discount brokerage servcies. It offers automated order
placement, portfolio tracking and related market information,
news and other information services 24 hours a day, seven days
a week by means of the Internet, online service providers
CompuServe and America Online, direct modem access, touch-tone
telephone and, to a lesser extent, interactive television.

The big news is that E*TRADE is starting after-hours trading of
stocks from both the New York Stock Exchange and the Nasdaq. Now
investors will be able to trade until 6:30 p.m. EST, much longer
than other after-hours online trading services. E*Trade is also
offering a new bulk commission program that will allow investors
to pay as little as $4.95 per trade. Lets see how the revenues
fare this quarter.

PLAY (conservative - neutral/debit straddle):

BUY  CALL JAN-22.50 QGR-AX OI=377 A=$4.75
BUY  PUT  JAN-22.50 QGR-MX OI=665 A=$4.62
INITIAL NET DEBIT TARGET=$9.25 (or better)

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

****

GM - General Motors  $65.06

The major portion of General Motors' operations is derived from
the automotive products industry segment. GM also has financing
and insurance products along with services in other industry
segments. Their automotive products consists of the design,
manufacture, assembly, and sale of automobiles, trucks, related
parts and accessories. The financing and insurance operations,
primarily General Motors Acceptance Corporation (GMAC), assist
in the merchandising of GM products as well as other products.

A federal probe into GM's airbags is gaining attention and the
current bout with the UAW certainly appears daunting. A deal
reached last week between the UAW and DaimlerChrylser may set
a precedent for higher wages and richer pensions that GM would
need to match in negotiations expected to intensify next week.

PLAY (conservative - neutral/debit straddle):

BUY  CALL JAN-65 GM-AM OI=515 A=$5.50
BUY  PUT  JAN-65 GM-MM OI=446 A=$4.88
INITIAL NET DEBIT TARGET=$10.12 (or better)

Note: December options are also available.
	   
Chart = http://quote.yahoo.com/q?s=GM&d=3m

****

PD - Phelps Dodge  $58.00

Phelps Dodge Corporation is among the world's largest producers
of copper. Gold, silver, molybdenum, copper and sulfuric acid
are also produced as byproducts of their copper operations. PD's
international mining interests include Candelaria, its major
copper mine in Chile, and other operations and investments in
Chile, Peru and South Africa. These mines produce a variety of
metals and minerals including copper, gold, fluorspar, silver,
lead and zinc. The company also explores for metals & minerals
throughout the world.

Phelps Dodge (PD) has made a three-way merger offer for fellow
U.S. miners Asarco (AR) and Cyprus Amaz Minerals (CYM). With its
recent rejection, they are now pursuing a hostile tender of the
outstanding shares. Lawsuits are pending.

PLAY (conservative - neutral/debit straddle):

BUY  CALL JAN-60 PD-AL OI=0 A=$4.12
BUY  PUT  JAN-60 PD-ML OI=0 A=$5.38
INITIAL NET DEBIT TARGET=$9.25 (or better)

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

****

LCOS - Lycos  $44.43

Lycos a "New Generation Online Service" that offers a network
of globally branded media and aggregated content distributed
primarily through the World Wide Web. Under the "Lycos" brand,
the company provides guides to online content, Web search and
directory services and community and personalization features.

It might appear to be a costly position but look at the range
on this issue over the past 120 days. There is a well-defined
median near the current price and any short-term spike away
from this area should produce favorable profits.

PLAY (conservative - neutral/debit straddle):

BUY  CALL JAN-45 QWL-AI OI=20 A=$8.50
BUY  PUT  JAN-45 QWL-MI OI=0  A=$8.25
INITIAL NET DEBIT TARGET=$16.25 (or better)

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



*************
COVERED CALLS
*************
Technical Indicators Explained..


Each week we receive a number of Emails concerning the basic
techniques that are used in our analysis of covered-call plays.
Today we will discuss some common technical indicators; Volume
and Buying Power.

Volume:

Trading volume, or the number of shares traded is an important
indicator in interpreting market direction and stock price. The
change in stock price is the result of supply and demand; those
who want to buy versus those who want to sell. The key point is
that a rise or fall in price on a small volume of shares traded
is far less important than a move supported by heavy volume. If
there is heavy trading on an upward move, buyers control the
market, and their enthusiasm for the stock often pushes it even
higher. Most technicians agree that volume usually precedes the
direction of a stock's price and when reviewing candidates, we
favor issues with bullish trends that have heavy volume support.

Buying Power:

Buying power has many forms but the most basic definition refers
to institutional sized accumulation or distribution over a long
period. BOP tells you whether the underlying activity in a stock
is characterized by systematic buying or selling. The single most
definitive and valuable characteristic of this indicator (for a
specific issue) is its pronounced ability to contradict the price
movement; it can help you spot changes of character in a stock's
trend.

A market-wide definition is somewhat different. It is generally
understood as the amount of money available to buy securities;
determined by the cash in brokerage accounts plus the money that
would be available if securities were fully margined. The basic
rule of buying power is the market cannot rise above the capital
outstanding. The principle is that investors have only so much
money available to purchase stocks. If it's being used in money
market funds and cash, their buying power is readily available,
not only to move into stocks but to push up prices. In contrast,
if most investor buying power is already in equities, there's
little left for purchasing more stock.

These two indicators work well together and volume is usually
the key; it rises on rallies when the trend is up and rises on
reactions when the trend is down. When volume is rising on new
rallies, investors are eager to buy and the demand is greater
than the supply, thus prices go up. Volume trends will usually
reverse before pricing trends in a broad market scenario. The
shrinking volume almost always appears before the top of a bull
market, as new capital dries up and before the bottom of a bear
market, when investors become reluctant to sell.

Good Luck!


SUMMARY OF PREVIOUS PICKS (Final Summary For September)
****

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

AERL   17.50  19.94   SEP  17.50  1.00  *$  1.00   6.1%  14.2%
NFLD   12.63  13.63   SEP  12.50  0.75  *$  0.62   5.2%  12.2%
WSTL    7.75   8.38   SEP   7.50  1.25  *$  1.00  15.4%  11.1%
NETS   27.38  25.25   SEP  25.00  3.00  *$  0.62   2.5%  11.1%
TRVL   13.50  13.00   SEP  12.50  1.31  *$  0.31   2.5%  11.1%
OLS     9.94  10.38   SEP  10.00  1.00  *$  1.06  11.9%  10.3%
VTS    19.25  21.13   SEP  17.50  3.25  *$  1.50   9.4%  10.2%
MXTR    5.03   6.00   SEP   5.00  0.63  *$  0.60  13.6%   9.9%
NPIX   18.94  17.44   SEP  17.50  2.13   $  0.63   3.7%   8.8%
IDTI   14.69  23.44   SEP  15.00  1.31  *$  1.62  12.1%   8.8%
PILL   13.94  13.75   SEP  12.50  1.88  *$  0.44   3.6%   8.5%
LYNX   13.00  12.75   SEP  12.50  1.13  *$  0.63   5.3%   7.7%
NRES   24.50  25.63   SEP  20.00  5.13  *$  0.63   3.3%   7.6%
TMAR    7.63   8.63   SEP   7.50  0.81  *$  0.68  10.0%   7.2%
IMNR    5.63   5.50   SEP   5.00  1.00  *$  0.37   8.0%   6.9%
PR     19.25  22.75   SEP  20.00  0.94  *$  1.69   9.2%   6.7%
KING   31.50  39.75   SEP  30.00  2.81  *$  1.31   4.6%   6.6%
PCYC   29.13  40.06   SEP  22.50  7.88  *$  1.25   5.9%   6.4%
NTAI   14.88  14.88   SEP  15.00  1.00   $  1.00   7.2%   6.3%
MRVC   14.88  23.25   SEP  12.50  3.00  *$  0.62   5.2%   5.7%
ADAP   33.00  33.00   SEP  30.00  4.13  *$  1.13   3.9%   5.7%
CS     15.50  19.75   SEP  15.00  1.06  *$  0.56   3.9%   5.6%
GNSS   24.88  24.06   SEP  22.50  2.88  *$  0.50   2.3%   5.3%
FLC    13.13  15.25   SEP  12.50  1.19  *$  0.56   4.7%   5.1%
IRF    16.00  17.13   SEP  15.00  1.81  *$  0.81   5.7%   5.0%
MOGN   11.88  12.50   SEP  10.00  2.31  *$  0.43   4.5%   4.9%
IDTI   18.88  23.44   SEP  17.50  2.13  *$  0.75   4.5%   4.9%
IDTC   18.88  22.63   SEP  15.00  4.50  *$  0.62   4.3%   4.7%
MRVC   14.50  23.25   SEP  12.50  2.63  *$  0.63   5.3%   4.6%
PESC   23.88  28.63   SEP  22.50  2.69  *$  1.31   6.2%   4.5%
RIGS   19.81  18.19   SEP  17.50  3.00  *$  0.69   4.1%   4.5%
USAI   45.94  45.00   SEP  45.00  3.50   $  2.56   6.0%   4.4%
RNBO   13.88  14.88   SEP  12.50  2.19  *$  0.81   6.9%   4.3%
ATML   39.88  38.69   SEP  40.00  2.63   $  1.44   3.9%   4.2%
NETA   17.56  19.94   SEP  15.00  3.50  *$  0.94   6.7%   4.2%
PENN    9.88   9.38   SEP  10.00  0.75   $  0.25   2.7%   2.0%
MAK    13.69  12.00   SEP  12.50  1.81   $  0.12   1.0%   0.9%
PXD    12.69  10.94   SEP  12.50  1.13   $ -0.62  -5.4%   0.0%
TIE    11.19   8.06   SEP  10.00  2.13   $ -1.00 -11.0%   0.0%
SBGI   20.31  15.56   SEP  20.00  1.69   $ -3.06 -16.4%   0.0%

CS     18.06  19.75   OCT  17.50  2.00  *$  1.44   9.0%   7.8%
MOGN   13.13  12.50   OCT  12.50  1.63   $  1.00   8.7%   7.6%
BRKT   15.88  15.88   OCT  15.00  2.25  *$  1.37  10.1%   6.2%
ENER   13.88  13.88   OCT  12.50  2.31  *$  0.93   8.0%   6.0%
RDRT    5.88   5.19   OCT   5.00  1.31  *$  0.43   9.4%   5.8%
DCTM   17.13  18.50   OCT  15.00  3.00  *$  0.87   6.2%   5.4%
SOFN   26.25  24.75   OCT  22.50  5.00  *$  1.25   5.9%   5.1%
OIL    13.19  13.81   OCT  12.50  1.38  *$  0.69   5.8%   5.1%
COMS   25.69  27.56   OCT  25.00  2.50  *$  1.81   7.8%   4.8%
NVDA   26.00  24.38   OCT  25.00  3.38   $  1.76   7.8%   4.8%
CIEN   39.75  42.38   OCT  35.00  6.13  *$  1.38   4.1%   3.6%
PCTL    5.69   4.47   OCT   5.00  1.19   $ -0.03  -0.7%   0.0%
TSK    17.50  14.75   OCT  17.50  1.63   $ -1.12  -7.1%   0.0%
NTMV    7.19   5.66   OCT   7.50  1.00   $ -0.53  -8.6%   0.0%

* Stock price is above the sold strike; should be called away.


Comments/Observations On Current Plays.

September:

NPIX, NTAI, USAI, ATML - Nice profit now. If your outlook
remains neutral to bullish, consider rolling forward.
PENN, MAK - Current rally is offering an exit above break-even
though rolling forward remains viable.
PXD, TIE, SBGI - Rolling forward verses limiting losses?!?

October:
 
PCTL - Consider exiting early on continued weakness, oversold.
TSK  - Earnings warning, consider closing to limit losses.
NTMV - BOP positive, bounced off support on heavy volume.


NEW PICKS
*********
Definitions:
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 Return Called and Return Not Called

****

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

HTCH   31.00  OCT 30.00  UTQ JF  2.75  1398  28.25   6.2%   6.2%
TALK   12.00  OCT 10.00  QQK JB  2.50  1552   9.50   5.3%   5.3%
BNBN   18.38  OCT 17.50  BEU JW  1.75  132   16.63   5.2%   5.2%
ASMI    8.44  OCT  7.50  IQB JU  1.31  12     7.13   5.2%   5.2%
NMSS   13.81  OCT 12.50  YYQ JV  1.88  171   11.93   4.8%   4.8%
NRES   25.69  OCT 22.50  QNN JX  4.13  287   21.56   4.4%   4.4%
HELX   34.25  OCT 30.00  HHQ JF  5.50  1078  28.75   4.3%   4.3%
AERL   20.00  OCT 17.50  IQA JW  3.13  196   16.87   3.7%   3.7%
PLCM   45.88  OCT 40.00  QHD JH  7.13  238   38.75   3.2%   3.2%


Company Descriptions

AERL - Aerial Communications Inc  $20.00 *** Wireless ***

Aerial Communications (82.2%- owned subsidiary of TDS), was 
formed to acquire PCS licenses from the FCC, construct PCS 
networks in Minneapolis, Tampa-St. Petersburg-Orlando, Houston,
Pittsburgh, Kansas City and Columbus-Ohio, and offer wireless 
communications services in these areas. A recent upgrade by
Lehman Brothers and some speculation that TDS may consider 
selling Aerial makes this a favorable play. The chart
remains strongly bullish - though overextended.

OCT 17.50 IQA JW Bid=3.13 OI=196 CB=16.87 RC=3.7% RNC=3.7%

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

****

ASMI - ASM International N.V.  $8.44 *** Semiconductor ***

ASM International designs, manufactures & markets equipment and 
materials used to produce semiconductor devices. They provide 
producing solutions for semiconductor water processing, assembly 
and packaging through its facilities in the United States, Europe,
Japan and South East Asia. This week, ASMI jumped out of a lateral
consolidation on heavy volume and reached a new 52 week high. As 
earnings season approaches, the semiconductor stocks continue to
outperform the market.

OCT 7.50 IQB JU Bid=1.31 OI=12 CB=7.13 RC=5.2% RNC=5.2%

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

****

BNBN - Barnesandnoble.com Inc  $18.38 *** E-commerce ***

Since launching its online business, barnesandnoble.com has become
one of the world's largest Web sites and is the fourth largest 
e-commerce retailer, according to Media Metrix. Focused largely on
the sale of books, music and related products, the company has 
capitalized on the recognized brand value of the Barnes & Noble 
name to become the second-largest, and one of the fastest growing, 
online distributors of books. BNBN is trending up towards the top
of its trading range, establishing support above $16.50. A long 
term play on a stock which should benefit from the approaching 
holiday season.

OCT 17.50 BEU JW Bid=1.75 OI=132 Bid=16.63 CB=5.2% RNC=5.2%

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

****

HELX - Helix Technology Corp. $34.25 *** Blue Sky! ***

HELX is engaged in the development and application of cryogenic 
vacuum technology and provides innovative solutions to customer
requirements in select markets worldwide. Helix 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 semiconductor 
stock that is displaying strong technical strength and has now 
closed at a new all-time high.

OCT 30.00 HHQ JF Bid=5.50 OI=1078 CB=28.75 RC=4.3% RNC=4.3%

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

****

HTCH - Hutchinson Technology  $31.00 *** Disk Drives ***

Hutchinson Technology is a supplier of suspension assemblies 
for hard disk drives. Suspension assemblies hold the recording
heads in position above the spinning magnetic disks in the drive.
They are a supplier to nearly all domestic and many foreign-based
users of suspension assemblies (APM, IBM, MXTR, SEG, ...etc.).
Hutchinson Tech broke out of a six month base and may run to a
new high. The technical picture continues to improve and we favor
the cost basis at support.

OCT 30.00 UTQ JF Bid=2.75 OI=1398 CB=28.25 RC=6.2% RNC=6.2%

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

****

NMSS - Natural Microsystems Corp  $13.81 *** What's Up? ***

Natural MicroSystems designs, manufactures and markets integrated 
hardware and software products which enable its customers to 
develop and implement high-value telecommunications solutions 
that operate globally. No news to explain the last few days jump
in price as NMSS closed at 52 week high.  In August, the company
announced a repurchase program of up to 400k shares. We like
this new move above resistance with support at our cost basis.

OCT 12.50 YYQ JV Bid=1.88 OI=171 CB=11.93 RC=4.8% RNC=4.8%

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

****

NRES - Nichols Research Corp. $25.69 *** For Sale, IPO? ***

Nichols Research is a provider of technical and information 
technology (IT) services, including information processing,
systems development and systems integration. They provide these
services to a wide range of clients, including the U.S. DOD, 
other federal agencies, state and local governments, healthcare
and insurance organizations, and other commercial enterprises.
Nichols has deferred plans to take its Nichols TXEN Corp public
and had hired investment bankers to help it consider strategic 
alternatives. If you wish to speculate, this play offers a 
favorable entry point with a cost basis at technical support.

OCT 22.50 QNN JX Bid=4.13 OI=287 CB=21.56 RC=4.4% RNC=4.4%

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

****

PLCM - Polycom, Inc. $45.88 *** Stage II ***

Polycom develops, manufactures and markets teleconferencing 
products that facilitate meetings at a distance. With its
SoundStation product line, Polycom believes it has established 
itself as a leading provider of audioconferencing equipment
designed for group use. With last quarters revenues up over 
70% Polycom is getting attention: coverage initiated with a 
buy on Tuesday. PLCM remains in a stage II climb though it 
is somewhat overextended. We like a more conservative entry
point with a cost basis near the July high.

OCT 40.00 QHD JH Bid=7.13 OI=238 CB=38.75 RC=3.2% RNC=3.2%

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

****

TALK - Talk.com, Inc.  $12.00 *** Short Squeeze? ***

Talk.com, Inc. is a provider of long distance telecommunication 
services to small and medium-sized businesses and residential 
customers in the United States, primarily through its e-commerce
platform. The Internet/telephone competition is heating up and
TALK is showing signs of a potential breakout. The bullish move 
above its 150 dma supported by volume offers a favorable entry
to speculate on a future news release.

OCT 10.00 QQK JB Bid=2.50 OI=1552 CB=9.50 RC=5.3% RNC=5.3%

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


**********
DISCLAIMER

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




The Option Investor Newsletter            9-19-99
Sunday                7  of  7


*************
NAKED PUTS
*************

Technical Indicators Explained..


Today we will discuss some of the broad market indicators used to
determine future trends. The first category is very similar to
the one we focus on for individual issues; Volume.

Market Volume:

A day of high volume on a major exchange usually means the market
is up and frenzied. Low volume generally indicates a negative or
bearish outlook. Of course "high" or "low" is relative, depending
on where we are in the market's overall history. In recent months
(since mid-April), the volume for both the Dow Industrial Average
and the S&P 500 Index has declined. However, trading volume on
the Nasdaq Composite has increased significantly (from lows in
late August) as the index approached record highs. That's a good
example of heavy trading on an upward move, when buyers control
the market and their enthusiasm pushes the issue or index higher.

New Highs and Lows:

Each day the market-wrap includes a list of stocks that hit a new
price high or low for the year, during the previous day's trading
activity. Analysts use the ratio between the new highs and lows
as an indication of the market's direction. When more stocks are
making new highs than lows, it is a generally bullish indication.

This indicator is even more effective when converted to a chart
and compared with a common average or index. When the high/low
indicator confirms the outlook of the Dow or the S&P 500, it is
far more significant. If the high/low indicator starts to fall
while the major averages are moving up, that's often a signal
that internal market conditions are deteriorating.
 
The index of new highs and lows exposes the underlying strength
or weakness of the stock market, which is often masked by the
activity of the Dow. In an aging bull market, the Industrial's
average may continue to rise with deceptive strength on upward
moves in a handful of major stocks; but closer examination will
usually reveal that most issues are too far below their yearly
highs to make new highs. In such times, the small number of new
highs is one of the most significant indicators of broad market
deterioration.

More on Market Indicators next week..


SUMMARY OF PREVIOUS PICKS (Final Summary For September)

****

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

ENER   13.88  13.88   SEP  12.50  0.31  *$  0.31   6.9%  16.2%
IRF    16.81  17.13   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  33.00   SEP  25.00  0.88  *$  0.88  11.8%  12.9%
MCOM   25.56  23.00   SEP  17.50  0.88  *$  0.88  14.7%  12.8%
PAX    15.31  13.13   SEP  12.50  0.44  *$  0.44  11.7%  12.7%
PCYC   29.13  40.06   SEP  20.00  0.69  *$  0.69  10.6%  11.5%
RIGS   19.81  18.19   SEP  17.50  0.63  *$  0.63  10.1%  11.0%
NVDA   26.00  24.38   SEP  22.50  0.56  *$  0.56   7.5%  10.9%
NETG   22.25  31.56   SEP  17.50  0.63  *$  0.63  12.4%  10.8%
NSM    28.56  34.94   SEP  25.00  0.63  *$  0.63   7.4%  10.7%
ADAP   22.88  33.00   SEP  17.50  0.75  *$  0.75  14.1%  10.2%
ZRAN   30.63  30.63   SEP  25.00  0.50  *$  0.50   7.0%  10.2%
CMTO   18.81  14.56   SEP  15.00  0.75   $  0.31   6.9%  10.0%
VTS    19.25  21.13   SEP  15.00  0.38  *$  0.38   9.0%   9.8%
BEAS   24.25  29.94   SEP  20.00  0.38  *$  0.38   6.5%   9.4%
GNSS   24.06  24.06   SEP  20.00  0.38  *$  0.38   6.4%   9.3%
KING   28.63  39.75   SEP  25.00  0.69  *$  0.69   8.1%   8.8%
CYMI   36.88  35.63   SEP  30.00  0.50  *$  0.50   6.0%   8.7%
SCMM   47.88  49.13   SEP  35.00  0.75  *$  0.75   7.3%   7.9%
NMR    33.50  37.13   SEP  25.00  0.63  *$  0.63   8.6%   7.5%
PESC   23.88  28.63   SEP  17.50  0.50  *$  0.50   9.5%   6.9%
CORR   22.50  26.00   SEP  17.50  0.44  *$  0.44   8.9%   6.5%
BOBJ   47.19  53.25   SEP  35.00  0.75  *$  0.75   7.4%   6.4%
PLMD   17.88  27.00   SEP  15.00  0.31  *$  0.31   6.8%   5.9%
CSE    48.06  49.56   SEP  40.00  0.75  *$  0.75   6.3%   5.5%
USAI   45.94  45.00   SEP  40.00  0.81  *$  0.81   6.1%   4.4%
TDW    34.44  31.88   SEP  30.00  0.56  *$  0.56   5.7%   4.1%
CLTR   29.13  19.06   SEP  20.00  0.63   $ -0.31  -4.8%   0.0%
DD     74.75  62.06   SEP  65.00  1.00   $ -1.94  -9.2%   0.0%
SBGI   20.50  15.56   SEP  17.50  0.38   $ -1.56 -28.0%   0.0%

NVX     7.19   9.00   OCT   5.00  0.38  *$  0.38  21.0%  18.2%
DUSA   15.50  14.88   OCT  12.50  0.88  *$  0.88  21.6%  16.0%
CYBX   18.69  16.44   OCT  15.00  0.69  *$  0.69  15.4%  11.4%
HELX   31.00  34.13   OCT  25.00  0.94  *$  0.94  12.8%  11.1%
MYGN   11.88  13.50   OCT  10.00  0.50  *$  0.50  14.8%  11.0%
IDTC   23.38  22.63   OCT  17.50  0.63  *$  0.63  11.9%  10.3%
CS     18.06  19.75   OCT  15.00  0.50  *$  0.50  10.7%   9.3%
HLTH   34.94  41.00   OCT  25.00  0.69  *$  0.69   9.0%   7.8%
ORTL   18.88  16.50   OCT  15.00  0.44  *$  0.44  10.5%   7.8%
PRTL   23.06  20.13   OCT  17.50  0.50  *$  0.50   9.8%   7.3%
MK     10.81  10.50   OCT  10.00  0.31  *$  0.31   8.1%   7.0%
USWB   28.50  29.44   OCT  22.50  0.50  *$  0.50   8.1%   7.0%
HELX   30.25  34.13   OCT  22.50  0.50  *$  0.50   7.6%   5.7%
KING   32.81  39.75   OCT  25.00  0.44  *$  0.44   6.3%   4.7%
CIEN   39.75  42.38   OCT  30.00  0.44  *$  0.44   5.2%   4.6%

* Stock price is above the sold strike; the option should expire.


Comments/Observations On September Plays:

CMTO - Sell now for a small profit or expect strength as traders
speculate on the next CabelLabs result in November?
CLTR - Must resubmit FDA application. Take a small loss or roll
down if stock holds at support ~ $18.00. OCT $17.50 call - $2.50.
DD - Selling pressure dropping as stock nears support ~ $61. The
JAN 60 call - $6.25. You own it now so make the best of it.
SBGI - Rolling forward verses limiting losses?!?


NEW PICKS

****

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


Sequenced by ROI  
***

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

ENMD   23.50  OCT 20.00  QMA VD  0.81  175   19.19  12.1%
ASPT   15.44  OCT 12.50  ATQ VV  0.38  55    12.12  10.5%
REV    24.81  OCT 17.50  REV VW  0.50  295   17.00   9.2%
AFCI   20.06  OCT 17.50  AQF VW  0.50  250   17.00   8.4%
NETA   20.00  OCT 17.50  CQM VW  0.50  990   17.00   8.3%
CEPH   20.44  OCT 17.50  CQE VW  0.44  61    17.06   7.7%
AERL   20.00  OCT 15.00  IQA VC  0.31  100   14.69   7.2%
INTU  103.00  OCT 85.00  IQU VQ  1.31  324   83.69   5.3%
PR     22.88  OCT 20.00   PR VD  0.31  10    19.69   4.7%


Company Descriptions

****

AERL - Aerial Communications  $20.00 *** Wireless ***

Aerial Communications (82.2%- owned subsidiary of TDS), was 
formed to acquire PCS licenses from the FCC, construct PCS 
networks in Minneapolis, Tampa-St. Petersburg-Orlando, Houston,
Pittsburgh, Kansas City and Columbus-Ohio, and offer wireless 
communications services in these areas. A recent upgrade by
Lehman Brothers and some speculation that TDS may consider 
selling Aerial makes this a favorable play. The chart
remains strongly bullish though overextended.

OCT  15.00  IQA VC  Bid=0.31  OI=100  CB=14.69  ROI=7.2%

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

****

AFCI - Advanced Fibre Communications  $20.06  *** Upgraded ***

Advanced Fibre Communications designs, manufactures, and markets
telephone delivery systems. The company's Modular Carrier system
allows telephone and cable companies to connect customers to the
central office switch, regardless of the combination of copper
wire, fiber-optic line, or coaxial cable networks. Upgrades and
Cisco's acquisition of Cerent Corp, which will provide AFCI with
just over 5.3 million shares of CSCO, have helped initiated the
recent breakout. A reasonable price to target shoot with a cost
basis at support.

OCT  17.50  AQF VW  Bid=0.50  OI=250  CB=17.00  ROI=8.4%

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

****

ASPT - Aspect Telecom  $15.44    *** Up, Up And Away! ***
    
Aspect Telecommunications is a global provider of comprehensive
business solutions for mission-critical call centers that exist
to generate revenue, service customers, and handle inquiries.
The company offers solutions for call transaction processing &
automation, interactive voice response, networking, management 
information and comprehensive planning and forecasting packages.
No news on the breakout last week but if you wish to speculate,
why pay retail?

OCT  12.50  ATQ VV  Bid=0.38  OI=55  CB=12.12  ROI=10.5%

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

****

CEPH - Cephalon  $20.44     *** Drugs Are Hot! ***
    
Cephalon is engaged in the development of pharmaceuticals for
the treatment of neurological disorders. The company combines
research expertise in molecular biology, molecular pharmacology,
biochemistry, cell biology & chemistry with a neurology focused
drug development and clinical research effort. No recent news
since August when Cephalon had coverage initiated. The current
consolidation is providing a cost basis below technical support.

OCT  17.50  CQE VW  Bid=0.44  OI=61  CB=17.06  ROI=7.7%
    
Chart = http://quote.yahoo.com/q?s=CEPH&d=3m

****

ENMD - Entremed  $23.50     *** Speculation Only! ***

Entremed engaged primarily in the research and development of 
biopharmaceutical products that address the role of blood and
blood vessels in the prevention and treatment of a broad range
of diseases. Their core technologies include the development of
products intended to inhibit the abnormal growth of new blood
vessels associated with cancer and certain causes of blindness,
and a device designed to enhance the ability of blood cells to
deliver oxygen to organs and tissues. Make sure you know this
issue very well before opening a position!

OCT  20.00  QMA VD  Bid=0.81  OI=175  CB=19.19  ROI=12.1%

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

****

INTU - Intuit  $103.00     *** Blue Chip Play ***

Intuit develops, markets and supports personal finance, small
business accounting, tax preparation & other consumer software
products, along with related electronic services that enable
individuals and businesses to perform common financial tasks.
Inuit jumped nicely after announcing a 3-for-1 split last week
to SOR September 20. Don't chase a trending stock! We feel
$1.31 is just reward for trying to own INTU at a discount. 

OCT  85.00  IQU VQ  Bid=1.31  OI=324  CB=83.69  ROI=5.3%

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

****

NETA - Network Associates  $20.00   *** On The Rebound? ***

Network Associates (formerly known as McAfee Associates), is a
leading supplier of enterprise network security and management
solutions. Network Associates' product offering includes four
individual software suites, Total Virus Defense, Total Network
Security, Total Network Visibility and Total ServiceDesk. New
products a favorable long-term outlook plus a bullish chart.

OCT  17.50  CQM VW  Bid=0.50  OI=990  CB=17.00  ROI=8.3%

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

****

PR - Price Communications  $22.88     *** Own This One! ***
    
PR is currently engaged through Price Communications Wireless in 
the construction, development, management and operation of 
cellular telephone systems in the southeastern United States. 
PR markets all of its products and services under the nationally
recognized service mark CELLULAR-ONE. Price continues its strong
stage II climb as the wireless sector continues to outperform the
overall market.
 
OCT  20.00  PR VD  Bid=0.31  OI=10  CB=19.69  ROI=4.7%

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

****

REV -  Revlon  $24.81     *** On The Rebound? ***

Revlon operates in a single business segment with different
products, which include an extensive array of glamorous,
exciting and innovative cosmetics and skin care, fragrance,
personal care and professional products. Revlon is one of the
world's best known names in cosmetics and is a leading mass
market cosmetics brand. Once a take-over target...always a
take-over target? Revlon continues to gyrate as speculators
trade new rumors.

OCT  17.50  REV VW  Bid=0.50  OI=295  CB=17.00  ROI=9.2%

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


**********
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