Option Investor

Daily Newsletter, Sunday, 11/07/1999

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

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

Entire newsletter best viewed in COURIER 10 font for alignment
        WE 11-05         WE 10-29         WE 10-22         WE 10-15
DOW     10704.48 - 25.38 10729.86 +259.61 10470.25 +450.54  -630.05 
Nasdaq   3102.29 +135.86  2966.43 +149.88  2816.52 + 84.69  -154.74 
S&P-100   718.80 +  1.77   717.03 + 31.40   685.63 + 33.88  - 46.70 
S&P-500  1370.23 +  7.30  1362.93 + 61.28  1301.65 + 88.12  - 88.61 
RUT       442.41 + 13.77   428.64 + 10.22   418.69 +  3.99  - 13.01 
TRAN     3003.99 - 54.99  3058.98 +195.83  2863.15 +  7.67  -226.13 
VIX        22.06 -  2.50    22.56 -  0.33    22.89 -  8.59  + 10.28 
Put/Call     .51              .51              .55             1.05

Episode one ends with a bang! 

The long running soap opera like feud between Microsoft and the
Justice Dept ended with a bang on Friday night. Judge Jackson 
pulled a grandstand play and announced that the ruling in the
first phase of the antitrust trial against Microsoft would be
available after the market closed at 6:30 PM ET. Planning to
avoid giant swings in the after hours trading of the stock, he
was out maneuvered by the ECNs as they stayed open long after 
the normal closing time to allow traders access to the market. 
MSFT traded down -$4 after the ruling was announced.

General Reno held a press conference to proclaim how proud she
was of the legal team, (that spent hundreds of millions of our
money) to discover and prove beyond a shadow of a doubt that
86% of all PCs are running Microsoft Windows as their operating
system. DUH!!!!! A quick call to IDC could have garnered that
fact for the price of a phone call.  The line of notables who
approached the microphone all touted the party line of a blow
for freedom and relief from oppression for the American consumer.
Our government system at it's finest. Unfortunately, it is not
over and will not be over soon. There are three phases left.
Now that the government officially recognizes MSFT as a monopoly
the trial now passes into the determination of law phase. The
government will try and decide if MSFT broke any laws while
exercising it's monopolistic agenda. The third phase is the
penalty phase. The court will try and decide what to do with
the 8000lb gorilla. The fourth phase will be the appeal of the
first three phases. In English it could take well into the next
millennium for any action to be taken against Microsoft. The
knee jerk reaction after hours to the MSFT stock price AND the
possible continuation on Monday will give aggressive investors
an opportunity to buy MSFT on the cheap and capitalize on news.

In reality there is no risk for MSFT investors. One of the
remedies the government is considering is to force MSFT to 
distribute Netscape with it's Windows software. Boy, I bet
that would really hurt. I am sure Bill would lose probably 
five minutes of sleep over that option. The second solution
is to make MSFT sell Windows to all the PC makers for the
same price. What, no sweetheart deals for the hard negotiators?
No cut rate volume discounts? Shucks, Mr Fox, please don't
through me in the briar patch. Please don't make me sell all
my software for the same high price. Is that champagne glasses
I hear tinkling in Redmond Washington? The next option would
be to breakup MSFT into several smaller companies. Say an
Internet company, an office products company, an operating
systems company, a venture capital company, a research and
development company. All would be extremely profitable and 
instead of having one monster company to compete with, there
would now be five monster companies, all bigger than the
competition. With any option stockholders win. With a breakup
stockholders win big. Almost all analysts agree that five
$20 companies, instead of one $100 company, would rapidly
become five $50 companies as the billions of dollars of hidden
value in MSFT surfaced. In reality MSFT and the Justice Dept
will most likely settle out of court. A killer play here would 
be the Jan-2002 leaps. Target shoot the $90-100 leaps around 
$25 on any big sell off and then sell short term calls against 
them for the next two years. That could easily return $100
for a $25 investment with no risk.  

In other news, and yes there was other news, the Nasdaq 
stretched it's winning streak to six days. Six days, six
new record highs. If you are not expecting some profit taking
soon then you need to be sure and read the article on entry
points tonight. Nothing goes up in a straight line and the
rubber band is stretched pretty tight at this point. The
gains by the winners on the Nasdaq should go into the Ripley's
Believe It or Not record book. QCOM +$75 for the week! Lets
get real here. They did not invent air or fire. They simply
had some good earnings and a couple of upgrades. PHCM +70,
Lucent announced they were going to use some wireless software
from PHCM in their devices. They did not say ET was going 
to phone home on it. CMRC +118, Commerce One announced the
availability of their XML developers tool kit. They did not
say they would write all the Ecommerce application on the
net for free. ICGE +$55, the CMGI wannabe, on no real news
other than our investigative report we published on Thursday,
and the news that they were opening an European office.
How about EMLX, +$40 in three days and a current play! I am
sorry guys but there is some real lofty gains here that
could evaporate with any hint of bad news or just plain
profit taking. Looks like a good prospect list for shorts!



Did you happen to notice that the Dow actually lost ground
this week? That's right, -25 on a week that the Nasdaq was
setting back to back records. The only real winners were
BA, C, KO, GE, IP, JPM, JNJ, MCD. If you don't recognize
these symbols then you see why the Dow pretty much stopped
dead at 10750. Financials were up on positive economic reports
and the drop in interest rates. Consumer favorites KO, JNJ, 
MCD were up on sector rotation and there was no support from
the rest of the Dow stocks. After the positive non-farm
payroll data this morning the Dow sprinted to a plus +204
but then bled points all day to finish only +65. What more
could you ask for. The Nasdaq is setting back to back record
highs. The new jobs came in exactly as expected at 310,000
and the increase in hourly wages a very tame +.1%. The fly
in the soup was the unemployment rate. At 4.1% it was the
lowest since Oct 1970 but still only -.1% from last month.
Could it be the earnings warnings from Disney and Unilever,
both of which got clobbered for big losses? Or could it be
the dwindling earnings reports and big investors holding 
their bets until after the PPI and the Fed meeting on Nov 16th?



The floor traders are pointing to the bond yields, 6.03% 
as evidence of decreased expectations that the Fed will 
raise rates on the 16th. Others are pointing to the strong
economic growth and are expecting the Fed to raise rates
to try and get back into a pre-emptive stance instead of
a reactive stance. Most agree that whatever the outcome on
the 16th there will be no further action this year. The
December meeting will be a nonevent and February will be
the next trouble spot. While the Fed is still making noises
about being "poised" to raise rates, they are still not
anxious to become a scapegoat if the market falls in front
of Y2K after a November rate hike. 

Y2 what? Don't look now but the Y2K hype is rapidly becoming
a distant memory. With only 38 trading days before Y2K the
probability of a significant market drop is becoming more 
and more unlikely as each day passes. Every day that we
hold these levels and actually gain ground, the prospects
for a year end rally appear brighter. Only a couple weeks
ago there was a parade of bears on CNBC every hour proclaiming
the end of the bull market. Where are they this week? 
We still have the bulls making appearances, some more cautious
than others. On Wednesday for instance, there was the analyst, 
who shall remain nameless, who was commenting on Nasdaq 3000 
and went out on a limb to predict 3100 by year end. On the other 
end we have Abbey Cohen trying to lure more cash in from the
sidelines with her optimistic forecasts. Sorry Abbey, weekly
repeats tend to dull the message. Still there is a strongly
bullish undercurrent to the market. The Nasdaq has traded 
over a billion shares for the last nine days. Rallies on
strong volume are hard to stop. Advance/decliners are positive
again and have been for a week. The new highs have reclaimed
the lead from new lows with 291 NH to 146 NL. Large inflows
of mutual fund money are powering this liquidity led rally
and as long as the trend continues, so should the rally.

The focus for the week will be the PPI on Wednesday and then
the Retail Sales and Productivity report on Friday. This 
sets the stage for the FOMC meeting next Tuesday. Normal 
market logic would predict a pull back for profit taking 
Tuesday before the PPI and then range bound until after 
the Fed meeting. However the market has not been following 
the play book recently with rallies into the Fed meetings 
instead of after them. The huge amounts of cash on the 
sidelines is worried that the train is leaving without them. 
The expected second leg of the D10K market drop from three 
weeks ago has failed to materialize and their trigger fingers 
are getting itchy. If we are going to see a second pullback 
it should be this week but I would not hold my breath. A 
+.25% rate hike by the Fed or no hike at all could be the 
starters gun for a race to January earnings and the money 
should come pouring in off the sidelines. Aggressive traders 
will want to take positions on any pull back this week and 
cautious investors will want to wait for the Fed. Both will 
not wait past the FOMC decision if the market continues to 
hold these gains and/or rally. If this sounds like a bullish
forecast you should also remember the VIX. It closed on 
Friday at 22.06, the bottom of it's recent trading range. 
The VIX at 22 corresponds with the Dows halt at 10750. The 
VIX has only moved under 22 five times this year and all 
five times signaled short term tops in the market. My 
forecast would be another buying opportunity real soon
but my forecast and $3.00 will only buy a cup of burned
coffee at Starbucks.


The highlights of the week will be Cisco earnings on Tuesday
and Dell's earnings on Thursday.

New features from OptionInvestor.com. 

Beginning this week we are re-instituting the "Sell Put" 
recommendation in the call section. If you are bullish 
enough on the stock to buy calls then selling puts is a 
natural conclusion. Selling puts requires a margin account 
and the returns are not as large as winning call plays. 
The returns however are easier to get. With a straight 
call play the stock must do two things. Move up and move 
quickly. If the stock moves up slowly, stays flat or trends 
down, you will lose money. If you sell puts the stock must 
only do one thing, not move down quickly. If it goes up, 
stays flat or moves down slowly, you win. You can use this
strategy to cash flow about 12-15% every month with less 
risk than straight calls. Now, the fun part. If you buy 
calls and sell puts on the same stock then your cost on 
the calls is reduced by the price of the puts. For example,
if you buy calls for $5 and sell puts for $3 then your net 
cost on the calls is only $2.00. This gives you an extra
margin of safety on the transaction and increases your 
profits on a winning play. Many times this will change a 
marginal play or even a losing play into a profitable trade.
The risk of selling naked puts is always the possibility
of a catastrophic event that drops the stock below the 
strike price and could result in the stock being PUT to you.
Always protect yourself with a "buy to cover" limit order
to take you out before this can happen.

Today we also begin the leap section. Leaps are a great way
to rent stock cheap. Leaps are best purchased on opportunity
stocks. MSFT would be an opportunity stock next week. IBM
at $90 would also be an opportunity. When you own leaps you
are renting the stock for up to two years. For instance, IBM
is at $90.25. The Jan-2001-100 call leap could probably be 
bought next week for $12.00. Now IBM has not traded under $80
in over a year and reached $138-139 twice. Everyone expects
2000 to be a record year for techs. What are the chances for
IBM to trade in the $135-150 range again before Jan-2001? In
my book I rate that as close to 100%. If you bought the $100
leap at $12 and then sold a current month call for $2.00 or
more each month then in six months your leap would be free.
Aggressive players could sell calls closer to the stock price
for more or buy the 2002 leap instead. There are many ways
to play leaps but even just betting $12 that IBM will trade
over $100 in the next 14 months is a good trade. Look at the
history of my two examples. MSFT was trading at $30 (split
adjusted) 1/1/98 and IBM $50. Where might these stocks be
trading on 1/1/2001 with a continuation of this bull market
and no Y2K in the forecast? Another 50% gain is highly probable.

We are also adding our "Ask the Analyst" section where you,
the readers, send us a stock you would like for us to dissect.
We will post a chart with notations as to patterns and also
the results of our research on the company. Send your stock
questions to askoin@OptionInvestor.com.

Tonight begins my ten part educational series. I am starting
with what I consider the most important lesson in options
trading. Entry points. If you pick a good entry point then
the rest of the trading decisions become easier. The lesson
is too big to email so look for it on the website.

Only 9 seats are left for the last OIN/Optionetics seminar of
the year in San Francisco on Nov 14/15th. Don't procrastinate 
any longer. Lack of education is expensive in the options market. 
You can pay your dues one trade at a time the hard way or 
"invest" them up front and turn them into an asset. If you 
cannot attend this class you can still get the home study 
course and attend any seminar next year for free.
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?

Watch the VIX, sell too soon.

Jim Brown


I was out of the market all last week while I was at the Money
Show in San Francisco. I hesitated to jump back in Thr/Fri this
week with the Nasdaq up so high and the Dow showing signs of
weakness. I considered shorting QCOM at the close on Friday
but after seeing the gap opens on the chart the last three
days I decided that waiting until Monday and checking the
market temperature was a wiser choice. I did however start a
spread on MSFT when the announcement came about the pending

MSFT - Combination play

I bought the $95 calls and the $85 puts for a total of $4.25.
I thought the possibility of s spike in either direction was
pretty good. MSFT had been trading in a range between $90-95
for the last two weeks and was due for a breakout on this
news event. MSFT traded down to $87 in after hours and due to
the severity of the report could go to $83-85 easy. I plan to
target shoot some leaps for the bounce back. Maybe the $80
leaps for $20 or the $90 leaps for $14. I am also going to
try and sell some Nov-80 Puts on any Monday morning dip to
decrease my cost in the leaps.

My other targets for this week will be in non-Nasdaq stocks.

I like;


I am watching two stocks with above normal volume and
strong gains.


Could be something in the wings on those.

I think QCOM and JDSU are screaming to be shorted but
only do so carefully. The puts are so overvalued I would
not recommend them.

Check out the entry point article for entry information
on new plays.

I have a busy week ahead of me and do not plan to trade
unless the market gives me a perfect entry.


Entry Point, Entry Point, Entry Point

By Jim Brown

Two different traders could buy options on the same five stocks 
in the newsletter this week and one trader could be profitable
on all five and the other lose on all five. Why? Entry Point!



The Short List.

Not surprisingly tech stocks were the focus this weekend.
However, before we get started, we want to welcome everyone 
to this new section of the OI newsletter.  Our goal here is 
educational.  For many traders, technical analysis is an 
extremely important tool in their arsenal of weapons to battle the 
market. For the team here at OI, we like to think it can be fun 
and simple.



Financials Rally on Inflation and Industry Reform News
By Cindy Christ

News from Congress and positive economic data renewed interest 
in financial service stocks Friday.

Late Thursday the Senate announced passage of landmark legislation 
ending depression-era banking regulations.  



The Not So Wonderful World of Disney
By S.P. Brown

Is the Walt Disney Company (DIS) a Mickey Mouse Operation?  DIS
investors used to years of sizzling growth were probably asking
themselves this very question after the company's conference
call with analysts on Thursday. 



Sunday, November 7, 1999

Sentiment on the Upswing!

The Nasdaq continues its powerful move, breaking new highs daily, 
and shorts continue to get squeezed by the second. This move seems 
to be very similar to last years, in the fact that every day you 
would think that it couldn't go any higher, yet it does! The 
sentiment across the board seems to be on the upswing, as our 
latest Investors Intelligence reading came out and saw an up-tick 
in bullishness. Now granted, this statistic is lagging, so you can
imagine what the numbers will look like next week. 

Regardless, everyone from Main Street to Wall Street seems to be
spending their cash pile that has been sitting on the sidelines. 
Just looking at the volume this last week can give you feelings of
euphoria. Regardless, we are due for a breather, and who knows 
what kind of effect the Microsoft ruling will have on the 
overall market Monday. The way things are going; the market will 
shrug it off and continue higher. However, the Dow has yet to break 
and hold above resistance of 10,750; and with Microsoft in the Dow 
now, breaking resistance may not happen on Monday.
Below is a quick list of companies who are on-deck to report their 
quarterly earnings this week. All three of the highlighted 
companies have a relatively low Pinnacle Index, which would 
indicate potential for an upside surprise due to the bearish

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

Dell Computer    DELL      1.68     +.20        +.21      11/11 
Cisco Systems    CSCO      2.33     +.23        +.24      11/9
Walmart          WMT       2.22     +.28        +.30      11/9
Dell has the lowest PI, which would indicate that it might be a 
strong buy, due to all the bearish sentiment surrounding the 
company at this time. However, there may be good reasons for this 
bearish sentiment. The stock, technically, has acted very poor this 
week, even with the Nasdaq and Computer Hardware indexes going 
through the roof. Also, one of our associates recently purchased 
a laptop from Dell, who is the king of just-in-time delivery; 
however, it took a month for our coworker to get his computer, 
unlike the 3-4 days it usually takes. That is very unlike Dell 
and could spell trouble. These problems may already be priced into 
the shares, however, we are not so sure. Regardless, the sentiment 
is very negative, but should the stock take a tumble, we view 35 
as huge support, due to the large quantities of put buying at this 
key number. 

Going back to last Sunday's letter, we highlighted the expected 
earnings that were due from Qualcomm. We noted that the Pinnacle 
Index was high at the time (9.72), and boy was this poor timing on 
our part. It only shows how quick sentiment can change. The next 3 
days (Friday OCT-29, Monday NOV-1, Tuesday NOV-2) going into 
QCOM's earnings, put buying exploded through the roof. The NOV-210 
put jumped from 2100 contracts to 4900 contracts, during those 3 
days alone. The NOV-220 put jumped from 900 to 1500 contracts as 
well. All across the board, put buying on a percentage standpoint
dramatically went up. We added the Pinnacle Index for QCOM on 
Tuesday after the close, and it dropped to 2.03 from 9.72. That is 
a very hefty drop, in an extremely short period of time. You 
combine this now-bearish sentiment, with a bull market just waking 
up, and you get a huge week. It just shows that Wall Street's 
sentiment can turn-on-a-dime, and punishes or rewards those who 
deliver or don't. Have a good trading week.


Short Interest:
Short interest for the Nasdaq is at an all-time high, and increased 
over 5% from the preceding month.

Bears have quick triggers:
After being beaten up for many years, bears are quick to 
run & hide, and will cover short positions in a flash.

The results are in, with exception from a few stragglers, and the 
quarter ended up very solid.

Investor Intelligence:  
As a contrarian indicator, we may have witnessed the bottom in 
pessimism, and should this prove right, this market has a lot more 
upside in the months ahead.

Interest Rates:
The yield on the 30-yr Treasury is now safely off the 52-wk high, and 
is getting close to being under the 6% benchmark, which is a key 
psychological number.

Mixed Signs: 

Volatility Index:
The VIX continues to prove that 32-33 is a great buying opportunity, 
and also shows that the low 20's have been a good exit point. 

Advance/Decline Line:
The A/D line is showing signs of basing out.


OTM Call Analysis

As we move closer to the November expiration cycle, Pinnacle is 
tracking the level of call buying (OTM) between 680-780 among option
speculators. As we have been documenting, excessive out-of-the-
money (OTM) call may serve as overhead resistance.

November Expiration Cycle
OEX OTM Call Analysis (Open Interest November 680-780)
Date                 Open Interest     Change %    Alert

Friday, October 15        39,072          -
Friday, October 22        61,250       +56.8%
Friday, October 29        75,022       +92.0%
Friday, November 05       89,143      +128.1%

The Power of Sentiment Analysis

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

OEX Pinnacle Index              Friday
Benchmark                       (11/5) 

Overhead Resistance (720-740)     7.42

OEX Close                       718.80

Underlying Support (700-715)      0.87

Based on 11/5/1999, support is still light, 
and overhead resistance is heavy.

Put/Call Ratio                  Friday
Strike/Contracts                (11/5)

CBOE Total P/C Ratio             .69      
CBOE Equity P/C Ratio            .40
OEX P/C Ratio                   1.36

Peak Open Interest (OEX)  Friday
Strike/Contracts          (11/5)

Puts                    670 / 10,889	
Calls                   740 / 8,772
Put/Call Ratio            1.24

Volatility Index    Major
Date                Turning Point       VIX

July 16, 1999       Top                 18.13 
August  5, 1999     Bottom              32.12 

October 15, 1999    Bottom?             32.06

November 5, 1999                        22.52 

Investors Intelligence  Major             Percent     Percent
Date                    Turning Point     Bullish     Bearish

January 11, 1999        Top               58.3        30.0
March 4, 1999           Bottom            49.1        32.5

Oct. 13, 1999           Bottom?           39.2        37.5

November 4, 1999                          42.1        38.6


As of Market Close - Friday, November 5, 1999 

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

DOW Industrials   10,750  11,320  10,704    BEARISH   9.23
SPX S&P 500        1,350   1,420   1,370    Neutral  10.29
OEX S&P 100          690     725     719    Neutral  10.28
RUT Russell 2000     445     465     442    BEARISH   9.14
NDX NASD 100       2,320   2,500   2,756    BULLISH  10.28
MSH High Tech      1,120   1,250   1,394    BULLISH  10.28

XCI Hardware       1,000   1,090   1,085    Neutral  10.15
CWX Software         750     800   1,034    BULLISH   9.03
SOX Semiconductor    450     525     621    BULLISH  10.29
NWX Networking       525     615     668    BULLISH  10.28
INX Internet         450     525     529    BULLISH  11.05  *

BIX Banking          660     690     676    Neutral  10.28
XBD Brokerage        410     445     444    Neutral  10.28
IUX Insurance        645     660     635    BEARISH   7.23

RLX Retail           915     960     901    BEARISH   7.23
DRG Drug             365     390     398    BULLISH  11.04
HCX Healthcare       720     780     783    BULLISH  11.04
XAL Airline          180     190     151    BEARISH   5.21
OIX Oil & Gas        280     315     276    BEARISH  11.05  *

Posture Alert    
The Nasdaq continues to lead this market higher, as it powered up
another +46 to close above 3100 mark. Sectors continuing to show 
strength Friday include Internet (+3.71%), Insurance (+2.90%), 
Semiconductors (+2.88%), and Retail (+2.29%). With Friday's 
action, we have turned BULLISH on the Internet sector. To the 
downside, the Oil & Gas sector continues it woes, closing down 
-2.11%. The sector has broken support, and as such, we have turned
Bearish from Neutral.

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



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This newsletter is a publication dedicated to the education 
of options traders. The newsletter is an information service 
only. The information provided herein is not to be construed 
as an offer to buy or sell securities of any kind. The 
newsletter picks are not to be considered a recommendation 
of any stock or option but an information resource to aid the
investor in making an informed decision regarding trading in 
options. It is possible at this or some subsequent date, the 
editor and staff of The Option Investor Newsletter may own, 
buy or sell securities presented. All investors should consult 
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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              Sunday  11-7-99
Sunday                        2 of 7


For the week of November 8, 1999


None Scheduled


Import Prices            Oct    Forecast: 0.3%  Previous:  0.7%
Export Prices            Oct    Forecast: 0.2%  Previous:  0.2%
Wholesale Inventories    Oct    Forecast: --    Previous:  0.3%


Producer Price Index     Oct    Forecast:  0.2%  Previous:  1.1%
Jobless Claims           11/6   Forecast: 290K   Previous:  288K 
Chicago Fed Index        Sept   Forecast: --     Previous:  132.4


Veterans Day Holiday


Productivity             Q3-pre Forecast: 1.5%  Previous:  0.6%
Unit Labor Costs         Q3-pre Forecast: --    Previous:  4.5%
Retail Sales             Oct    Forecast: 0.3%  Previous:  0.1%
Univ Michigan Sentiment  Novpre Forecast: --    Previous: 103.2
Money Supply             11/1   Forecast: --    Previous: $4.3B



As traders, we have all had a position or two stopped out 
only to have the stock reverse course and turn an already 
agonizing loss into complete frustration. Sometimes during 
periods of extreme volatility, there just isn't enough time 
to allow stocks to move enough in the right direction to
make us money. A proof certain way to avoid this 
disappointment is to use spreads. Your profit will be 
limited but so to will your losses.

Just as every market has a period that calls for aggressive 
buying (Oct 98), so to does every market have a period that 
calls for conservatism (Current).

This market has been dominated by declining interest rates 
since '94'. The result, Nasdaq up nearly 300%, and the S&P up 
nearly 200%. While yields have backed off considerably as of 
late, (from 6.398% on Oct 25 to 6.085% at the time of this 
writing), the rate of decline is showing signs of slowing and 
could stall and reverse on any given day.

After a sharp run-up it is easy to forget what kind of market 
we have been in for the better part of 99. On the Nasdaq we 
have had no fewer than 4 corrections of 10% or better in less 
than 10 months. One would be hard pressed to find a period of 
more volatility. Markets like this are a very profitable 
situation if your timing is right, but without proper management,
emotion has been known to take over at times and force us to buy 
into a market that is overbought and could be nearing a short-term

The recent move has been awesome; the Nasdaq has jumped 11% in 
6 trading days. But Folks, we're pushing the top of a trend 
channel that hasn't been broken in 3 years. I am not saying that
this won't be the break-out move to send us into another trading 
range, I am merely offering a word of caution and a reminder 
that we have touched the top of this trend channel 4 times this 
year only to be followed by a swift 10% correction. It is true 
that November through April have been the best months to be in 
the market.

Stay in the market, but for a short period here, why not do 
it conservatively and use spreads until we see where interest 
rates are truly headed. Again, you won't make a killing, but 
you won't get killed.

I am sure everyone has had an amazingly profitable year. Let's 
make sure it stays that way.

A word in passing: I am neither a bull nor a bear when it comes
to option trading. I only call em' as I see em'.

Monty McCutcheon 
Associate Vice President 
Fahnestock & Co


X TRADE commission $35
Online SEGA Investors commission $29
Internet Disruptions $$$$$
Customer Service Problems $$$$$$
What happened?? $$$$$$



One of the costs when trading is the commission charge. 
Unfortunately for most traders it becomes the number one 
concern to the point of obsession to find the cheapest rate. 
Competition is significant in the brokerage business and the 
people that value quality in most aspects of their lives; 
homes, cars, etc. have sacrificed service and knowledge for 
a very small amount of money. Most successful traders do not 
drive a Yugo because they are the cheapest and get great 

The Internet has dramatically changed the brokerage business 
but many traders are falling between the cracks. They do not 
get the service that they need or maybe are not willing to 
pay for. Pay a little now or you may pay a lot later if you 
do not use stops to protect yourself. The knowledge and input 
from brokers that specialize in options will increase your 
bottom line and make trading much easier and less emotionally 

Option trading requires the highest degree of discipline 
because of the leverage and time decay. New traders often 
need assistance in understanding the mathematical probabilities
of the varying strike prices and time durations. $9.95 
commission is perfect for the individual trader that plans 
on buying a couple of hundred shares of stock XXX and holding
for the long term. For most short term traders (especially 

The execution difference of 1/8 or 1/4 on 1000 shares or 10 
options more than make up for the commission disparity. People
are rightfully concerned about what they pay but also need to 
be aware that the deep discount firms are not making money with
the low commission charges but instead compensated for their 
order flow or additional fees. By sending orders to certain 
exchanges they are paid for that order but the customer may 
not receive the best execution. The reality is you get what 
you pay for: If you pay cheap commissions, you are often 
paying in other ways. Those brokerage firms are only in 
business to make money and will continue to take advantage 
of uneducated traders that are under the impression that 
they have a great deal.

The best traders realize good execution is the difference 
between success and failure. The disciplined trading plan 
that full service option brokers can provide often is most 
appreciated most by those traders that "Know Better". Any 
trade is worth doing after the proper research has been done
as long as the plan is in place. The Entry Point, Stop Loss 
Protection, and Profit points must be selected prior to 
entering the market to ensure the best results. A good 
broker will help you with these aspects.

Good brokerage service is certainly worth more than the extra 
$25-$50 per trade. This is still a very small percentage of 
the total transaction. Life is challenging enough that traders
do not need to worry about Internet disruptions or having to 
watch the markets all day. Concern yourself with learning how 
to trade and you will become less concerned with commissions 
and understand what value really is.

Alan Knuckman & Andrew Aronson
LaSalle St. Securities
Toll Free 888-281-9569

Sunday, November 7, 1999


 Visit the trading club message boards and see what others have to 


If you would like to join contact us at Visit@OptionInvestor.com 
and Organize@OptionInvestor.com.

The Boston Option Investors Club met on October 20th to hear Eric 
Frait of the CBOE speak. It was standing room only and Eric 
delivered one of the best talks the group has heard, simply 
magnificent! He brought with him Al Jacobson, vice president of 
the Chicago Board of Options who added to Eric's comments from 
his own obviously vast amount of experience.

If anyone expected a dry, tedious talk about the nature of 
options, were THEY in for a surprise! Eric and his sidekick gave 
an extremely irreverent and hilarious talk during which they 
managed to debunk most of the rumors, myths and general 
misinformation we all know and love about the way that options 
trades function.

Their talk on volatility alone was worth the price of admission.
 BOIC members were overheard to say after the talk "Let's get 
more speakers that are terrific like Eric Frait!" Indeed, we 
invited him back for January and we hope he brings Al, too. If 
you're in the vicinity the week of January 10th, and want to learn 
a great deal that you never knew before, please feel free to 

On November 13th, BOIC will have its next meeting, which will be 
devoted to a Chart Reading Workshop, from 1 - 4 p.m. at Sudbury 
Public Library. Hal Barnett and Penny Bowman, two knowledgeable 
and experienced BOIC members, will lead the workshop, which has 
been frequently requested. "Chart reading is one of the best 
protections against letting emotions enter your trade," said Gang 
Yan, a BOIC member said in his email message in support of having 
this workshop.

On November 23rd, we will have our 3rd monthly Put Sellers 
Workshop, lead ably by Tom Keane, to review our recent choices 
picked at October's workshop, and how the seesawing market 
affected them.

Then on December 11th, Bob Rinear comes to town and will speak to 
us on Spotting Trends and tomorrow's Winner: The Split Play. 
Rinear is a highly recommended expert on trading the market.

Anyone interested in attending these events, please contact me 
at:  Contact Support 

Kim Lemaire 

Last night several of us got together as a study group on chart 
reading and it went very well. I encourage everyone to get 
together in small groups and do this so that when Jack presents 
his workshop on technical analysis and chart reading we are all 
going into it with the same foundation. If anyone is interested I 
can have another study group over this Saturday at around 10:30 
a.m. let me know if you're interested.

I am anticipating a large group for Jack's workshop and am 
presently looking for a space. If anyone knows of any conference 
rooms that we can meet in let me know.

Evan - ekwilder@aol.com


Dear Folks - 
I'm sitting here at my terminal having just sold 1000 shares 
of Emulex up 15 points plus in two sessions, and 2000 shares 
of Voicestream Wireless up 3 points plus in half an hour. 
That follows having gained 7 points on BMC Software in the 
last few days on a big position, and a very nice move and 
profit in Veritas calls. My heartfelt, most sincere thanks 
for your excellent work and service!!!!!!!!!!!!!!!! 
Ernest M. Dill


Jim and Group - 
We want to thank you for the all of the information that we 
received during the various seminars we attended at the San 
Francisco Money Show. We are relatively new at investing in 
Options. We thought we had it figured out early this summer 
and did some trades. Well, our results were not good and we 
decided we needed to learn some more before we started actually 
trading again. The OptionInvestor/Optionetics seminars we 
attended this past weekend sure helped! Not only did we learn 
some new things, we discovered that we were able to understand 
and weren't "snowed" by the information (we did learn something 
over this summer!). We have often toyed with the idea of 
starting a home-based business and now believe we have found 
the our niche. This is truly a business for us to do as a 
couple. We eventually would like to get our 15-year old son 
(and eventually our older son) involved. 
Thanks again. Keep up the good work! 
Arthur and Elizabeth Miller


Jim: I'm excited about the upcoming option instruction, to 
start Sunday, count me in. I'm at three months with you and 
am learning all the time. I have paid some dues in the market 
but not too much. Always my fault for staying on the bus too 
long. Am actually winning some now and then. I really enjoy 
your comments in the newsletter and they are so instructive. 
So much to learn and so little time to do it. 
Kindest regards, Jim Kilpatrick


Preferred Trade made my week, as I bought at the close and 
sold the opening gaps and given the fact that it's not browser 
based, it was very efficient unlike some of my trading buds 
that couldn't get into the Schwab's of the world. Thanks for 
the recommendation, more people need to know about this. 


Hi Jim,
First of all I wnat to thank you all for the doing a great job. 
For 39.95, it is a gift. I am now making money just like I had 
dreamed about more than seven months ago. Last month I made 
$15,000 with an investment of $5,000 in one week trading OEX 
options. I am still amazed that the returns are real. I now can 
see how people like the ones you mentioned in you your writeup 
can make over a million a year. I believe it is just a matter 
of time and by the grace of God before I can do it too. I am 
still learning.


Dear Janar,

My name is Graham Dutton and I am from Australia.
I took a course with On-Line Investors Advantage which 
included a 6 month subscription to the Optioninvestor 
Newsletter. I have been reading the newsletter and have 
found some great information with lots of great play 
suggestions.During the past month alone I have been lucky 
enough to have a 130% return following the suggested plays.
I have noted that one of the most important aspects of Option 
trading is to target your entry point.

The problem that I am having is lack of sleep!
At the end of Oct you finished Daylight Saving and we 
started ours, This means the market opens at 1.30AM!!! 
Melbourne time. Oh well not much I can do about that.
I am also looking forward to Jim's new 10 part series 
starting today.

Graham Dutton

(1:30 AM - WOW ! a real hardcore trader - Jim)


Great Broker for a rookie

As a retired dentist searching for my next career I have 
become absolutely fascinated by the stock market and options
in particular. Several months ago my wife (a practicing 
physician) asked me when I would begin my speculative investor
career with real money. My answer was "when I pass my board 
exams." I had set up a minimum 6 month curriculum aimed at 
developing my basic knowledge. (Lots of books, video tapes 
and steady doses of the OI newsletter) Then I established 3 
months of profitable paper trading as my "competency board 
The next step was to find a way to place my orders. I quickly
found out that almost nobody would let me sell naked puts or 
set up combination plays because I had absolutely no experience.
It was like applying for a job back in high school. 

Now the reason for this letter: 
Through your web site I found Andy Aronson and Alan Knuckman 
at LaSalle St. Securities in Chicago. Not only would they let 
me play the game; they always took the time to make sure I 
knew what I was doing. Those two men put up with all of my 
rookie stuttering and stammering and helped me learn the 
language of real world trading. I would be completely prepared
and when they answered the phone; what I call the "Andy Effect" 
would kick in. Suddenly I couldn't speak coherently! One 
morning I called them fully prepared. As usual I began to 
melt-down with second thoughts. Andy said something like "well 
John, what's your plan?" I responded with "heck I don't know 
if I have a good plan". He came right back with "Well, if you 
don't have a plan - don't trade." Woke me right up! I told him 
my strategy and plan and placed the trades. 

I want to personally thank both Andy and Alan for their patience,
thoughtfulness and guidance through this most difficult phase of 
training in a new profession. For thirty years I have been the 
boss and it is very strange breaking into a new field as complex
as speculative options trading. Andy and Alan have a "double 
check" system that I'm sure is reserved for rookies like me just
to make sure I understand what I am doing and how much I'm 
putting on the line before they call in my trades. Hopefully in 
the near future I will grow to become just another trader. I 
highly recommend them to anyone, especially those of us who are 
having our egos for breakfast most mornings as we dive into this 
exciting world of options trading. 
Sincere thanks, 
John McCreary, DDS


I discovered your site several days ago and am very impressed. 
You have an absolute AAA and Ill even add one more "A" for a 
job well done. 
I find your site exceedingly valuable with it's numerous menus 
and categories chucked full of vitals. I am spreading the word 
about you and foresee a long and very prosperous future which 
I hope to benefit from with your great stock picks. 
Chris Alex

                                            YR AGO   EST EPS
11/08 Comcast Corp.           (Nasdaq:CMCSK)(0.01)    0.04
11/08 May Department          (NYSE:MAY)     0.35     0.38
11/09 Allied Waste Inds. Inc  (NYSE:AW)      0.26     0.28

11/09 Cisco Systems           (Nasdaq:CSCO)  0.17     0.23
11/09 Dollar General Corp.    (NYSE:DG)      0.15     0.19
11/09 Wal-Mart Stores, Inc.   (NYSE:WMT)     0.23     0.28
11/09 Waste Management Inc.   (NYSE:WMI)     0.49     0.47

11/10 Federated Department    (NYSE:FD)      0.50     0.53
11/10 Kmart Corp.             (NYSE:KM)      0.08     0.10
11/10 Newmont Mining          (NYSE:NEM)     0.04     0.02
11/10 Thermo Electron Corp.   (NYSE:TMO)     0.27     0.25

11/11 Dell Computer Corp.     (Nasdaq:DELL)  0.14     0.18
11/11 Gap, Inc.               (NYSE:GPS)     0.27     0.34
11/11 Masco Corp.             (NYSE:MAS)     0.37     0.42
11/11 McDermott International (NYSE:MDR)     0.84     0.19
11/11 Nordstrom, Inc.         (NYSE:JWN)     0.27     0.27
11/11 PacifiCorp              (NYSE:PPW)     0.20     0.26
11/11 Pep Boys                (NYSE:PBY)     0.20     0.25


Daily Results

Index       Last   Week
Dow      10704.48 -25.38
Nasdaq    3102.29 135.90
$OEX       718.80   1.77
$SPX      1370.23   7.30
$RUT       442.41  13.77
$TRAN     3003.99 -54.99
$VIX        22.06  -0.50

Calls              Week

EMLX       182.63  26.69  EMLX once again in record territory
SEBL       128.25  18.44  Upcoming stock split November 12th
AOL        146.00  16.63  AOL advanced nearly 13% last week!
ORCL        58.69  11.13  Dropped, moved too far, too fast
BVSN        83.50   9.88  New, strong volume & new high on Fri.
AAPL        88.31   8.19  New, in striking distance of $100
NT          68.81   6.88  New, more like "movin' up quickly"
MXIM        85.31   6.38  New high for last 7 trading sessions
ADPT        50.31   5.31  ADPT looks to continue upward trend
ADIC        42.50   5.25  Dropped, looks to be consolidating
SFA         62.25   5.00  Annual shareholder meeting next Weds.
SNE        164.69   4.94  New, time to play one of our favorites
INTC        82.38   4.94  New, mother of chipmakers on the rise
SUNW       109.69   3.88  New, we look for the sun to rise
LSCC        38.41   3.03  New, hottest sector in town
LVLT        71.13   2.75  Waiting for a breakout
IMNX        65.56   2.56  Momentum looks to be in our favor
KMB         65.50   2.50  New, not a tech stock but breaking out
HD          78.00   2.25  New, Earnings run, split candidate
SYMC        49.88   2.13  The bulls crowd into the ring
WMT         58.06   1.75  Dropped, earnings on Tuesday the 9th
DELL        40.75   0.63  Dropped, Dell is being a stinker
CMVT       113.75   0.25  Looking for a stock split announcement
VRTS       108.06   0.19  Entry point on the split run??
RATL        42.88   0.13  Dropped, just not moving fast enough
GMST        85.56  -1.31  Dropped, a shooting star fades out
VSTR        97.00  -1.75  Ready to breakout over $100
PCS         81.06  -1.88  Dropped, shooting star dug a crater


AMZN        64.94  -5.69  New, looks to be headed underwater
BBY         50.63  -5.13  Bears seem to be winning the war
GT          36.69  -4.63  And the tires continue to spin
LTD         37.50  -3.50  Dropped, approaching earnings date
ALD         55.63  -1.31  We are looking for the signal...
PBI         44.88  -0.69  Dropped, risk reward not in our favor
VISX        67.00   4.44  Dropped, do not want to be blinded
NDB         35.25  11.31  New, should be headed back to Earth



AAPL - Apple Computer 
SNE  - Sony Corp
INTC - Intel Corp
SUNW - Sun Microsystems, Inc
BVSN - Broadvision
NT   - Nortel Networks
LSCC - Lattice Semiconductors
KMB  - Kimberly-Clark
HD   - Home Depot


NDB  - National Discount Brokers
AMZN - Amazon.com


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.


ADIC $42.50 (+5.25) The dynamics have changed on our play of 
ADIC and we are therefore dropping from the call list for 
awhile.  When we added ADIC, it was just beginning to breakout 
and the volatility (and premiums) were still low.  After 
Monday's open at $39 and run to over $46 in less than an hour, 
the premiums have skyrocketed.  We still had a lot of chances 
to make a profitable trade during intraday swings but it now 
looks to be consolidating.  We will let ADIC calm down and 
let the premiums return to normal.  But it will always be high 
on the watch list due to the positive developments at the 
company, earnings in early December and high marks for the 
allowing for entry points.

DELL $40.75 (+0.63) Plain and simple DELL is being a stinker.  
There's been lots of positive press surrounding the company, the 
markets have been in rally mode, and zippo.  We were expecting 
some action ahead of its scheduled earnings next week on 
Thursday, Nov 11th thus prompting us to keep it on our call 
list this long.  But after watching DELL finally break out of 
its tight trading range (above $41) on Tuesday only to give it 
all back on Friday was the final straw.  Our technical play 
turned earnings' hopeful is officially dropped this weekend.

RATL $42.81 (+0.13) After the favorable Economic Data on 
Friday, a follow through of the recent price surges in RATL
was expected, but this was not the case.  The stock just is 
not moving fast enough for us to capitalize on the short-term
momentum movement of the overall market and it is probably in
our best interest to take our profits and put the gains in 
other market movers that are experiencing higher-highs over
the near period.  The technicals and fundamentals still are
firmly in place and look good.  The stock has bounced off 
of the weekly lows of $40.38 nicely, and have proved to be 
a profitable trade.  

PCS $81.06 (-1.88) While PCS took a blasting on Tuesday from 
news that Comcast was selling its remaining interest in PCS, 
much as we thought, it turned out to be a buying opportunity, 
shooting PCS back up to almost $85 (resistance) by Friday 
morning.  After that, this shooting star dug a crater on re-
entry, falling back almost $4 to close just off its low of the 
day.  Even in the stellar market we saw last week, there wasn't 
enough oomph to push PCS through resistance and the fall was 
severe.  We still think PCS is a great long-term hold, but the 
trend that originally got us into this trade is over.  Thus we're 
dropping PCS this weekend.

ORCL $58.69 (+11.13) Why are we dropping this incredibly 
profitable play?  Simple - it moved too far, too fast.  While 
it closed at another new high on Friday, it had reached as high 
as $61 before falling in the afternoon to close at its low of 
the day on above average volume.  Technically, that signals a 
top, prompting us to take our profits and get out before the 
damage is done.  Don't let greed get the better of you and 
cause you to hold out for more.  That big spike with a close at 
the low was a warning shot fired across the bough.  Time to go.

GMST $85.56 (-1.31) Did you make a wish? Gemstar went shooting 
down nearly three points on Friday, finding brief support at 
$87 and then plummeting down to break through $86.  GMST has 
violated its 10-dma and all of this has occurred with nothing 
new in the news department.  If you have been following this 
play, you will remember that when we first began playing GMST, 
we noted the lack of news supporting the run.  This run began 
based purely on momentum and it looks as though the momentum 
is continuing, just in the opposite direction.

WMT $56.00 (+1.75) We are dropping this play due to the 
upcoming earnings announcement on Tuesday.  WMT was helped 
along in winding up its earnings run by the positive employment 
report Friday morning. Wal-Mart treated us to a new 52 week 
high of $58.75 before retreating a bit in afternoon trading. 
WMT tested a support of $58 before finally breaking through and 
trading as low as $57.25 late day on Friday. If you are going 
to continue to play WMT on Monday, be sure to close out your 
positions in the afternoon, as WMT will announce before the bell 
on Tuesday. 

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



PBI $44.88 (-0.69) We believe that the risk reward is no longer 
in our favor with the shares of PBI.  We have carried this put 
position for three weeks now and the and the downside pressure 
has flattened out, which leads us to believe that all of the 
major selling is over for now and the value players might want 
to step in at these levels for some bottom fishing.  We had 
mentioned on Thursday, that if the Economic Data was digested 
favorably that we would opt to take our money off the table in 
PBI.  Well the U.S. unemployment rate fell to a 30 year low in 
October, and a mild wage gain soothed fears of interest-rate 
rises by the Fed.  The market rallied.  This should be good for 
stocks in the near term.  We look to close all positions here 
in the shares of PBI.

VISX $63.56 (+4.44) You just can't beat a good revenue stream.  
Every time someone has laser surgery done to correct his or her 
vision, VISX gets paid.  This is one play that went against us 
in a hurry yesterday.  In short, VISX spiked up on big volume 
in the morning and held steady throughout the day.  We can find 
nothing in the news to tell us why, but the reversal is enough 
to tell us to get out at this time.  Nice gains with volume and 
no news could be a precursor to another move up, but don't run 
out and buy calls either.  We're dropping this play today rather 
than let ourselves get blinded by this laser's intensity.

LTD $37.50 (-3.50) The Limited opened strongly on Friday, 
trading as high as $38.19, just pennies below LTD's 10-dma. 
LTD then made a turn and then spent the remainder of the day 
slowly retreating.  We are dropping this play because we are 
concerned about the late day bounce at $37, which is proving 
to provide continuing support.  With LTD flirting with a 
breakthrough of it's 10-dma and earnings just over a week away, 
we do not think that it is likely that LTD is going to 
continue to decline, at least not enough to justify the 


CMVT - Comverse Tech.
SNE  - Sony Corp
MXIM - Maxim Integrated Products 
Split Candidates that are not current plays:
CHKP - CheckPoint Software
MEDI - Medimmune Inc
DCLK - DoubleClick


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

Symbol - Stock         Splits/Date  
DNA  - Genentech       2:1 no date set
GIS  - General Mills   2:1 11-08-99 ex-date 11-09
JAKK - Jakks Pacific   3:2 11-10-99 ex-date 11-12
KING - King Pharm      3:2 11-11-99 ex-date 11-12
PHCM - Phone.com       2:1 11-12-99 ex-date 11-15
SEBL - Siebel Systems  2:1 11-12-99 ex-date 11-15
EMLX - Emulex          2:1 11-18-99 vote to aprove
AOL  - America Online  2:1 11-19-99 ex-date 11-22
AMGN - Amgen           2:1 11-19-99 ex-date 11-22
VRTS - Veritas         3:2 11-19-99 ex-date 11-22
AOL  - AmericaOnline   2:1 11-22-99 ex-date 11-23
POWI - Power Integrat  2:1 11-22-99 ex-date 11-23
OCLI - Optical Coating 2:1 11-30-99 ex-date 12-01 cancelled
ADVP - Advance Paradigm2:1 11-30-99 ex-date 12-01
ORBK - Orbotech        3:2 11-30-99 ex-date 12-01
VRTY - Verity          2:1 12-03-99 ex-date 12-06
SUNW - SunMicro        2:1 12-07-99 ex-date 12-08
AGN  - Allergan        2:1 12-09-99 ex-date 12-10
GDW  - Golden West     3:1 12-10-99 ex-date 12-13
XLNX - Xilinx          2:1 12-27-99 ex-date 12-28
JDSU - JDS Uniphase    2:1 12-29-99 ex-date 12-30

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


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

Call plays of the day:

LSCC - Lattice Semiconductors $38.41 (+3.03)

See details in sector list

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


BVSN - Broadvision $83.50 (+9.88)

See details in sector list

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


VSTR - VoiceStream Wireless $97.00 (-1.75)(+9.88) 

See details in sector list

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


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

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

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

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

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

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


EMLX - Emulex $182.63 (+26.69)(+16.69)(+11.25)

Emulex is all about easy access.  The company designs three 
types of network connectivity products: network access servers, 
printer servers, and high-speed fibre channel products.  The 
firm's network access servers enable remote access to WANs, 
while its printer servers connect directly to LANs (others 
usually connect to file servers), thus enhancing network 
performance.  Its Fibre Channel products, such as the flagship 
LP7000 adapter, provide high performance interfaces for computer 
networks.  Emulex sells its products to OEMs (71% of sales) and 
distributors (25% of sales).  Sequent Computer Systems and IBM 
account for 12% of 11% of sales, respectively.

It's amazing how tame inflation numbers can boost an investors 
moral.  This was the case on Friday when the October's 
unemployment figures were released.  Buyers were at full force 
ready to take advantage of the improving market conditions.  
Our call play on EMLX was no exception as buyers rushed the 
stock sending it once again to record territory.  This split
run play has produced some nice returns for our investors 
since we first started the play back on October 17th, a 42 
percent return in three weeks is not too shabby for the stock.  
That translates into a quadruple return on some options.  We 
originally started the play on an EMLX because on Oct 12th 
the company announced a 2:1 stock split, pending shareholder 
approval.  The anticipated shareholder meeting is scheduled 
on November 18, which is less than two weeks away.  In the 
mean time, we plan to take advantage of the situation and 
play the spit run for what it's worth.  When entering new 
trades, watch for slight pullbacks in the stock, which has a 
tendency to happen in the late morning.  For the big risk 
takers, place your trades near the end of the trading session, 
the last three trading sessions EMLX has jumped substantially 
at the open.  The nearest support level is near $160, which is 
well below the current trading level so adjust your stops 
proportionally to increases in the stock.  With market 
conditions backing us, let's see how high our split run will 
take us.  It is likely traders are waiting for $200 before 

There was no additional news to report at this time that would 
alter our position on EMLX.    

***Caution: only 2 weeks left for November options***

BUY CALL NOV-170*UMQ-KN OI=257 at $20.50 SL=16.50
BUY CALL NOV-180 UMQ-KP OI=  0 at $00.00 SL=00.00 new strike
BUY CALL NOV-185 UMQ-KQ OI=  0 at $00.00 SL=00.00 new strike
BUY CALL DEC-180 UMQ-LP OI=150 at $23.88 SL=18.75

Picked on Oct 17th at $128.00     P/E = 258
Change since picked    +54.63     52 week high=$186.25             
Analysts Ratings    4-3-0-1-0     52 week low =$  9.69                 
Last earning 07/14  est= 0.16     actual= 0.26                            
Next earning 01/31  est= 0.27     versus= 0.05                            
Average Daily Volume =  500 K 
Chart = http://quote.yahoo.com/q?s=EMLX&d=3m


LVLT - Level 3 Communications $71.19 (+2.75)(+6.00)

Level 3 Communications, Inc. is a communications and 
Information services company that is building the first 
upgradeable international network optimized for Internet
protocol technology.  The Level 3 network combines local, 
long distance, and undersea networks, connecting customers 
end-to-end across the U.S. and in Europe and Asia.  The 
company expects to complete its planned network construction 
in phases beginning in the first quarter of 2001.

A big positive in the shares of LVLT on Friday was that the
price surges were sustained, and the stock ended up closing
at the higher end of the range at $71.19, with the intraday
high for the day of $71.25.  This was a break in the recent
pattern of price surges in the morning and then major profit-
taking at the end of the day.  With the favorable Economic
Data that was reported on Friday, and the overall market
confidence returning to Wall Street that the Fed is possibly
on hold for the remaining of the year, buyers returned to 
the stock.  The technical picture remains bullish with the 
Moneystream and Volume strong, and the stock remaining firmly
in the relative strength channel, we should see much higher 
prices.  Going forward we like the shares at these levels, 
being mindful that the stock is volatile and needs to be 
monitored closely with tight stops on any new positions 
taken.  We are looking for a breakout of the current range.  
A breakout would be above the recent highs of $73.13.  

The telecom sector is booming right now and companies like
LVLT, NXLK, QWST are fighting to bring a potpourri of 
Technologies.  Technology that will bring voice and data 
services to small and mid-sized business customers.  So far 
LVLT is in good position to compete, although the outright 
leader has not emerged.   

***Caution: only 2 weeks left for November options***

BUY CALL NOV-65*QHN-KM OI=1542 at $7.13 SL=5.38
BUY CALL NOV-70 QHN-KN OI=2883 at $3.63 SL=1.88
BUY CALL DEC-65 QHN-LM OI= 976 at $9.50 SL=7.75
BUY CALL DEC-70 QHN-LN OI=1237 at $6.63 SL=4.50

Picked on Oct 28th  at   $68.63     P/E = N/A
Change since picked       +2.81     52 week high=$100.13
Analyst Ratings       5-3-1-0-0     52 week low =$ 29.88
Last earnings 10/22   est=-0.51     actual=-0.43
Next earnings 02-18   est=-0.65     versus=-0.11
Average daily volume = 1.80 mln 
Chart = http://quote.yahoo.com/q?s=LVLT&d=3m  


ADPT - Adaptec Inc.  $50.31 (+5.31)(+4.44)

Adaptec, Inc is a market leader with host I/O, RAID, and CD
recording software products that transfer, manage, and protect
data.  Adaptec empowers customers with high performance, 
reliable access to data stored on Internet, database, ERP, 
and other Windows NT servers.  Adaptec also makes host adapter 
cards that plug into powerful computers and speed the transfer
of data to and from devices like disk drives, scanners and 
CD-ROM drives.  It's also the No. 1 maker of software for
recordable compact-disc drives.  Adaptec is an S&P 500 and 
Nasdaq 100 company.

ADPT continued the upward trend climbing the past week up 
over 5 points, the Nasdaq composite index jumped 46.34 points
on Friday, or 1.52 percent to close at 3,102.29, continuing
a winning streak fuelled by strong investor appetite for 
almost anything technology.  That includes ADPT.  ADPT hit 
another 52-week high on Friday at $50.50 intraday, before
closing just below the highs at $50.31.  The technical 
picture remains consistent with our last report.  Prices
surging, strong money stream, although the volume remained
average.  The positive Economic Data has given the overall
market some comfort going forward that the Fed is now in 
favor of not raising interest rates.  This, along with a 
30 year treasury that is yielding 6.06% is positive for
stocks.  We got the higher highs that we were expecting, 
and remain bullish on the shares going forward.  We look
for prices above recent highs of $50.50 to be confirmed
before we add to current positions.

The overall picture is positive for ADPT in the near-term, 
with recent price targets increased to $55.  The Ultra160
SCSI Technology was selected for NEC Servers.  Finally, 
the plans to buy privately held Distributed Processing
Technology for $235 million in a deal will only strengthen
Adaptec's effort to provide hardware and software for 
Backing up computer storage systems.

***Caution: only 2 weeks left for November options***
BUY CALL NOV-45 APQ-KI OI= 370 at $6.00 SL=4.25
BUY CALL NOV-50 APQ-KJ OI= 217 at $2.63 SL=1.38
BUY CALL DEC-45 APQ-LI OI= 140 at $7.25 SL=5.50
BUY CALL DEC-50 APQ-LJ OI= 107 at $4.13 SL=2.63

SELL PUT NOV-47.50 APQ-WW OI=38 at $0.94 SL=2.00
(See risks of selling puts in the play legend)

Picked on Nov 2nd  at    $48.06     P/E = 31
Change since picked       +2.25     52-week high=$50.50
Analyst Ratings       2-3-2-0-0     52-week low =$15.50
Last earnings 10/21   est= 0.41     actual= 0.45
Next earnings 01-24   est= 0.47     versus= 0.24
Average daily volume = 2.17 mln 
Chart = http://quote.yahoo.com/q?s=ADPT&d=3m


AAPL - Apple Computer $88.31 (+8.19)

Apple Computer designs, develops, produces, markets and services 
microprocessor-based personal computers.  AAPL makes the popular 
and colorful I-mac computers and the Mac OS operating system, 
the first commercially viable graphical user interface.  Its 
other products include laptop computers, peripherals, handheld 
devices, servers, Internet tools, and networking and connectivity 
products.  Apple is run by the original founder, Steve Jobs.  

The Mac is Back!  That is the message that CEO, Steve jobs is 
telling to investors and investors are well...investing.  AAPL 
powered higher for yet another week and is now in striking 
distance of $100.  You may recall it was less than 2 months 
ago that people were dumping shares of Apple when the company 
said there would be a drag on earnings due to Motorola not 
being able to ship chips fast enough to meet demand for the 
popular (and colorful) IMAC computer line.  That issue was 
quickly resolved and AAPL picked up the trend it had for most 
of the summer.  In fact, it is hard to find a trend as nice 
as AAPL during the rocky month of October.  The rebound is 
partly seasonal for box makers and increased by news that 
the IMAC is popular for students and holiday shoppers.  This 
week Bear Sterns raised their price target for AAPL to $90-$95 
from $75-$80.  They cited increased confidence in the near-term, 
incremental upside from Apple's coming Internet strategy which 
is to be unveiled within 3 to 6 months, and valuation.  This 
last point is probably the best sell to conservative investors.  
Perception is starting to change from where it was just over 
a year ago.  At that time traders were wondering if AAPL 
could ever comeback.  The P/E dropped to single digits.  Now 
the P/E sits at 24 but is still one of the lowest in the 
industry.  As far as entry points, we like $80 as an entry 
point but don't know if we will get that lucky.  There is also 
some support at $84 which may be more realistic.  Ultimately 
it will depend on the market.  When is the NASDAQ going to 
take a breather?  Once we get this consolidation and a bounce 
off support, AAPL could be ready to charge toward $100.  Monday 
will be an interesting day as traders try to sort out the MSFT 
verdict so use caution but take advantage of any new found 

There is never a shortage of news on Apple but one point to be 
watching for this week is DELL.  Other than the MSFT news which 
will also have a huge affect on the markets, don't forget that 
DELL reports earnings on Thursday.  Now that they are numero 
uno among computer makers, their report will say a lot for the 
current demand heading into the holiday season.  They report 
after the close on Thursday and are looking for $0.11 cents.

***Caution: only 2 weeks left for November options***

BUY CALL NOV-80*AAQ-KP OI=2688 at $ 9.25 SL=6.75
BUY CALL NOV-85 AAQ-KQ OI=4458 at $ 5.75 SL=4.00
BUY CALL DEC-80 AAQ-LP OI= 645 at $11.75 SL=9.25
BUY CALL DEC-85 AAQ-LQ OI= 546 at $ 8.38 SL=6.50 

Picked on Nov 07th at    $88.31    P/E = 24
Change since picked       +0.00    52-week high=$88.38
Analysts Ratings      8-8-6-1-0    52-week low =$28.50
Last earnings 10/99   est= 0.45    actual= 0.51 
Next earnings 01-13   est= 0.89    versus= 0.78
Average daily volume = 5.86 mln
Chart = http://quote.yahoo.com/q?s=AAPL&d=3m


SNE - Sony Corp $164.69 (+4.94)

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

Once again we have decided to recommend one of our favorite 
call plays, SNE.  This is familiar territory for investors 
that follow our recommendations and know why we like this 
stock so much.  It may not be the fastest moving stock but it 
can produce some nice returns.  With the holiday season right 
around the corner, what better time to play a stock like Sony.  
Last week the company announced sales from its PlayStation 
home game machine and associated products would top $1 billion 
for this year's holiday season.  This news was enough to spark 
investors' interests, which have propelled the stock into 
newer highs.  Since mid-October the stock is up more than 
12 percent and is poised to continue its upward climb as the 
holidays near.  If SNE starts out of the gate strong on Monday, 
consider current trading prices as entry points.  The nearest 
support level is the breakout price at $160 and resistance is 
at the new high near $167.  With good market conditions and the 
holidays coming soon, expect SNE to show why it's a leader within 
the sector.  One other catalyst is the increasing possibility 
of a stock split.  They have enough shares authorized but the 
timing of an announcement is anyone's guess. 

The Sony Corporation is revolutionizing the camcorder by 
creating an all- in-one digital disk-based camcorder. 
Announced November 2, the new MD Discam's breakthrough 
technology makes it easy for anyone to record and edit in 
the same camcorder.

***Caution: only 2 weeks left for November options***

BUY CALL NOV-160*SNE-KL OI=100 at $ 7.88 SL=5.75
BUY CALL NOV-165 SNE-KM OI= 98 at $ 3.75 SL=1.75
BUY CALL DEC-160 SNE-LL OI= 33 at $11.25 SL=8.75
BUY CALL DEC-165 SNE-LM OI= 46 at $ 8.50 SL=6.50

SELL PUT NOV-155 SNE-WK OI=130 at $ 1.44 SL=2.75
(See risks of selling puts in the play legend)

Picked on Nov 7th at  $164.69     P/E = N/A
Change since picked     +0.00     52-week high=$165.69
Analysts Ratings    0-1-0-0-0     52-week low =$ 65.50
Last earnings 10/99  est= N/A     actual= N/A
Next earnings 01-00  est= N/A     versus= N/A
Average Daily Volume =  190 K
Chart = http://quote.yahoo.com/q?s=SNE&d=3m 


INTC - Intel Corp $82.38 (+4.94)

Intel is the world's #1 chip maker.  Its star performer is 
the Pentium chip and the low-end Celeron chip.  They have an 
overwhelming 85% of the market share in the industry and have 
been providing the microcomputer components for IBM-compatible 
PCs since 1981.  Intel has operations in the US, Europe, Asia, 
and Central America.

The mother of all chip makers is once again on the rise.  During 
a Webcast conference call on October 28th, Intel tooted an 
expected record 4Q dispelling the Y2K concerns and stating no 
likely impact from Taiwan's massive earthquake last month.  The 
company declared they will meet the strong demand for chips even 
in light of the tight supply.  Additionally, they have a new 
first of its kind "system-on-a-chip" in development, code-named 
Timna, designed for lower-end PC's.  Plus Intel cited it is on 
track to release an 800 megahertz Pentium chip in the first half 
of 2000 with a 1 gigahertz chip, code-named Willamette, in the 
second half of the year keeping fierce rival, Advanced Micro 
Devices (AMD), on its toes.  Following the positive Webcast, 
CIBC upgraded INTC to a Buy from a Hold and ABN AMRO reiterated 
their Outperform rating the very next morning (Friday October 
29th).  Investor interest was piqued and INTC jumped up $5.25, 
or 7.3% on the positive news.  The momentum on INTC's news 
driven climb remained intact this week and the share price 
continued to edge higher.  The stock is now moving closer to 
its 52-week high at $89.50, set at the beginning of September. 
Looking at three-month chart, INTC is above the 10, 30, and 
50-dma's, breaking through the latter one this week which 
provides us with further evidence that we're not just seeing a 
head fake.  Couple these factors with the resurgence in the 
semiconductor sector and we have ingredients for a call play.  
Remember to confirm the stock direction and especially market 
sentiment before opening any new plays.

This week was also packed with news surrounding Intel.  On 
October 20th Intel had commenced an all-cash tender offer to DSP 
Communications (DSPC) stockholders for all the shares of common 
stock at $36 p/s.  The offer will expire at midnight EST on 
November 17th, however both companies anticipate that all of 
the regulatory requirements will be met; and on Thursday, they 
announced they have completed all Israeli governmental 
approvals.  Also on Thursday, Intel filed with the SEC to sell 
approximately $20.7 mln of its CMGI holdings.  This translates 
into about 200 K of its estimated 4 mln shares of CMGI stock.
But the big news hit the press on Friday!  Intel has won a key 
antitrust victory lifting an order that required it to release 
patented microprocessor technology to smaller competitors, in 
particular Intergraph Corp.  Despite the 2-0 ruling lifting the 
injunction, Intel is still under investigation by the FTC for 
other antitrust issues. 

**November calls expire in two weeks** 

BUY CALL NOV-80*INQ-KP OI=26188 at $4.00 SL=2.50
BUY CALL NOV-85 INQ-KQ OI=13997 at $1.50 SL=0.75
BUY CALL NOV-90 INQ-KR OI= 5351 at $0.38 SL=0.00 High Risk!
BUY CALL DEC-85 INQ-LQ OI= 4999 at $3.50 SL=1.75
BUY CALL DEC-90 INQ-LR OI= 2641 at $1.75 SL=1.00

Picked on Nov 7th at     $82.38    P/E = 35
Change since picked       +0.00    52-week high=$89.50
Analysts Ratings    16-14-6-0-0    52-week low =$45.63
Last earnings 09/99   est= 0.57    actual= 0.55 surprise -3.5%
Next earnings 01-12   est= 0.63    versus= 0.60
Average Daily Volume = 25.6 mln
Chart = http://quote.yahoo.com/q?s=INTC&d=3m


LSCC - Lattice Semiconductors $38.41 (+3.03)

Lattice Semiconductor Corporation designs, develops and 
markets high performance programmable logic devices ("PLDs") 
and related development system software.  LSCC invented 
in-system programmable ("ISP(tm)") PLDs.  PLDs are standard 
semiconductor components that can be configured by the end 
customer as specific logic functions, enabling shorter design 
cycle times and reduced development costs.  Their products 
are sold worldwide.  Lattice was founded in 1983 and is based 
in Hillsboro, Oregon. 

LSCC has been trending up steadily and being that the 
semiconductor sector in general has been performing so well, 
we expect this momentum to continue.  LSCC traded up to a new 
all-time high of $38.81 on Friday and closed just short of this 
level.  LSCC continually tested and bounced from a support of 
$38 in trading on Friday.  Should this support hold heading 
into next week, $38 could serve as a nice point of entry.  Of 
course, you will want to confirm momentum before entering.  If 
LSCC does pull back, the $38 will serve as resistance rather 
than support and we recommend waiting for a bounce and a return 
of positive momentum before entering.  LSCC has further support 
at it's 10-dma of $35.  Besides, it usually pays to play in 
the hot sectors and there aren't many hotter than Semis right 
now.  Watch the trend from last week and notice the higher-
lows that are forming.  You can draw a straight line along 
them and use this line as a possible gauge for entry points.    

Lattice announced on Wednesday, that they have completed the 
private placement of $260 million of 4.34% Convertible 
Subordinated Notes to qualified institutional investors.  LSCC 
plans to use the proceeds of this placement to repay the debt 
incurred due to the acquisition of Vantis in June. 

BUY CALL NOV-30 LQT-KF OI=290 at $8.63 SL=6.50
BUY CALL NOV-35 LQT-KG OI=555 at $4.25 SL=2.50
BUY CALL NOV-40 LQT-KH OI= 33 at $1.38 SL=0.50
BUY CALL DEC-40 LQT-LH OI=126 at $2.94 SL=1.50

Picked on Nov 7th  at   $38.41      P/E = N/A                           
Change since picked      +0.00      52-week high=$38.81 
Analysts Ratings     9-8-4-1-0      52-week low =$15.44                  
Last earnings 10/99  est= 0.19      actual= 0.23                             
Next earnings 01/00  est= 0.34      versus= 0.23                            
Average Daily Volume =   520 K
Chart = http://quote.yahoo.com/q?s=LSCC&d=3m


SUNW - Sun Microsystems, Inc $109.69 (+3.88)

Sun Microsystems is the leading provider of high quality 
hardware, software and services for establishing enterprise
wide intranets and expanding the power of the Internet.  Sun
is the leading maker of UNIX-based, number crunching 
workstation computers, storage devices, and servers for 
powering corporate computer networks.  With more than $11 
billion in annual revenues, the company sells its products to 
a variety of different markets, and can be found in more than 
150 countries.

Sun announced this week that it plans to ship a new version of
its operating system, Solaris 8, in February-the same month 
Microsoft plans to unveil its long awaited Windows 2000 software.
you might think this is a coincidence.  Nope.  They want to 
compete and they believe that they can win.  The street has 
been buying SUNW's story since the end of Oct., which has seen
major price surges.  The stock hit another 52-week high this 
week at the $111.25 level, before finishing Friday at $109.69.
all the technicals are converging-volume, moneystream, and 
relative strength are hitting on all cylinders.  We look for 
higher-highs.  Confirm the market momentum, the stock can have
major price swings during a trading day.  Current support is 
at the $107.56 level.  Remember we have a 2:1 split coming up 
in early-December.  The ex-date is Dec 8th.  This will also 
help to fuel the stock price.   

After the federal judge ruled Friday that MSFT was a monopoly, 
the high technology veterans in Silicon Valley cheered.  SUNW 
and other companies around the world feel vindicated and they 
couldn't be more elated.  To be specific, the government alleges 
that MSFT tried to sabotage SUNW' Java cross-platform 
capabilities, which it saw as a threat to the popularity of 
its Windows operating system.  We should see a good bounce 
in stocks like SUNW on the back of this favorable ruling for 
the government.  Expect lots of volatility on Monday! 

***Caution: only 2 weeks left for November options*** 

BUY CALL NOV-105*SUX-KA OI=5144 at $ 6.88 SL=5.38
BUY CALL NOV-110 SUX-KB OI=3481 at $ 3.88 SL=1.75
BUY CALL DEC-105 SUX-LA OI=1224 at $10.00 SL=7.50
BUY CALL DEC-110 SUX-LB OI=1754 at $ 7.38 SL=5.63

Picked on Nov 7th  at   $109.69     P/E = 74
Change since picked       +0.00     52-week high=$111.25
Analyst Ratings      9-12-3-0-0     52-week low =$ 28.44
Last earnings 10/29   est= 0.31     actual= 0.33
Next earnings 01/20   est= 0.40     versus= 0.34
Average daily volume = 10.9 mln 
Chart = http://quote.yahoo.com/q?s=SUNW&d=3m

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


BVSN - Broadvision $83.50 (+9.88)

Broadvision's software helps companies become e-commerce 
powerhouses.  Their depth in One to One Internet software 
provides the tools for all facets of the online transaction, 
including ordering, payment, fulfillment, customer service and 
billing.  It also allows users to collect, track and manage 
customer visits, then create customer profiles accordingly.  
Customers include Oracle and Cyberian Outpost.  Insiders own 
46% of the company.

On Tuesday, BVSN launched a secondary offering in Europe by 
offering 2.7 mln shares at $72.  On Monday, BVSN traded in the 
U.S. at $80.  Why pay $80 when you can buy them for $72?  Right, 
neither did anyone else.  BVSN was pounded back to around $74 to 
close at its low that day.  The good news is that once investors 
shook it off, the issue continued climbing the rest of the week 
on strong volume, culminating in a new high on Friday.  
Technically, the chart couldn't look better, and volume at more 
than twice the ADV couldn't be stronger either.  But that's the 
rear view mirror look.  Looking forward, if volume keeps up we 
should get more of the same - nice gains.  However, since the 
NASDAQ has been up 6 days in a row, "immediately" is not the time 
to take a position.  We need to wait for a pullback and let the 
market digest some of its gains before it continues to move up 
again.  Decent support appears at $76 on intraday dips, though 
Friday, the dips only got us a buying opportunity at $80.  Check 
the chart for yourself to see where you fit on the risk scale.  
Given the big market rise, our leaning is to wait for the lower 
digits when the market decides to take its profits.  Otherwise, 
so long as volume remains heavy, a breakout over $85.25 
(resistance=$84.88) is buyable too, but we still prefer the 
dips for a better entry.  Earnings were on October 20, and they 
surprised 23% to the upside.

News?  Other than 2.7 mln shares in a European secondary 
offering, from CBSMarketWatch on Monday, "The partnership between 
New Era and BroadVision will allow businesses to integrate 
existing systems with Internet applications to perform business-
to-business and business-to-consumer e-commerce, according to a 
statement from the companies." 

***November strikes expire in 2 weeks***

BUY CALL NOV-75 BDV-KO OI= 178 at $11.63 SL= 9.50
BUY CALL NOV-80*BDV-KP OI=1002 at $ 8.13 SL= 6.25
BUY CALL NOV-85 BDV-KQ OI= 182 at $ 5.75 SL= 4.00
BUY CALL DEC-80 BDV-LP OI= 520 at $12.63 SL=10.00
BUY CALL DEC-85 BDV-LQ OI= 170 at $10.25 SL= 7.75

Picked on Nov 7th at    $83.50     P/E = 539
Change since picked      +0.00     52-week high=$84.88
Analysts Ratings    4-19-1-0-0     52-week low =$ 4.81
Last earnings 09/99  est= 0.13     actual= 0.16
Next earnings 01-27  est= 0.16     versus= 0.08
Average Daily Volume = 1.2 mln
Chart = http://quote.yahoo.com/q?s=BVSN&d=3m


VRTS - Veritas Software $108.06 (+0.19)(+13.69)(+3.09)

Veritas Software is the industry's leading enterprise-class 
application storage management software provider.  They 
furnish storage management software for protection against 
data loss and file corruption, efficient file processing and 
network back-up.  Veritas (Latin for "truth") has made its 
name by partnering with such technological heavyweights as 
Hewlett-Packard (HWP), Microsoft (MSFT), and Sun Microsystems 
(SUNW), all of which have licensed and embedded Veritas 
products in their operating systems.  Its purchase of the 
network and storage management software group of the disk 
drive maker, Seagate Technology (SEG), doubled Veritas size 
and gave Seagate a 35% stake in the company.

We originally chose VRTS as a call play because the company 
announced a 3:2 stock split, which will take place on Nov 22nd. 
It's been a nice ride however, the stock has slightly stalled.  
On Friday VRTS followed the heels of the broader markets as 
they rallied behind mild unemployment figures, unfortunately, 
the afternoon profit-taking on VRTS was a little more extreme 
than the broader markets.  The stock gapped almost 5 points 
at the open but profit-takers took control, leaving VRTS 
fractionally lower for the day.  This week's change for our 
split play is very deceiving as to how the stock has really 
performed.  If you were lucky enough, investors were able to 
buy at the close of each trading session and sell at the opening.  
This was the trend last week, which would have provided some 
nice profits for those lucky investors.  However, trades like 
these are not for the light hearted and should be left for more 
aggressive investors.  For less aggressive investors, watch for 
pullbacks near $105, the stock has held support at this level 
quite well.  The nearest resistance is $113, which is the high 
for VRTS and was established during Friday's trading session.  
As the split day nears we expect to see the stock set more highs.       

On Friday VRTS announced record-breaking attendance at its 
third-annual worldwide user's conference in Anaheim, Calif.  
Attendees the opportunity to participate in pre-conference 
tutorials and attend presentations by VERITAS Software 
customers, executives and product managers.  There was no 
other news to report at this time.

***Caution: only 2 weeks left for November options***

BUY CALL NOV-105 UQJ-KA OI= 91 at $ 7.50 SL=5.75
BUY CALL NOV-110*UQJ-KB OI=526 at $ 4.88 SL=2.75
BUY CALL NOV-115 UQJ-KC OI=110 at $ 3.13 SL=1.50
BUY CALL DEC-105 UQJ-LA OI= 77 at $11.75 SL=9.00
BUY CALL DEC-110 UQJ-LB OI=140 at $ 9.25 SL=6.75

SELL PUT NOV-100 UQJ-WT OI=615 at $ 2.19 SL=3.75
(See risks of selling puts in the play legend)

Picked on Oct 21st at  $92.94     P/E = N/A
Change since picked    +15.13     52 week high=$111.00             
Analysts Ratings   5-13-2-0-0     52 week low =$ 24.25                
Last earning 10/14  est= 0.17     actual= 0.21                            
Next earning 01/28  est= 0.27     versus= 0.12                            
Average Daily Volume =  500 K 
Chart = http://quote.yahoo.com/q?s=VRTS&d=3m


SYMC - Symantec Corp $49.88 (+2.13)(+3.75)(+0.69)

Symantec is one of the two leading providers of utility software 
for the security market.  Its fierce competitor is Network 
Associates and the two companies are continually striving to 
be in the #1 position.  Symantec's software is designed for 
business and personal computing with three distinct business 
segments: security and assistance, remote productivity 
solutions, and Internet tools.  The distributor company, Ingram 
Micro, accounts for 33% of its sales revenue.

On October 20th, Symantec Systems unveiled their Q2 results of 
fiscal 2000 beating of $0.42 cents by reporting a $0.45 per 
share profit, a $0.03 cent upside surprise!  A significant 
accomplishment for a company that typically only beats estimates 
by a penny.  We waited for a post-earnings meltdown, but instead 
saw a growing intensity.  Together with an energized Internet 
sector and its own momentum, SYMC migrated through its old 
resistance at $40 to firmly establish a new support level at 
the $47 mark in just two weeks' time. 

Twice this week SYMC closed smack on its daily high - on 
Wednesday and Thursday bulls crowded into the ring at the last 
minute to buy up the rising shares of SYMC.  The intent to go 
higher was made clear.  On Friday SYMC opened strong and set 
another 52-week high peaking at $50.75 just minutes into 
trading.  Trying to find an entry?  Well recently the stock's 
trading behavior has either offered intraday volatility or 
days of slight consolidation in which to get a solid entry.  
Therefore if you're planning an entry into this momentum play 
look for either a daily bottom or a pullback.  Remember support 
is at $47 and the 10-dma indicator is just below it at $46.68, 
excellent points of entry.  But of course confirm stock 
direction and a positive market sentiment.  Look too for analyst 
comments.  For instance, last Monday Prudential Securities 
reiterated a Strong Buy rating and issued a 12 to 18-month price 
target of $60!  Always try to put as many odds in your favor for 
a successful play.  

**November calls expire in two weeks**

BUY CALL NOV-45*SYQ-KI OI=345 at $5.88 SL=4.25
BUY CALL NOV-50 SYQ-KJ OI=150 at $2.50 SL=1.25
BUY CALL DEC-50 SYQ-LJ OI=114 at $4.25 SL=2.75
BUY CALL DEC-55 SYQ-LK OI=  8 at $2.63 SL=1.25 low OI

SELL PUT NOV-50 SYQ-WJ OI= 19 at $1.94 SL=3.75
(See risks of selling puts in the play legend)

Picked on Oct 26th at  $44.00    P/E = 26
Change since picked     +5.88    52-week high=$50.75
Analyst Ratings     6-0-0-0-0    52-week low =$ 8.69
Last earnings 09/99 est= 0.42    actual= 0.45
Next earnings 01-14 est= 0.49    versus= 0.42
Average daily volume =  960 K 
Chart = http://quote.yahoo.com/q?s=SYMC&d=3m


NT - Nortel Networks $68.81 (+6.88)

Here come 'Ol Flat Top; he come groovin' up slowly.  What does 
this has to do with the new era of communications, we don't 
know.  But the bandwidth enabling capability of NT equipment 
is causing the Internet to "Come Together" (the Beatles song 
used in NT's TV commercials) with PC's, TV's, local area networks, 
plus wireless and fiber data/voice communications systems 
everywhere.  NT makes the equipment that makes the electronic 
convergence possible.  With over $19 bln in sales, they are 
number #2 behind competitor Lucent in size.  Canadian Telecom 
owns 40%.  The U.S. accounts for over 50% of sales.

With their hip commercials covering the Beatles' song "Come 
Together", Nortel is "groovin' up slowly" (more like movin' up 
quickly) on its competitors Lucent, Cisco and 3Com, though the 
latter two are not direct competitors yet.  Earnings reported 
on October 26 were 33% greater than last year and beat Street 
estimates by 2 cents, or 8%.  With investor eyes focused on other 
sectors at the time, post earnings depression was minimized and 
NT has continued to climb to new highs almost daily (breather 
last Tuesday and Wednesday) since earnings.  CS First Boston 
upgraded the issue on Wednesday to a Strong Buy citing "near-term 
visibility and long-term fundamentals", while moving the price 
target to $75.  Technically, aside from last Tuesday's hiccup 
resulting from NewBridge Networks earnings warning, sending NT 
into a $3.58 nosedive on the day, new highs with strong volume 
30% greater than the ADV made for a powerful chart.  We expect 
the trend to continue, however not before a pullback to digest 
some of the gains.  Not even NT will go up forever in a straight 
line.  We need to wait for a pullback to get a better entry.  
Support is around $65, then again around $61.  Target shooting 
at these levels (depending on your risk profile) will get you a 
better entry.  Remember, the market has been hot the last six 
days and is subject to a pullback.  Wait for the buying 

NT is spending $400 mln to triple its optical networking and 
component manufacturing capacity to meet heavy demand.  This is 
in addition to doubling its capacity already this year.  The 
market is growing 50% annually, and NT aims to capture the lion's 
share of it.  They are currently building 32 of the 40 national 
or pan-European networks announced in the last 2 years.  Keep 
your eyes on JDS Uniphase (JDSU) too.  It supplies a big chunk 
of the laser subsystems used by NT (and LU too) to complete all 
this work.

*** November strikes expire in 2 weeks***

BUY CALL NOV-60*NT-KL OI=9346 at $9.38 SL=7.00
BUY CALL NOV-65 NT-KM OI=2341 at $5.13 SL=3.25
BUY CALL NOV-70 NT-KN OI= 453 at $2.00 SL=1.00
BUY CALL DEC-65 NT-LM OI=1696 at $6.88 SL=5.00
BUY CALL DEC-70 NT-LN OI= 654 at $4.13 SL=2.50

Picked on Nov 7th at    $68.81     P/E = 419
Change since picked      +0.00     52-week high=$69.81
Analysts Ratings   11-12-4-0-0     52-week low =$21.12
Last earnings 09/99  est= 0.26     actual= 0.28 surprise=7.7%
Next earnings  1-26  est= 0.44     versus= 0.36
Average Daily Volume = 3.3 mln
Chart = http://quote.yahoo.com/q?s=NT&d=3m


CMVT - Comverse Technology $113.75 (+0.25)(+8.69)(+9.56)

Comverse makes enhanced telecommunications systems and is 
the 3rd largest firm in the voice mail market.  Its TRILOGUE 
Infinity and Access NP product lines supply voice and fax 
messaging, automated personal assistant, and call answering 
services.  TRILOGUE is marketed to telecom network operators 
and gives multiple telephone users access to integrated 
digital information and messaging services.  Comverse's 
AUDIODISK and ULTRA lines are communications monitoring 
systems used by police and surveillance agencies, correctional 
institutions, emergency 911 services, financial institutions 
and tele-marketers. 

It is like we said on Thursday, this week's trading in CMVT was 
as much fun as watching paint dry.  With all the excitement 
in the NASDAQ and broad markets, CMVT only managed a $0.25 
gain but we still like it.  In fact, the closer we get to 
Nov 30th, the more we like it.  That is when CMVT is going 
to announce earnings.  Investors, traders and ourselves are 
all expecting a stock split announcement.  During their board 
meeting on Oct 8th, they approved an increase in shares and 
stated that they would consider a split in coming weeks.  That
coincides with the earnings release.  So why didn't CMVT 
participate this week?  Our feeling is that it is consolidating 
after two weeks of stellar gains.  We are still seeing higher-
lows in the chart signifying the trend is still in tact.  At 
this point we are 3 weeks out and traders will slowly start 
taking a position in anticipation of a split.  It is hard 
to find fault in this theory when stocks with pending splits 
have had huge run ups lately.  There seems to be even more 
investors willing to buy now and ask questions later when it 
comes to a split announcement.  On the chart, we see support 
at $112 and resistance at the 52-week high at $115.  The 
range has tightened up a lot recently which means CMVT may 
be ready to breakout one way or the other.  For the reasons 
listed above, we see the breakout heading north.  But with 
the big gains in the NASDAQ and the MSFT announcement after 
the close Friday, it pays to use stops.

We are hard pressed to come up with any fresh news.  There 
was on article on Monday that had a blurb on CMVT and how 
they do some business in Israel but it had no material impact 
on the stock. 

***Caution: only 2 weeks left for November options***

BUY CALL NOV-100 CQV-KT OI=447 at $14.00 SL=11.00
BUY CALL NOV-105 CQV-KA OI=909 at $ 9.88 SL= 7.25
BUY CALL NOV-110*CQV-KB OI=764 at $ 5.75 SL= 4.00
BUY CALL DEC-100 CQV-LT OI=524 at $ 9.50 SL= 7.25

SELL PUT NOV-110 CQV-WB OI=140 at $ 3.25 SL=5.00
SELL PUT NOV-105 CQV-WA OI=127 at $ 1.50 SL=0.75
(See risks of selling puts in the play legend)

Picked on Oct 21st at  $102.13    P/E = 62
Change since picked     +11.63    52-week high=$115.00
Analysts Ratings     8-3-0-0-0    52-week low =$ 24.50
Last earnings 08/99  est= 0.49    actual= 0.52
Next earnings 11-30  est= 0.53    versus= 0.41
Average Daily Volume = 1.2 mln
Chart = http://quote.yahoo.com/q?s=CMVT&d=3m  


VSTR - VoiceStream Wireless $97.00 (-1.75)(+9.88) 

VoiceStream Wireless is a provider of wireless communication 
services.  These services are available in the western United 
States.  VoiceStream has an aggressive marketing plan, boasting 
more minutes, more features and more service.  Jamie Lee Curtis 
is the always on-the-go spokeswoman for VSTR and her famous 
"hello" sign off is helping to make VoiceStream a household 

VSTR began the day up strongly with yet another staring contest
midday between buyers and sellers before finally breaking out 
to make a substantial move up.  VSTR closed up at the high of 
the day on higher then average volume, both good indications 
heading into trading on Monday.  The buyers and sellers have 
been at it all week, spending a good deal of time locked in a 
very tight trading range.  The buyers have been consistently 
winning out, and since there has been no new news pertaining to 
the takeover rumors, we see this positive momentum as genuine 
and a continuation of the uptrend VSTR had established before 
the rumors.  VSTR has a bit of support at $95 though it did take 
several dips below this level on Friday.  VSTR has further and 
solid support at it's 10-dma of $91.  Resistance looks to be 
at $100.  At this point it will be important to proceed with 
caution in regards to entering a new play.  We will want to see 
the $95 support level hold and a continuation of positive 

The senior notes and senior discount notes, which were recently 
issued by VSTR, have been attracting a great deal of attention.  
Apparently, the new issues were a hot item as nearly all of 
the new issue was snatched up right away.  Many are saying 
that because VSTR is an already popular company and now touted 
as being one of the more attractive takeover targets, this 
credit may eventually be consolidated into an even better 

BUY CALL NOV- 95*UVT-KS OI=660 at $ 6.88 SL=4.75
BUY CALL NOV-100 UVT-KT OI=455 at $ 4.50 SL=2.75
BUY CALL DEC- 95 UVT-LS OI=317 at $11.00 SL=8.75
BUY CALL DEC-100 UVT-LT OI=200 at $ 8.63 SL=6.50

SELL PUT NOV- 90 UVT-WR OI=208 at $ 2.38 SL=4.00
(See risks of selling puts in the play legend)

Picked on Oct 28th at    $85.75      PE = N/A                           
Change since picked      +11.25      52-week high=$102.94 
Analysts Ratings     13-4-1-0-0      52-week low =$ 16.38                 
Last earnings 10/99   est=-0.85      actual= 0.90                             
Next earnings 01/00   est=-1.02      versus=-1.03                            
Average Daily Volume = 1.63 mln
Chart = http://quote.yahoo.com/q?s=VSTR&d=3m


SEBL - Siebel Systems Inc $128.25 (+18.44)(+13.31)(+11.38)

Siebel Systems designs, markets, and supports enterprise-class 
information systems focusing on customer service and call center 
software.  The company's main software product, Siebel Sales 
Enterprise, is used globally by well-known clients such as 
Lucent Technologies, Glaxo Wellcome, and Prudential Insurance.  
Anderson Consulting owns 8% of the company and CEO and Chairman 
Thomas Siebel has a 28% stake.     

Coming off better-than-expected earnings and a 2:1 stock split 
announcement on October 19th, SEBL has skyrocketed setting new 
52-weeks practically every trading session.  The earnings' 
numbers topped analysts estimate by $0.02 coming in at $0.27 
p/s, a 93% gain since last year's $0.14 same quarter results.   
But the driving force behind the ever increasing share price is 
the upcoming 2:1 stock split scheduled for this Friday, November 

Investors couldn't complain with SEBL's trading performance this 
week.  Initially the stock surged $9.75, or just another 8.9% 
followed by two days of profit-taking and consolidation that 
we warned of.  If you got your foot in the door you were amply 
rewarded.  During the last minutes of trading on Thursday, SEBL 
spiked up advancing $7.25 by the close.  Friday was almost as 
good with just another $7.  Needless to day, SEBL is exploring 
new territory once again - $131.25 is the latest 52-week record 
high.  Bottom support appears to be forming around $115 and 
the 10-dma has correspondingly risen to $109.13 with the huge 
gains.  Just a reminder, we'll be exiting this play on Thursday 
since we rarely recommend holding over the actual split date.

***Presently there are no strikes above 125***

***November calls expire in two weeks***

BUY CALL NOV-115 SGQ-KC OI=294 at $15.38 SL=12.00
BUY CALL NOV-120 SGQ-KD OI=669 at $11.50 SL= 9.25
BUY CALL NOV-125*SGQ-KE OI=754 at $ 8.50 SL= 6.50
BUY CALL DEC-120 SGQ-LD OI=415 at $15.75 SL=12.25
BUY CALL DEC-125 SGQ-LE OI=140 at $12.63 SL=10.25

Picked on Oct 21st at    $94.88    P/E = 133
Change since picked      +33.38    52-week high=$131.25
Analysts Ratings      9-5-0-0-1    52-week low =$ 18.25
Last earnings 09/99   est= 0.25    actual= 0.27
Next earnings 01-28   est= 0.27    versus= 0.20
Average Daily Volume = 1.76 mln
Chart = http://quote.yahoo.com/q?s=SEBL&d=3m


AOL - America Online Inc $146.00 (+16.63)(+9.00)

AOL is the world's #1 provider of online services with over 
17 million subscribers.  It's acquisitions in 1998 and 1999 
have given the company a 60% market share and diversity.  
CompuServe, an online service geared more to professionals, 
added its 2 million users to the AOL portfolio in 1998.  
This year AOL brought the Web navigator, Netscape, to its 
organization and is also using DIRECTV to launch an interactive 
TV service.  The recent announcement of a proposed merger 
between EarthLink (ELNK) and MindSpring (MSPG) and the new 
wave of companies offering free Internet access is certainly 
heating up the competition for AOL.

After a profitable earnings' run with over 10% in gains and 
reaching newer near-term highs on the momentum, OIN adhered to 
its rule not to hold over the earnings report on Oct 20th and we 
exited the play the evening before.  But of course not before 
reminding our readers of the potential of an upcoming split 
announcement.  So while AOL held firm at its $120 support level, 
we patiently waited to hear the outcome of the Shareholder's 
Meeting on October 28th.  Patience paid off and after hours, AOL 
announced a 2:1 stock split!  This is the second time that AOL 
has split 2:1 this year.  The ex-date is scheduled for November 

We are always in search of our next entry point and it is 
becoming more evident that near-term support is evolving in 
the proximity of $135, just above the 10-dma ($130.93).  The 
trading volume continues to be moderate.  AOL has indeed made 
huge gains this past week - advancing almost 13%!  However 
what's nice about the climb is that it's been steady and 
consistent offering players a conservative opportunity to buy 
calls or sell puts.  In the news this week, the National 
Federation of the Blind is suing AOL alleging the ISP is 
violating the Americans With Disabilities Act by refusing to 
modify its programming so it is compatible with visually 
impaired software.  On the brighter side, AOL announced a 
multi-year strategic and marketing alliance with Blockbuster 
(BBI), the world's leading renter of videos and video games.  
AOL will invest $30 mln into Blockbuster.com for the joint 
development of high-speed broadband content and delivery.  
According to some analysts, this could set the stage for a 
possible public offering of the Blockbuster.com unit.

**November calls expire in two weeks**

BUY CALL NOV-140*AOO-KH OI=17953 at $10.00 SL= 7.50
BUY CALL NOV-145 AOO-KI OI= 9364 at $ 6.50 SL= 4.75
BUY CALL NOV-150 AOO-KJ OI=10022 at $ 4.38 SL= 2.75
BUY CALL DEC-145 AOO-LI OI= 7035 at $11.88 SL= 9.50
BUY CALL DEC-150 AOO-LJ OI= 5812 at $ 9.38 SL= 7.00

SELL PUT NOV-140 AOO-WH OI= 4309 at $ 2.50 SL= 4.00
SELL PUT NOV-145 AOO-WI OI= 2012 at $ 4.38 SL= 6.00
(See risks of selling puts in the play legend)

Picked on Oct 31st at   $129.38    P/E = 210
Change since picked      +16.63    52-week high=$175.50
Analysts Ratings    23-15-3-0-0    52-week low =$ 20.63
Last earnings 09/99   est= 0.13    actual= 0.15 surprise +15.4%
Next earnings 01-27   est= 0.14    versus= 0.08
Average Daily Volume = 18.0 mln
Chart = http://quote.yahoo.com/q?s=AOL&d=3m


IMNX - Immunex Corp. $65.56 (+2.56)(+9.06)

Their primary products include Enbrel, for treating rheumatoid
arthritis, Lukine, which is used in the treatment of bone-marrow
transplant patients and Novantrone, used to treat acute non-
lymphocytic leukemia and to ease pain associated with prostate 
cancer.  Immunex develops biopharmaceutical products aimed at
treating cancer, auto-immune disorders, and infectious diseases.
They are in the developmental stages of developing other drugs
to treat asthma, leukemia, and certain other cancers.  Immunex
competes in the marketplace with heavy weight Amgen, Bristol-
Meyers Squibb and Merck.  54% of Immunex stock is owned by 
American Home Products through its subsidiary American Cyanamid.
IMNX is popular with the institutions as well with over 270 
holding stock in the company. 

Stocks in the Biotechnology and Drug sector had a news filled 
week.  The events this past week had the stocks all over the map.
IMNX was no exception.  Early in the week Gilead(GILD) had their
drug Adefovir, nixed by an FDA panel, which drove the sector 
3% lower, dropping IMNX down to $58.44.  Wednesday we had the
American Home Products/Warner-Lambert deal and Thursday Pfizer
entered the playing field.  Shares of Immunex responded by 
gaining over $8 in the final three days of the week.  Friday 
IMNX hit a high of $67 before a pullback to close at $65.56.
Although the stock has been downgraded recently IMNX has been
able to make its way higher.  Since reporting earnings in the
middle of October the volume has lighted up considerably, 
which may be due in part to the downgrades.  The next area of
resistance for the Drug company is near the $71-$72 area, IMNX
has not seen since late August.  Right now the momentum seems
to be going in our favor however, as we all know that can change
at any time.   Should we see a retreat or profit-taking set in,
IMNX will find intraday support near the $62 area, with the 10- 
dma setting at $60.21.  A bounce off either of those levels
would certainly be view as a buying opportunity.  If IMNX 
continues its current trend higher that would also be viewed
as an opportunity to buy, however remember IMNX could find the
going a bit tougher as it approaches its old highs near $70 
mark.  No other news at this time.   

**Caution: only 2 weeks left for November options**

BUY CALL NOV-60*IUU-KL OI=549 at $ 7.13 SL=5.25
BUY CALL NOV-65 IUU-KM OI=497 at $ 4.00 SL=2.50
BUY CALL DEC-60 IUU-LL OI=491 at $ 9.75 SL=7.25
BUY CALL DEC-65 IUU-LM OI=492 at $ 7.13 SL=5.25

Picked on Oct 31st at    $63.00    P/E = 262
Change since picked       +2.56    52 week high=$73.50
Analysts Ratings      3-7-9-0-0    52 week low =$16.61
Last earnings 10/99   est= 0.10    actual= 0.12 surprise +20.0%
Next earnings 02-03   est= 0.09    versus= 0.06
Average daily volume = 1.63 mln
Chart = http://quote.yahoo.com/q?s=IMNX&d=3m


MXIM - Maxim Integrated Products $85.31 (+6.38)(+2.56)

Integrated Products designs, develops, and manufactures
linear and mixed-signal integrated circuits.  These circuits
detect, measure, amplify and convert "real world" signals, 
such as temperature, pressure or sound into digital signals
necessary for computer processing.  They make over 1,500 kinds 
of linear and mixed-signal integrated circuits.  The company
owns manufacturing facilities in the U.S. and the Philippines. 
About one-fourth of their sales come from overseas.  MXIM's
primary competition comes from Analog Devices, Linear Tech
and National Semiconductor.

Maxim Integrated has made a new high for the last seven trading
sessions.  We can probably expect a new round of reiterations 
and price objectives from the analysts in the coming weeks as 
the stock has taken out most of the recent 12 month price 
objectives the past two weeks.  There are really no signs of
a slow down at this point as shares of the integrated circuits
maker just keep going higher.  Of course, when MXIM will reach 
a point where it will consolidate or pullback but is anyone's
guess.  For now, why step in front of an oncoming freight train.
Investors seem to be focusing on the upcoming shareholders 
meeting 11/18/99.  The board has requested a vote to increase the
authorized shares from 240M to 480M.  With the potential of a 
split announcement and the fact that the semiconductor industry
caught fire in the last week shares of MXIM have gained $16 in
the last seven days, which is an increase of about 23%.  So do
you buy at these levels?  If it continues to go higher, with good
volume, don't fight the trend.  If we get a pullback, which we
are probably do for in MXIM and in the Nasdaq, MXIM has support
intraday support $82, $80, and then again at $78.  A bounce off
any of those levels may be a good chance to buy calls.  If you 
have a position in MXIM consider the above areas of support
and your risk level and move your stops up accordingly.

**Caution: only 2 weeks left for November options**

BUY CALL NOV-75 XIQ-KO OI=1820 at $11.63 SL=9.00
BUY CALL NOV-80*XIQ-KP OI= 514 at $ 7.50 SL=5.75
BUY CALL NOV-85 XIQ-KQ OI= 539 at $ 3.75 SL=2.00
BUY CALL DEC-80 XIQ-LP OI= 426 at $ 9.38 SL=7.00
BUY CALL DEC-85 XIQ-LQ OI=1179 at $ 7.25 SL=5.50

SELL PUT NOV-80 XIQ-WP OI= 280 at $ 1.75 SL=3.50
(See risks of selling puts in the play legend)

Picked on Nov 2nd at     $81.50    P/E = 64
Change since picked       +3.81    52-week high=$85.75
Analysts Ratings      7-6-1-0-0    52-week low =$34.50
Last earnings 10/99   est= 0.35    actual= 0.37 surprise +5.70%
Next earnings 01-27   est= 0.40    versus= 0.31
Average daily volume = 1.49 mln
Chart = http://quote.yahoo.com/q?s=MXIM&d=3m

Miscellaneous continued in section five

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

Miscellaneous continued

SFA - Scientific-Atlanta $62.25 (+5.00)(+3.75)

The company is one of the largest makers of set-top boxes used
by subscribers to receive cable TV programs and interactive 
services such as movies on demand and e-mail.  SFA also makes
transmission and distribution equipment such as digital video
compression products, signal encoders/decoders and distribution 
amplifiers.  The communication equipment company makes for
land-based and satellite network systems, cable TV operators
and telecommunication providers.  Scientific-Atlanta also
supplies earth stations for the Iridium global satellite phone
system.  Their primary competition comes from ANTEC, General 
Instrument, and Pioneer.

Shareholders of SFA stock have enjoyed a nice gain in the last
eight trading days.  At that time the company's stock was 
selling for around $52 a share.  The company reported they had 
started off the new fiscal year in great shape, with better
than expected earnings and revenues.  They had beat the street
by about $0.03 per share in earnings and increased revenues by
approximately 36 percent.  What seemed to impress Wall Street
even more was their bookings for the next quarter, which showed
an increase of 23% over the previous year's first quarter.
Investors jumped in and started bidding the price of SFA stock
higher.  Friday SFA made a new 52-week high at $64.19.  What's
in store for SFA next week?  Well, SFA did finish the day on 
Friday rather weak but the company does have it's annual 
shareholder meeting on Wednesday.  That is typically a good 
sign as investor enthusiasm runs strong while the CEO gets up 
to talk about everything positive and nothing negative.  A 
pullback to $60 would be nice but you may have to go with the
momentum.  Stronger support is at $60.  It may be to early to 
talk split for SFA but with enough shares already authorized 
it is possible.  You can bet someone will ask at the annual 
meeting but we consider it a real long shot.  

**Caution: only 2 weeks left for November options**

BUY CALL NOV-55 SFA-KK OI=1933 at $ 8.00 SL= 6.25
BUY CALL NOV-60*SFA-KL OI=1060 at $ 4.13 SL= 2.50
BUY CALL DEC-55 SFA-LK OI= 431 at $ 9.38 SL= 7.00
BUY CALL DEC-60 SFA-LL OI= 453 at $ 5.88 SL= 4.25

SELL PUT NOV-60 SFA-WL OI=  10 at $ 1.81 SL= 3.50 low OI
(See risks of selling puts in the play legend)

Picked on Nov 4th at    $61.00     P/E = 44
Change since picked      +1.25     52-week high=$64.19
Analysts Ratings     8-9-2-0-0     52-week low =$15.94
Last earnings 09/99  est= 0.28     actual= 0.31 surprise +10.7%
Next earnings 01-28  est= 0.32     versus= 0.16
Average Daily Volume =   794 K
Chart = http://quote.yahoo.com/q?s=SFA&d=3m


KMB - Kimberly-Clark $65.50 (+2.50)

Kimberly-Clark creates with a focus on three global businesses: 
Tissue, Personal Care, and Health Care and Other.   With 
manufacturing facilities in 40 countries and sales in more 
than 150, they are the leading tissue manufacturer in the 
world.  They are also the second largest household and personal 
care products company in the United States.  The company's 
global brands include Huggies, Pull-Ups, Kotex, Depend, 
Kleenex, Scott, Kimberly-Clark, Tecnol, Kimwipes and Wypall.  
Other brands well known outside the U.S. include Andrex, 
Scottex, Page, Poppee and Kimbies. 

This play is nothing to sneeze at!  KMB has been trending up 
nicely since the beginning of October.  $62 has been holding 
resistance for KMB since July, which KMB finally managed to 
break through on October 28th.  KMB traded up to a new 52- 
week high of $65.75 on Friday and closed just a quarter short 
of that.  The only resistance in sight for KMB is this new high.  
KMB made a few bounces on Friday close to $65 and looks to have 
to have additional support at $63.  KMB is currently trading 
nearly $4 above it's 10-dma of $61.50, which could serve as 
further support if needed.  It is going to be important to 
confirm continuing momentum before entering.  Should KMB break 
through this new set resistance level and continue to maintain 
support in the area of $65, a new entry may be appropriate.  
However, should KMB pull back next week, wait for a bounce 
before making a new play.

Interestingly enough, the news coinciding with KMB's break 
through the $62 resistance level on the 28th of October is a 
research alert released announcing the upgrade of Kimberly 
Clark de Mexico by Goldman Sachs to their Latin American 
Recommended List from Market Outperformer.  Reasons cited 
for the upgrade?  An expected increase in tissue capacity and 
an improved outlook for pulp prices.  Coverage was initiated 
by AG Edwards on Wednesday with a Buy rating. 

BUY CALL NOV-60*KMB-KL OI=3954 at $5.88 SL=3.75
BUY CALL NOV-65 KMB-KM OI= 985 at $2.00 SL=1.00
BUY CALL DEC 65 KMB-LM OI= 206 at $3.38 SL=1.50

Picked on Nov 7th  at    $65.50      P/E = 22                           
Change since picked       +0.00      52-week high=$65.75 
Analysts Ratings      7-7-1-0-0      52-week low =$44.81                  
Last earnings 10/99   est= 0.72      actual=0.75                             
Next earnings 01/00   est= 0.76      versus=0.69                            
Average Daily Volume = 1.65 mln
Chart = http://quote.yahoo.com/q?s=KMB&d=3m


HD - Home Depot $78.00 (+2.25)

Founded in 1978 in Atlanta, Georgia, Home Depot is the largest 
home improvement retailer in the US.  HD also has locations in 
Canada, Puerto Rico and Chile.  HD boasts low prices and quality
customer service.  HD stores are usually in the neighborhood 
of 130,000 square feet, however, the company plans to open 
smaller stores in the U.S. by the name of Villagers Hardware.  
Home Depot was recently added to the Dow Industrials index.

This is an earnings and potential split candidate play.  HD 
is set to announce earnings on November 16th.  As most everyone 
knows, Home Depot was added to the Dow Jones Industrial Average 
on November 1.  The company is one of the great success stories 
of the last 20 years and has been a steady, reliable performer 
for the entire decade.  The stock has been very powerful lately, 
rising from a low of below $54 in mid-August to a close on 
Friday of $78 and another all-time high.  HD has had steady 
earnings growth and seldom disappoints investors.  Some traders 
are expecting a split announcement with the company's earnings 
announcement.  This will help HD along on its earnings run.  The 
stock has support at $75 and $71 and should show strength 
going into earnings.  

As we mentioned above, Home Depot has received fuel for its 
continuing run by recently being added to the Dow Jones 
Industrial Average.  This news, combined with upcoming earning 
and a possible split announcement could provide a pretty 
profitable run next week.  It is going to be important to 
close out positions on Monday, November 15th, being that HD
is set to announce before the bell on Tuesday.  That is also 
the same day as the Fed meeting so we may very well have two 
reasons to be out of this play by then.  If we get a split 
announcement, we will consider a play closer to the ex-date.

BUY CALL NOV-75*HD-KO 7833 at $4.13 SL=2.50
BUY CALL NOV-80 HD-KP 6326 at $1.31 SL=0.50
BUY CALL DEC-75 HD-LO 1520 at $5.88 SL=4.25
BUY CALL DEC-80 HD-LP 2310 at $3.00 SL=1.50

Picked on Nov 7th at    $78.00      P/E = 59                           
Change since picked      +0.00      52-week high=$78.75 
Analysts Ratings   10-18-3-0-0      52-week low =$43.13                  
Last earnings 08/99  est= 0.41      actual= 0.44                             
Next earnings 11-16  est= 0.25      versus= 0.27                            
Average Daily Volume = 3.69 mln
Chart = http://quote.yahoo.com/q?s=HD&d=3m


Sunday, November 7

The stocks listed below have been chosen because of their
growth potential for longer term option players. It is a cheaper
than buying the stock out right but you still profit from the 
substantial gains made longer term without falling prey to the
short term volatility. Many are the 800 lb. gorilla in their 
respective sectors.  Others may be up and coming challengers.  
Don't be surprised to find a large number of tech stocks.

EMC - EMC Corp.  $73.75

EMC has seen a huge appreciation in stock price over the last
18 months.  Unfortunately, a lot of that was prior to April of
this year.  If anything the consolidation that occurred through
April to August is a positive for long term option buyers.  The 
break above old highs at $67 and retest of support at $60 
suggests that EMC is ready to move again.  EMC is a very strong 
company with robust potential as the need for data storage 
increases with the growth of the Internet.  Patient traders can 
wait for the occasional dip to its 100 dma that occurs about 
every three months.  Less patient traders might consider 
purchasing LEAPS when EMC lands near its 50 dma (currently 
hovering around $69.00).  

BUY LEAP JAN-2001 $80.00 ZOH-AP at $15.38
BUY LEAP JAN-2002 $90.00 WUE-AR at $19.00


DELL - DELL Computer  $40.75

DELL needs no introduction.  After an amazing run from January
1998 at $10.71 to beginning of February 1999 at $54.06, the growth
story of the 90's has hit some turbulence.  The last several 
months DELL has been caught in a trading range from $35 to $45 
with the occasional stray run above or below the boundaries.
However, with a growth rate outpacing everyone in their class,
DELL can't help but make progress as it eats their competitors' 
lunches.  Long term buyers should consider entries anywhere
between $35 and $40.  Looks like a great one to sell calls against
once you stake your claim (please see the combos editor for 
questions on a calendar spread).

BUY LEAP JAN-2001 $50.00 ZDE-AJ at $ 7.00 (wow, look at the volume!)
BUY LEAP JAN-2002 $50.00 WDQ-AJ at $11.25 ($4 for an extra year)


GPS - Gap Inc. $32.75

Another one that really needs no introduction, The Gap has been
an investor's dream for years.  With amazing growth and strong
same stores sales for years, investors have been spoiled by 
a stock price that didn't stop until July of this year.  Post
split depression hit GPS hard.  Plus, last years same store 
sales were so strong, it was too much to have a repeat performance.
However, long term, this company looks great.  Right now GPS is
bouncing off of support at the $30 level.  Long term option 
buyers should be looking for an entry at this support level.
If it breaks $30, then re-evaluate your position.

BUY LEAP JAN-2001 $40.00 ZGS-AH at $5.75 (dbl check symbol w/ broker!)
BUY LEAP JAN-2002 $45.00 WGS-AI at $7.88 


IBM - Intl. Business Machines $90.25

Okay, we are picking some of the big boys - so we're not going to
discuss who they are.  IBM has been hammered lately and we see 
this as a great opportunity to purchase some LEAPS.  Y2K will
be gone before you know it and the stock price is likely to rebound
quickly after the first of the year.  Who wouldn't want to own 
Big Blue at a discount.  Granted, some are predicting IBM might
fall to $80, but $90 has held pretty well so far.  Even so, 
anywhere in this level might offer a entry point for long term 

BUY LEAP JAN-2001 $100.00 ZIB-AT at $13.63
BUY LEAP JAN-2002 $110.00 WIB-AB at $16.50


MSFT - Microsoft $91.56

We couldn't leave MSFT out of the picture.  One of the greatest
growth companies of all time.  We don't want to dwell too long here,
but everyone has probably heard of the recent court decision on
the MSFT vs. Justice dept. case.  This case has kept a lid on MSFT's 
stock price for the last seven months.  Even though current sentiment
appears negative, many investors see this decision as a win/win for
shareholders.  Granted, it is unknown whether MSFT will appeal or 
try and swallow their medicine with the judge's verdict.  However,
either way, investors will know longer have to fear the unknown.
If they keep MSFT together, then the stock price will go up.
If they break them up into leaner, meaner, smaller companies 
then the word is investors will be able to see more value in the
new divisions and the stock price will go up.  Either way, when
the stock price dips next week, it looks like a buying opportunity.
$3 or $4 may be the extent of the profit taking, but if we are lucky, 
MSFT might dip to its 200 dma at $86.  Looks like an entry point.

BUY LEAP JAN-2001 $100.00 ZMF-AT at $14.25 
BUY LEAP JAN-2002 $100.00 WMF-AT at $21.38


WMT - Walmart  $58.06

WMT recently broke out of a multi-month long channel of trading
between $40 and $50 early October.  The last time WMT based for a
few months and broke, it ran for several months before running
out of steam.  This could be the beginning of another leg up.

BUY LEAP JAN-2001 $70.00 ZWT-AN at $6.50 
BUY LEAP JAN-2002 $75.00 WWT-AO at $9.75

That is it for this week, but look for more LEAPS candidates
next weekend in our new LEAPS section.


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


BBY - Best Buy Company Inc. $50.63 (-5.13)(-3.56) 

The US's #1 consumer electronics specialty retailer, Best Buy
sells home office products, consumer electronics, entertainment 
software and appliances.  Ahead of rivals Circuit City and 
Tandy in sales but not store count, Best Buy has more than 310
stores in about 40 states coast to coast, with heavy 
concentrations in the Midwest, Texas, California, and Florida.

Last week the retailers reported their same store sales growth 
for October, and across the board they came in rather strong 
ahead of the all important Christmas season.  BBY does not 
report numbers, but favorable news was hitting the street, as 
well as questionable concerns.  The story changes depending 
upon who you talk too concerning BBY's earnings outlook for the
Christmas quarter and beyond.  Well, on Friday it seems as if 
the bears are winning the war.  With stocks closing higher 
in most sectors across the board after the government's jobs 
report showed continued economic strength with only mild
inflationary pressure you would have expected a bounce back 
off of the recent selling pressure in BBY, that was not the
case the shares continued downward, closing the day down over
a point at $50.63.  From a technical standpoint, the 
Moneystream remains weak and the volume suppressed.  It seems 
to be a consolidation to the downside, we will need to see a 
follow through of selling pressure before we add to our 
current positions.  A break of $50 would be a nice development 
to our play, signaling further weakness.  Resistance is at 
the 10-dma at $52.75.

***Caution: only 2 weeks left for November options***

BUY PUT NOV-60*BBY-WL OI=2709 at $10.00 SL=7.50
BUY PUT NOV-55 BBY-WK OI=2624 at $ 5.75 SL=4.00

Average Daily Volume = 2.30 mln
Chart = http://quote.yahoo.com/q?s=BBY&d=3m


ALD - Allied Signal $55.63 (-1.31)(+1.31)

AlliedSignal makes a wide variety of products for industries 
in aerospace, automotive, pharmaceutical, fibers, and plastics. 
Aerospace products by AlliedSignal include airborne weather-
radar systems, wind-shear detection systems, and radar systems 
for avoiding traffic collisions.  Through its performance 
polymers segment, the company produces specialty fibers and 
films such as Spectra, used in body armor. Other segments 
produce aircraft and marine engines, and consumer automotive 
products such as Fram filters, Autolite spark plugs, and 
Prestone antifreeze.  

The first two days of next week will probably be tell the tale
sign of our put play in ALD.  The volume continues to dry up in
the conglomerate.  With the ADV at 1.80 mln for the last three 
sessions, ALD has struggled to reach 1 mln shares.  The trading
range of the stock is shrinking indicating ALD is likely to make
a move in one direction or the other soon.  Tuesday ALD fell 
back below its 200-dma at $56.96 and the lack of any conviction 
in the recent decline is a bit concerning.  Technically, the 
stochastics and MACD are beginning to point up but will roll 
back over if we get a decline.  For ALD to remain a viable play 
it needs to break the $55 area with some solid volume behind it.  
If it doesn't begin to fall apart soon the next direction will 
be north.  With the strength in the major indices we could see 
a pullback early in the week which could certainly help our 
chances with ALD.  The jobs report came in benign and the broader 
markets jumped, but ALD only managed to add $0.63 on Friday.  We 
are hanging on to ALD for another day or so.  There is one other 
concern for traders that may have entered this play earlier and 
are waiting for ALD to move.  That's time decay on the premium 
in their options.  The premium will begin to deteriorate more 
rapidly this week as we are only two weeks away from November 
expiration.  We are not suggesting dropping the play on ALD, but 
if it doesn't move our direction in the next couple of days, you 
may want to start looking for an exit point.  As for a new play 
in ALD, enter only on a strong move though the $55 mark, and 
always assess your risk profile and the profit potential prior 
to entering a new position.   

Tuesday JP Morgan reiterated their buy rating for ALD saying 
the recently announced merger agreement with Tristar would be 
positive for both companies.  Friday ALD said it had commenced
its previously announced $291 million tender offer of Tristar 
at $9.50 per share and includes $107 million of Tristar debt. 

**Caution: only 2 weeks left for November options**

BUY PUT NOV-65 ALD-WM OI=2190 at $9.25 SL=7.00
BUY PUT NOV-60*ALD-WL OI=2946 at $5.13 SL=3.25 
BUY PUT NOV-55 ALD-WK OI= 674 at $1.63 SL=0.75 

Average Daily Volume = 1.80 mln
Chart = http://quote.yahoo.com/q?s=ALD&d=3m


GT - Goodyear Tire and Rubber Co. $36.69 (-4.63)(-2.44)

Goodyear has helped most of us keep our grip at one time or 
another.  After all, they are the world's largest tire maker.  
They also own the Dunlop and Kelly-Springfield brand.  
Headquartered in Akron, Ohio, the company manufacturers 
engineered rubber products and chemicals too in more than 90 
facilities in 30 countries.  It has marketing operations in 
almost every country around the world.  Goodyear, with the 
recent addition of its Dunlop tire joint ventures, employs 
more than 105,000 people worldwide.

Simultaneous lousy earnings announcement and a de-listing from 
the Dow Jones Industrial average are the factors driving this 
play into the blacktop.  As we noted in earlier write ups, DJIA 
index funds are now in the unenviable position of having to sell 
GT and replace it with one of the new entrants.  Of course, the 
selling, coupled with lack of demand causes the price to sink.  
So far, GT has been a beautiful put play, sinking even in the 
face of overall market strength.  Technically, there aren't many 
uglier than GT.  On Friday, it closed very near its low of the 
day on volume exceeding its ADV by 35%.  It can't even grab its 
10-dma with both hands.  With 120 mln shares in float, the 
momentum is cast and it looks to continue down.  Its next support 
level is at $35 (previously seen in early 1995), but based on the 
volume since the announcement, penetration isn't out of the 
question.  The next level after that would be around $32, where 
support appears pretty strong.  After a full week of incredible 
strength and volume for the overall market, the play is likely 
to see a reversal for a day or two as profit-takers hunt for 
"bargains", perhaps spiking GT.  Protect your profits by 
tightening up the stops.  However, if you get stopped out, 
consider re-entering on a BOUNCE south of $38.50. 

***November strikes expire in 2 weeks***

BUY PUT NOV-40*GT-WH OI=806 at $3.88 SL=2.00
BUY PUT NOV-35 GT-WG OI= 43 at $0.63 SL=0.00 High Risk!

Average Daily Volume = 881K
Chart = http://quote.yahoo.com/q?s=GT&d=3m


NDB - National Discount Brokers $35.25 (+11.31)

NDB is a holding company engaged in NYSE and AMEX specialist 
activities and also offers online retail brokerage trading.  
They are a national trading firm with offices all over the 
country that acts as market makers for some 3400 different 
NASDAQ and OTC stocks.  Through their division Triak, they 
offer deep-discount trading for individual investors.  This 
part of the business has been put in the forefront as the 
online trading war heats up.

Friday was a hot day for online brokers, investors rushed the 
sector buying shares and driving the prices to levels not seen 
for quite some time.  This was the case for our latest put play, 
NDB.  Helping NDB particularly was a Strong Buy recommendation 
initiated by Credit Suisse First Boston.  You ask why we would 
recommend such a play after a spike due to a positive 
recommendation?  This is exactly why.  We feel the stock has 
spiked and is now back on its way down to earth.  Friday, when 
the initial recommendation was made, NDB spiked however, there 
was a steady sell-off of shares as the trading session progressed.  
We expect the selling to continue and eventually take us back to 
familiar territory around $25.  This wouldn't be the first time 
that sellers show their ugly faces after a spike in the stock.  
Look at the historical chart for NDB, you will notice similar 
spikes throughout the year and the declines that follow.  Even 
though we are going by historical data, use caution with this 
play, remember to confirm negative momentum prior to placing 
your trades.  If the stock breaks $35, this would be a good 
entry point.  The nearest support is at the 10-dma at $26 and 
resistance exists at the current trading level at $35.  Monday 
should confirm whether the stock has hit this wall or not.  

***Caution: only 2 weeks left for November options***   

BUY PUT NOV-35 NDB-WG OI=22 at $2.81 SL=1.25 low OI
BUY PUT NOV-30 NDB-WF OI=63 at $0.94 SL=0.00 HIGH RISK!

Average Daily Volume = 1.32 mln
Chart = http://quote.yahoo.com/q?s=NDB&d=3m


AMZN - Amazon.com $64.94 (-5.69)

Wake up, Dorothy!  We're not in Kansas anymore; or at the mall 
either.  We're in the AMZN jungle, the online retailer attempting 
to become the Wal-Mart of the Internet.  They sell everything 
from books, videos, CD, software, hardware, home electronics, 
etc all over the Internet.  Within the last six months, they 
have opened an online auction service (to compete with YHOO and 
EBAY) and purchased upper-end auction house, Butterfield and 

Amazon looks headed underwater.  While there is some support for 
AMZN in the $62 range preceding its pre-earnings run, we don't 
think that will last.  First of all, AMZN reported a loss of 
$0.26, while the street expected a loss of $0.28 - 2 cents better 
than expected (acceptable, but not stellar).  However in the 
conference call they noted that Q4 wouldn't look so hot as 
marketing expenses for the upcoming holidays were going to 
increase the bleeding (losses).  In other words, no profits in 
sight and investors are getting impatient.  Investors' response 
was to begin selling.  Second, on a technical basis, AMZN was 
falling while the rest of the Internets barely participated in 
NASDAQ's six days of gains.  It was looking like the worst of the 
worst.  If the market turns south on us (and we think it will 
from harvesting juicy profits gained in the last 6 days of NASDAQ 
records), there will be nothing to hold AMZN up.  Though it has 
been down 8 days in a row, Friday's "up" came with less than 
average volume, and appeared to us to be a last gasp/put buying 
opportunity.  Friday's resistance level proved to be a measly 
$65.  There just isn't any reason for this stock to go up.  
Consider spikes up to $65 with a southerly bounce as buyable.  
For the more conservative Internet investor (is there really 
such a thing?), wait for a clean break below $61 with stepped up 
volume.  That will serve as confirmation, so long as the market 
cooperates and continues to punish the sector.

Sentiment and nervousness about the future are what's driving 
this play.  News that AMZN settled a name dispute with Amazon 
Bookstore Cooperative in Minnesota isn't going to do a thing.  
News that they were taking their auctions and shopping sites 
to Europe might stimulate some buying interest, but that news 
already appears to have played out on Friday.

*** November strikes expire in 2 weeks***

BUY PUT NOV-70*YQN-WN OI=8214 at $7.38 SL=5.50
BUY PUT NOV-65 YZZ-WM OI=9542 at $4.38 SL=2.50
BUY PUT NOV-60 YZZ-WL OI=6062 at $2.38 SL=1.00

Average Daily Volume = 12.5 mln
Chart = http://quote.yahoo.com/q?s=AMZN&d=3m 


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


Waiting To Exhale..

Friday, November 5

U.S. stocks rallied Friday after a favorable wages report calmed 
interest-rate fears. The Dow finished up 64 points at 10,704 and
the Nasdaq index rocketed another 46 points to 3,102 continuing
a streak of record gains in technology issues. The S&P 500 index
ended up 8 points at 1,370. Advances led declines 1,742 to 1,301
on active volume of over 1 million shares traded on the NYSE. The
30-year U.S. Treasury bond was up 20/32 with a yield of 6.06%.

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

Toys-R-Us   TOY   JAN17C/NOV17C   $1.12   debit  calendar
Claire's    CLE   FEB22C/NOV22C   $0.00   debit  calendar

Our new plays were a mixed lot as one climbed higher while the
other fell on profit-taking. CLE opened $0.50 higher and the
spread was offered at $1.18 until 9:48 am, when the price of
the long position was raised to $2.00. It's not clear whether
the target entry was available (we didn't have a physical order
on this play) but the debit remained well above our suggested
price for the remainder of the session. We will list the spread
as unavailable. TOY was up at the open and then faded later in
the day as sellers dominated the trading activity. The position
was offered at a low of $1.00 debit.

Portfolio plays:

The Markets roared today as stocks, bonds and the dollar rallied
after news of subdued inflation in the U.S. economy. A report on
average hourly earnings showed a rise of only 0.1% in October and
non-farm payrolls grew by a less-than-expected 310,000. The new
data reduced fears that the Fed will hike interest rates when its 
policy-setting committee meets later this month. There are those
who think the inflation-fighting Fed may simply avoid creating a
new setback, leaving rates unchanged as the critical Y2K period

Regardless of the reasons, investors are happy with the results
as stocks continue to make gains in all sectors of the market.
Our big winners continue to be the technology issues and today
the uncontested champion was Qualcomm (QCOM), up $30 after new
bullish comments by an analyst about the company. The stock has
had an incredible run recently, reporting better-than-expected
profits, setting a four-for-one stock split and giving investors
a rosy picture of the wireless future. The issue is up over $100
since our bullish recommendation in September. Another technology
stock that moved higher today was Cisco Systems (CSCO), up $3.50
on a healthy pre-earnings rally. The company reports after the
close Tuesday and is expected to exceed estimates of $0.23 per
share. NetBank (NTBK) rose $3.12 to $25.31, a recent resistance
area. Some investors are speculating that there may be an offer
in the works for the outstanding shares of the company and our
position would benefit from an extended stay near or above the
current range.

As you know, we focus primarily on time selling strategies (the
simplest methods for new spread traders) and the calendar spreads
portfolio is performing very well. We have a number of positions
that closed profitably this month and many that were candidates
for early exits including Anesta (NSTA), C.R. Bard (BCR), Global
Telesystems (GTS), Legato (LGTO) and Proxymed (PILL). Our current
favorable plays include Allied Waste (AW), Bell Atlantic (BEL),
LG&E Energy (LGE), Micron Electronics (MUEI), Occidental (OXY),
Peoplesoft (PSFT), Talk.com (TALK), 3dfx (TDFX) and Zoltek (ZOLT).
Zoltek was a big surprise today, up $1 to $9 on no news or public
announcements. The current speculation is that a new carbon fiber 
contract for the company may be announced within a few weeks. You
will need to monitor the technical indicators for bullish signs
and make the necessary adjustments (if the stock moves higher).

The majority of our diagonal and debit spread positions are ITM
and those sections have produced a number of winners this month.
The most productive issue has been JDS Uniphase (JDSU) and today
the stock moved $8 higher to a recent plateau at $200. The issue
is trading $60 above our sold strike and easily closed at maximum
profit last week. Other plays that have provided profitable early
exits this month include; Aware (AWRE), CMG Incorporated (CMGI),
Dell Computers (DELL), Etrade Group (EGRP), Gemstar (GMST), and
The Limited (LTD).

Our long-term portfolio is by far the most interesting (from a
trading viewpoint) and we are happy to see the majority of plays
back in a profitable range. The static (original) positions have
recovered very quickly from the late-summer lows but our personal
plays have suffered from aggressive trading as we sought to limit
losses during the slump. The most difficult decision to make in
these long-term positions is how to manage downward movement and
make the appropriate (timely) adjustments to protect the initial
investment. Many traders say that because the LEAPS/CC's strategy
is based primarily on selling time, the majority of losses will be
small and the infrequent large profits will able to overcome these
small losses. With this type of approach, the hands-off technique
should be sufficient in all but the most volatile issues, as long
as a relatively neutral outlook is maintained. That's obviously a
a subject that we (personally) need to study in greater detail.

Motorola (MOT) has been the leader in the LEAPS/CC's section over
the past week and the rally continued Friday after analysts from
PaineWebber raised their price target for the company to $146. In
a research note, PaineWebber said Motorola is the least expensive
way to play the high growth wireless industry and the company is
in the process of gaining mobile phone market share in the United
States. With the favorable economic news and an expected jump in
the technology issues, Motorola was primed for another rally. The
deciding blow came after the company made positive comments about
demand prospects for its semiconductor segment. By midday, MOT was
trading up $7 and well above the 52-week high of $108. We managed
to corral some of the movement in our "roll-up" to the $105 calls
but our position is woefully behind the initial (unadjusted) play.
Cabletron (CS) and Solectron (SLR) were the other big movers and
both plays were also due for an adjustment. In the case of CS, our
current position is diagonal and downside protection is a primary 
objective. With SLR, this roll-up is the first move away from our
neutral outlook and the play is already profitable, so the margin
for error on the upside is slightly larger.

Here are the new prices for each of our (adjusted) positions:

Cabletron   CS    LJAN15/DEC17C   $2.38    debit   LEAPS/CC's 
Motorola    MOT   LJ105/DEC105C   $14.50   debit   LEAPS/CC's 
Solectron   SLR   LJAN70/DEC75C   $11.62   debit   LEAPS/CC's

Of course there were some negative issue in the section today
and one that continues to baffle us is Pacific Gateway (PGEX).
We know it's heresy to open a bullish play after an earnings
announcement (regardless of how positive it is) but the chart
and the attractive premium disparities were too overwhelming.
At this point, the stock is testing trend support at $20 and
failing this range, the character changes significantly. One
other stock that made a new and surprising turn for the worse
was Message Media (MESG). The stock price fell $2 after some
excellent gains earlier in the week. Many traders are pointing
to pump-and-dump tactics while others are suggesting the move
is just a runners crouch before the sprint. With consolidation
expected for the large-cap issues in the week ahead, the trend
for smaller priced stocks should continue to improve. One can
only hope..

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


NETS - YouthStream Media  $25.06   ** Masters Of Marketing **

YouthStream Media Networks publishes mybytes.com, the premier
online community for the 15-million strong college market, and
the leading media gateway to the young adult marketplace, with
a strong emphasis on the high school and college audience. With
50 years of aggregate experience, YouthStream delivers the most
extensive range of customized, fully integrated online media and
marketing services in this market in the world.

Thousands of schools and colleges rely on YouthStream to provide 
educational, informational and promotional material through the
industry's first full-service, personalized and free Internet hub
for college students and faculty; the nation's largest on-campus
event marketer and poster seller at campuses across the country;
the nation's only network of campus theaters; the leading college
newspaper advertising placement service; the leading promotions
company; the largest print poster catalog; and the nation's only
college online research service.

YouthStream recently announced the results of an audit of its
Super Poster Shows, which revealed that over 5 million students
trafficked its on-campus poster shows this fall, making it the
single largest on-campus marketing event in the college market.
They have also expanded their network of cinemas to reach over
one million students on campuses across the country and recently
upgraded a major portion of the system with digital transmission
and projection equipment, making it the first operational digital
cinema network in the country.

Lots of hype and advertising (that's what they do best) and the
market audience is large and available, perfect for the type of
service this company provides. From a technical viewpoint, this
issue is a good candidate for continued bullish movement as the
consolidation period appears to have ended and the recent rally
is on heavy volume. We like the near-term outlook for the stock
and will participate in the move with a conservative, diagonal

PLAY (conservative - bullish/diagonal spread):

BUY  CALL FEB-22.50 NTU-BX OI=935  A=$6.75
SELL CALL NOV-25.00 NTU-KE OI=1860 B=$1.93
UPSIDE "Breakout" ROI=8% (two weeks)

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


NVDA - Nvidia Corporation  $28.25   *** The Squeeze! ***

Nvidia Corp. designs, develops and markets 3D graphics processors
and related software that provide high performance interactive 3D
graphics to the mainstream PC market. Their graphics processors
are designed to deliver an immersive, interactive 3D experience
with realistic imagery and great effects. The highly integrated
design of the company's graphics processors combines performance 
3D and 2D graphics on a single chip and provides a simpler and
lower cost graphics solution relative to competing solutions.

Nvidia has moved up quickly in the last week after announcing
that Hewlett-Packard will use a graphics chip from Nvidia in
H-P's Pavilion PC. This new graphics solution will allow HP to
deliver award-winning graphics performance and quality across
all HP Pavilion PC platforms allowing end users to achieve the
ultimate experience for Internet and entertainment applications.

As the stock gained momentum, options became unusually active
and some shorts got squeezed as the graphics chip maker edged
closer to a new high. The number of shorted Nvidia shares has
doubled over the past 3 months. A "squeeze" usually occurs when
brokerages demand the borrowed shares, and shorters have to buy
back the stock. Shorters also use options to hedge a position
and that may been the cause of increased interest in options.

We favor the technical outlook for the stock and the activity
in call options has caused a small disparity in the premiums
which will allow us to open this position at a discount.

PLAY (conservative - bullish/debit spread):

BUY  CALL DEC-20 UVA-LD OI=562 A=$9.25
SELL CALL DEC-25 UVA-LE OI=510 B=$5.50

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


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 also higher
than other plays in the same strategy. Current news and market
sentiment will have an effect on these positions so review each
play individually and make your own decision about the future
outcome of the stock price.

QLTI - QLT PhotoTherapeutics  34.88     ***  Down And Out! ***

QLT PhotoTherapeutics is a world-leader in the development and 
commercialization of proprietary pharmaceutical products for
"Photodynamic Therapy", an emerging therapy that uses light
activated drugs in the treatment of cancers, diseases of eye
and other medical conditions. The company's lead product is
marketed under the "Photofin" name.

QLTI has broken the neckline of a short-term head-n-shoulders
top (at $38.45) and appears headed for support around $30. Any
reversal of the current bearish trend will need to work through
the heavy overhead supply near $39 and that should allow our
position to comfortably expire in two weeks.

PLAY (conservative - bearish/credit spread):

BUY  CALL NOV-47.50 QTL-KW OI=35  A=$1.38
SELL CALL NOV-45.00 QTL-KI OI=142 B=$1.62
INITIAL NET CREDIT TARGET=$0.38 ROI=17% (two weeks)

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


Most of our straddles are still retaining a comfortable amount
of time value but some may require a directional exit (trading
out of the position) to eventually profit in the play.

Here is a list of the existing portfolio positions along with
their maximum observed values (MV) and current prices (C/P):

Long-term plays:

Stock  Pick    Last     Position     Debit    M/V     C/P

ALL   $24.50  $29.44   APR25C/25P    $5.50   $7.25   $7.25 
ALT   $16.44  $14.94   APR17C/15P    $2.50   $2.25   $2.25 
CAL   $36.43  $40.56   MAR35C/35P    $8.62   $9.00   $8.50 	
FDX   $35.19  $41.88   APR35C/35P    $9.75   $12.50  $11.12	
HIG   $41.13  $53.44   MAR40C/40P    $7.31   $11.50  $14.00 	
MYL   $18.63  $20.38   APR17C/17P    $4.56   $5.00   $4.88 	
U     $25.62  $26.88   MAY25C25P     $8.00   $10.75  $7.25 	
UVN   $85.75  $85.50   MAR85C/85P    $7.75    New     Play	

Short-term plays:

Stock  Pick    Last     Position     Debit    M/V     C/P

AMES  $31.63  $31.19   JAN30C/30P    $8.88   $9.62   $7.25 	
AOL   $120.38 $145.50  DEC120C/120P  $18.75  $30.50  $30.50 	
AVI   $22.81  $19.25   DEC22C/22P    $4.38   $4.88   $3.88 	
DLJ   $50.13  $53.81   JAN50C/50P    $13.25  $14.00  $10.50 	 
EBAY  $142.62 $133.25  JAN145C/145P  $41.00  $38.00  $33.00 	
GNET  $55.88  $74.94   JAN55C/55P    $17.88  $25.00  $25.00
STN   $25.25  $23.94   JAN25C/25P    $3.75   $3.88   $2.88 	
WMB   $40.75  $35.00   JAN40C/40P    $8.12   $8.00   $7.25

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

Univision   UVN   MAR85C/85P   $7.75   debit   straddle


CFR - Cullen Frost Bankers  $29.69

Cullen Frost Bankers, through its subsidiary banks provides a
broad array of products and services throughout central and
south Texas. In addition to general commercial banking, other
products and services offered include trust and investment
management, mortgage banking, asset based lending, treasury
management and item processing.

This unique issue satisfies all three conditions for a straddle
purchase. Options that are undervalued (cheap) on an underlying
security that has the potential to move (high or low) enough to
make the straddle profitable, and a history of movement through
a sufficient range in the required amount of time to justify the
overall risk/reward of the position.

PLAY (conservative - neutral/debit straddle):

BUY  CALL MAR-30 CFR-CF OI=96 A=$1.31
BUY  PUT  MAR-30 CFR-OF OI=10 A=$1.75

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


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


Using The Right Strategy...

Success in the stock market depends on many things and those who
have learned how to consistently profit in this game are few and
far between. There are numerous approaches to determining market
direction including: charting with technical trend or momentum
indicators, contrarian systems that use sentiment indexes or
put/call ratios, and valuation techniques such as fundamental
analysis. The important issue that most investors overlook is
that regardless of the method, the market is very difficult to
predict and the value of time spent trying can often outweigh
the gains from the outcome.

We all use different systems to determine when to buy and sell
specific issues (most of them based on technical analysis), but
to profit with directional option trading, you have to correctly
predict the movement of the underlying as well as the time frame
in which the move will occur. A successful trader must also have
a solid understanding of implied volatility in order to enter the
position at a fair price and determine a reasonable goal for the
outcome of the play. Even with the best techniques, this type of
trading involves a great deal of skill and timing; including the
initial selection of the position (and its size) along with risk
management in identifying target exit points and the correct use
of stops to preserve capital. To complicate matters, some experts
suggest that success from directional strategies can be virtually
impossible on a regular basis and the inconsistency of returns
will prevent all but the most wealthy traders from surviving the
short-term losses.

With all of the difficulties involved in directional trading, are
there any techniques that offer the average investor a reasonable
opportunity to profit in a comfortable, low maintenance strategy.
We believe that writing covered-calls fits this description quite
successfully. A strategy based on stock ownership is much easier
to manage on a day-to-day basis than directional trading and it
offers a favorable balance of risk versus profit potential for
those who attempt to predict stock movement and magnitude. The
strategy is more conservative than just buying stock, due to the
fact that a premium is collected, lowering the break-even price on
the stock position, and the concept is attractive to the investor
who is willing to limit his upside potential in exchange for some
downside protection. In addition, the technique is often used in
retirement and Keogh accounts.

Although this strategy might not be suitable for everyone, many
investors will find the technique fits their comfort level and
lifestyle much better than other stock option strategies. 

Good Luck! 


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

CYOE    5.56   6.69   NOV   5.00  1.06  *$  0.50  11.1%  16.1%
SATH   11.06  11.44   NOV  10.00  2.31  *$  1.25  14.3%  12.4%
LIPO    7.56   9.50   NOV   7.50  0.75  *$  0.69  10.1%  11.0%
FLAS    9.63  10.00   NOV   7.50  2.63  *$  0.50   7.1%  10.3%
PILL   13.88  13.50   NOV  12.50  2.75  *$  1.37  12.3%   8.9%
MRVT   11.38  10.50   NOV  10.00  2.13  *$  0.75   8.1%   8.8%
ITIG    8.06  13.31   NOV   7.50  1.25  *$  0.69  10.1%   8.8%
LTXX   15.19  18.50   NOV  15.00  1.25  *$  1.06   7.6%   8.3%
ZIXI   33.00  43.75   NOV  25.00  9.88  *$  1.88   8.1%   7.1%
COOL    8.53   9.56   NOV   7.50  1.88  *$  0.85  12.8%   6.9%
CNCX   26.50  29.00   NOV  22.50  5.25  *$  1.25   5.9%   6.4%
SFSK    8.44   8.06   NOV   7.50  1.25  *$  0.31   4.3%   6.2%
RRRR   11.44  16.44   NOV  10.00  2.25  *$  0.81   8.8%   5.5%
PILT   12.69  15.88   NOV  10.00  3.38  *$  0.69   7.4%   5.4%
NPIX   23.25  30.75   NOV  17.50  6.75  *$  1.00   6.1%   5.3%
COOL    9.06   9.56   NOV   7.50  2.06  *$  0.50   7.1%   5.2%
LCBM   14.06  14.50   NOV  12.50  2.50  *$  0.94   8.1%   5.0%
BNYN    8.72  12.25   NOV   7.50  1.63  *$  0.41   5.8%   5.0%
ASMI    8.50  15.38   NOV   7.50  1.56  *$  0.56   8.1%   5.0%
ELON    8.91   8.44   NOV   7.50  1.88  *$  0.47   6.7%   4.8%
PAIR   13.44  13.19   NOV  12.50  1.81  *$  0.87   7.5%   4.6%
ABTL   15.13  13.88   NOV  12.50  3.13  *$  0.50   4.2%   4.5%
PILL   14.88  13.50   NOV  12.50  2.88  *$  0.50   4.2%   4.5%
DRYR   17.13  17.13   NOV  15.00  3.13  *$  1.00   7.1%   4.4%
MAPX    9.06   7.63   NOV   7.50  2.06  *$  0.50   7.1%   4.4%
EGGS    9.38   9.63   NOV   7.50  2.31  *$  0.43   6.1%   4.4%
NPIX   23.00  30.75   NOV  17.50  6.50  *$  1.00   6.1%   4.4%
GBLX   35.38  34.00   NOV  30.00  6.75  *$  1.37   4.8%   4.2%
NVDA   22.63  28.25   NOV  20.00  4.62  *$  1.99  11.0%   4.0%
NPNT   22.13  28.69   NOV  17.50  5.25  *$  0.62   3.7%   4.0%
LCBM   14.88  14.50   NOV  12.50  3.00  *$  0.62   5.2%   3.8%
IRF    17.44  20.38   NOV  15.00  3.00  *$  0.56   3.9%   3.4%
BNBN   20.00  18.00   NOV  17.50  3.38  *$  0.88   5.3%   3.3%
PRGY   21.75  24.75   NOV  17.50  4.88  *$  0.63   3.7%   3.2%
CS     16.69  19.50   NOV  15.00  2.38  *$  0.69   4.8%   2.1%
EGHT    5.00   4.06   NOV   5.00  0.88   $ -0.06  -1.5%   0.0%
NEM    23.25  20.56   NOV  22.50  2.25   $ -0.44  -2.1%   0.0%

ITIG   10.00  13.31   DEC  10.00  1.25  *$  1.25  14.3%   8.9%
RRRR   14.75  16.44   DEC  12.50  3.25  *$  1.00   8.7%   5.4%
DRIV   22.75  26.63   DEC  20.00  4.25  *$  1.50   8.1%   5.0%
PRGY   25.38  24.75   DEC  22.50  4.50  *$  1.62   7.8%   4.8%
LTXX   16.00  18.50   DEC  15.00  2.06  *$  1.06   7.6%   4.7%
TOPP    9.81  10.88   DEC   7.50  2.75  *$  0.44   6.2%   3.9%

*$ = Stock price is above the sold striking price.

Comments/Observations on Open Positions:

Lifecore Biomedical Inc (LCBM) should be monitored closely as it
is displaying several negative technical divergences. A favorable
exit was available Friday for a net credit of $12.06; a $0.50 
profit and $0.18 profit respectively, on the two listed plays. 
Again, if the calls had been bought back on either of the recent
drops, a greater profit would have been available. Newmont Mining
Corp (NEM) is quite oversold but will move with the price of Gold
(also oversold). 8x8 Inc (EGHT) appears to be holding support.
Other issues testing support or showing weakness are: 
Barnesandnoble.com (BNBN); Global Crossing Ltd (GBLX); Mapics 
Inc (MAPX); and Autobytel.Com Inc (ABTL).

Positions Closed: Youbet.Com Inc (UBET); Beyond.Com Corp (BYND)

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 Not Called

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

NTAI   19.19  NOV 17.50  QNA KW  2.25  44    16.94   3.3%   3.3%

BTOB   18.38  DEC 15.00  TUM LC  4.63  150   13.75   9.1%   9.1%
CYCH    8.38  DEC  7.50  KBQ LU  1.44  1344   6.94   8.1%   8.1%
WAVX   13.19  DEC 10.00  AXU LB  3.88  186    9.31   7.4%   7.4%
DIGE   14.44  DEC 12.50  QDG LV  2.75  252   11.69   6.9%   6.9%
PILT   15.94  DEC 12.50  PTU LV  4.25  187   11.69   6.9%   6.9%
DGII   13.56  DEC 12.50  DGQ LV  1.69  10    11.87   5.3%   5.3%
JDAS   11.63  DEC 10.00  QAH LB  2.13  55     9.50   5.3%   5.3%

Company Descriptions

NTAI - Nam Tai Electronics Inc  $19.19 *** Stage II ***

Nam Tai is a consumer electronics design and manufacturing service
provider to some of the world's leading OEMs. NTAI manufactures 
telecommunication products, palm-sized PC's, personal digital
assistants, linguistic products, calculators, smart card readers, 
battery packs and LCD modules.  A speculative entry with earnings
due before the open on Monday. Last quarter was exceptional and
helped instigate Nam Tai's stage II climb. If earnings come in 
strong, an entry may be possible later in the day (or week) with 
some profit taking. If earnings are lackluster...don't enter!
We believe it is favorable short term (2 weeks) speculation.

NOV 17.50 QNA KW Bid=2.25 OI=44 CB=16.94 RC=3.3% RNC=3.3%

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


BTOB - First Sierra Financial  $18.38 *** Breakout #1 ***

First Sierra is an e-commerce technology and services provider to 
small businesses. The Company customizes lease financing products 
and offers servicing, consulting and technology solutions via on-
line connections to its e-commerce software system. First Sierra
acquires, originates, sells and services equipment leases on a 
wide range products. First Sierra has completed several major 
alliances with leaders in the sought-after business-to-business 
arena, including Intuit and VerticalNet. The breakout Friday,
with no news, was impressive on heavy volume. Earnings were a
last month and First Sierra reported record revenues.
DEC 15.00 TUM LC Bid=4.63 OI=150 CB=13.75 RC=9.1% RNC=9.1%

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


CYCH - CyberCash Inc $8.38 *** Stage I Base ***

CyberCash Inc is the world leader in secure, convenient payment 
technologies and services, enabling e-commerce across the entire
market spectrum from electronic retailing environments to the 
Internet. CyberCash provides a complete line of software products 
and services allowing merchants, billers, financial institutions 
and consumers to conduct secure transactions using the broadest 
array of popular payment forms. Though CyberCash reported a loss
this quarter, they did beat estimates as they continue to market
and expand their product. The technical outlook has improved with
CyberCash entering a stage I base, establishing support at the 
sold strike price.

DEC 7.50 KBQ LU Bid=1.44 OI=1344 CB=6.94 RC=8.1% RNC=8.1%

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


DGII - Digi International Inc $13.56 *** Breakout #2 ***

Digi International is a leading world-wide provider of voice and 
data communications hardware and software that delivers seamless 
connectivity solutions for open systems, server-based remote 
access and LAN markets. The company markets its products through
a global network of distributors and resellers, system integrators
and OEMs. Digi now has a permanent CEO with Mr. Dunsmore, recently
of Lucent Technologies. Monday's breakout spike in price appears 
related to the news on Digi joining the Red Hat partnership 
program. Digi has now moved above its four month trading range
and with earnings due mid week, it could start a new up-trend.

DEC 12.50 DGQ LV Bid=1.69 OI=10 CB=11.87 RC=5.3% RNC=5.3%

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


DIGE - Digene Corporation  $14.44 *** FDA Approval ***

Digene develops, manufactures and markets proprietary DNA and RNA 
testing systems for the screening, monitoring and diagnosis of 
human diseases. The Company has developed and is commercializing 
their patented Hybrid CaptureŽ Gene Analysis System and tests in 
three areas: women's cancers and infectious diseases, blood 
viruses, and pharmaceutical clinical research. Digene's primary 
focus is in women's cancers and infectious diseases. DIGE resumed
its uptrend on news that health plans would provide reimbursement
coverage for the Digene HPV Test. Monday's announcement that DIGE
has received marketing clearance from the FDA for its Hybrid 
CaptureŽ II Chlamydia Test was icing on the cake. Digene reported
earnings Thursday and the headline says it all: Revenues Increase 
45% As Quarterly Net Loss Narrows 54%. 

DEC 12.50 QDG LV Bid=2.75 OI=252 CB=11.69 RC=6.9% RNC=6.9%

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


JDAS - JDA Software Group Inc.  $11.63 *** What's Up? ***

JDA Software is a global provider of integrated retail software 
products and professional services for more than 600 clients 
worldwide. Designed to optimize the retail enterprise, JDA's 
solution addresses the requirements for the entire retail supply
chain from corporate, to the distribution center, at the store
and on the Internet. JDA took a hit in October after warning
about a delay in software license revenue due to, yes, Y2K.
When JDA reported earnings Oct 21, the company stated that the 
uncertainty surrounding the millennium change has extended their
selling cycles for some deals. This week the price took off on
no news and closed at a new 52 week high on Thursday. Profit 
taking was evident Friday and should allow a conservative entry
point. We favor the strong support around the cost basis.

DEC 10.00 QAH LB Bid=2.13 OI=55 CB=9.50 RC=5.3% RNC=5.3%

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


PILT - Pilot Network Services  $15.94 *** Breakout #3 ***

Pilot Network Services, the Security Utility pioneer, is the only 
e-business network service provider of highly secure, subscription
based e-business services. For companies of all sizes, in every 
industry, Pilot enables secure e-business by providing a wide 
range of services with built-in security to protect enterprise 
networks. PILT announced earnings on October 26 reporting services
revenues up 89% and that it has reached an agreement with Greyrock 
Capital for $8 million in financing. Aspect Communications is now 
subscribing to the security infrastructure provided by PILT. The
breakout this week after a successful retest of support, bodes
well for Pilot resuming its up-trend.

DEC 12.50 PTU LV Bid=4.25 OI=187 CB=11.69 RC=6.9% RNC=6.9%

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


WAVX - Wave Systems Corp $13.19 *** Breakout #4 ***

Wave Systems is a development stage corporation that provides
electronic commerce, content distribution and security services.
With the recently completed acquisition of N*Able Technologies, 
Wave now has a comprehensive line of trusted client coprocessor
systems. Wave's technology is an inexpensive, open standards, 
hardware & software-based device that enables secure transaction
processing and distributed information metering in users' PCs. 
Wave hopes to take advantage of the recently formed Trusted 
Computing Platform Alliance (TCPA) and will be presenting at
the AEA Classic in San Diego. Tuesday's breakout on no news 
was supported with heavy volume and moved Wave's share price
above the recent three month base. We favor the support at the
sold strike price as earnings are due later this month.

DEC 10.00 AXU LB Bid=3.88 OI=186 CB=9.31 RC=7.4% RNC=7.4%

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


Selling LEAPS...

Many of our readers participate in the naked-put strategy with
long-term options and this strategy may interest those traders
with a bullish market outlook and large collateral accounts.

Put writing allows the trader to collect a premium (the price
of the option) for accepting the obligation to buy a stock at a
specific price. The strategy is designed to complement a stock
trading portfolio because it offers two methods for generating
profits: collecting premium by selling out-of-the money options
and/or acquiring a stock at a reduced price.

Long-term Equity AnticiPation Securities, or LEAPS, are options
with a much longer outlook than traditional stock derivatives.
Stock-related LEAPS may be call or put options, meaning that the
owner has the right to purchase or sell shares of the stock at a
given price on or before a specific date.

LEAPS offer expiration dates as far as two and one-half years in
the future and strategies involving the sale of LEAPS differ very
little from those involving shorter-term options. LEAPS can be
sold against collateral or other positions just like short-term
options and the equity/margin requirements are similar. A trader
that sells LEAPS will take in substantial premium when compared
to the short-term option and thus has a much larger return with
respect to the collateral investment. The larger premium of this
length of contract also produces a significantly lower break-even
price for the overall position.

The most significant theoretical difference in LEAPS is the slow
rate of time decay. These long-term options retain time premium
even when they are substantially 'in' or 'out' of the money. This
unique characteristic will significantly affect a traders ability
to adjust or roll-down (or out) of a position because the option
is relatively expensive to buy back.

Although the large absolute premiums available in this type of
strategy make these long-term positions unusually attractive, the
key is to compare the difference in annualized returns from LEAPS
versus those that can be made from repeatedly selling the shorter
term options. Then you can decide if the relatively large initial
reward justifies the potential risk of such a long-term outlook.

Good Luck!


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

NVX     7.94   5.25   NOV   5.00  0.56  *$  0.56  26.0%  16.2%
DUSA   14.94  16.50   NOV  12.50  0.50  *$  0.50  12.4%  13.4%
HELX   40.31  43.25   NOV  35.00  1.00  *$  1.00   8.5%  12.3%
DRIV   22.75  26.63   NOV  20.00  0.56  *$  0.56   8.1%  11.7%
SUPG   26.56  28.63   NOV  22.50  0.75  *$  0.75  10.3%  11.1%
ENMD   24.75  22.63   NOV  20.00  0.75  *$  0.75  12.7%  11.0%
NPIX   23.00  30.75   NOV  15.00  0.81  *$  0.81  15.0%  10.8%
PRGY   21.63  24.75   NOV  17.50  0.50  *$  0.50  10.0%  10.8%
NSPK   12.44  12.75   NOV  10.00  0.44  *$  0.44  14.8%  10.7%
TALK   14.94  16.38   NOV  12.50  0.38  *$  0.38   9.7%  10.5%
USIX   35.00  48.25   NOV  25.00  0.75  *$  0.75   9.7%  10.5%
DUSA   14.38  16.50   NOV  10.00  0.44  *$  0.44  13.3%   9.6%
NPIX   23.25  30.75   NOV  15.00  0.56  *$  0.56  10.7%   9.3%
LTXX   15.56  18.50   NOV  12.50  0.38  *$  0.38  10.7%   9.3%
SUPG   24.38  28.63   NOV  20.00  0.63  *$  0.63  10.5%   9.1%
IRF    19.63  20.38   NOV  17.50  0.38  *$  0.38   6.2%   9.0%
KIDE   40.44  81.44   NOV  25.00  1.13  *$  1.13  12.3%   8.9%
NEWZ    9.47  11.19   NOV   7.50  0.31  *$  0.31  14.1%   8.7%
SPGLA  12.00  14.50   NOV  10.00  0.38  *$  0.38  11.9%   8.7%
VERT   39.75  69.13   NOV  30.00  1.25  *$  1.25  13.6%   8.4%
BNYN    9.91  12.25   NOV   7.50  0.31  *$  0.31  13.5%   8.4%
CNCX   26.50  29.00   NOV  20.00  0.44  *$  0.44   7.7%   8.3%
RMDY   43.00  40.34   NOV  35.00  0.50  *$  0.50   5.2%   7.5%
RMDY   29.00  40.34   NOV  22.50  0.50  *$  0.50   7.9%   6.9%
SUPG   22.50  28.63   NOV  17.50  0.56  *$  0.56  11.1%   6.9%
TALK   12.63  16.38   NOV  10.00  0.31  *$  0.31  10.9%   6.8%
NPIX   23.88  30.75   NOV  15.00  0.31  *$  0.31   6.1%   6.6%
ZOMX   34.63  33.94   NOV  25.00  0.69  *$  0.69   9.1%   6.6%
EXTR   80.31  81.00   NOV  60.00  0.75  *$  0.75   4.5%   6.5%
ZIXI   33.00  43.75   NOV  20.00  0.50  *$  0.50   7.0%   6.1%
LGE    22.44  22.13   NOV  20.00  0.56  *$  0.56   7.9%   5.7%
TUTS   34.69  40.00   NOV  25.00  0.38  *$  0.38   5.2%   5.6%
NPIX   19.13  30.75   NOV  12.50  0.38  *$  0.38   9.0%   5.6%
HRBC   17.00  17.00   NOV  12.50  0.31  *$  0.31   8.4%   5.2%
CPTH   44.19  60.88   NOV  30.00  0.56  *$  0.56   6.0%   5.2%

STRX    7.63   7.34   DEC   5.00  0.44  *$  0.44  22.3%  13.9%
MLTX   16.19  17.75   DEC  12.50  0.50  *$  0.50  13.4%   8.3%
IONA   21.38  22.06   DEC  15.00  0.56  *$  0.56  11.6%   7.2%

*$ = Stock price is above the sold striking price.

Comments/Observations on Open Positions:

North American Vaccine (NVX), (yes, at the top of the summary
list), is threatening to move below the sold strike. Be sure
you want to own this issue; support around $4.50. You may exit
the play now for the cost of commissions (sometimes that isn't
a bad thing) or plan to sell the December $5 call if assigned.

Positions Closed: Ardent Software (ARDT) - Murphy's Law is in
play as it rebounded strongly, well above the sold strike and 
our cost basis; Theglobe.Com Inc (TGLO).

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

NPLS   15.56  NOV 12.50  UTN WV  0.31  20    12.19   8.9%
ICIX   28.75  NOV 22.50  QIX WX  0.44  157   22.06   7.1%
CPTH   61.38  NOV 45.00  UPA WI  0.63  156   44.37   4.9%
TFSM   49.75  NOV 40.00  BMQ WH  0.50  221   39.50   4.7%
RMBS   89.38  NOV 65.00  BNQ WM  0.63  2920  64.37   3.4%

FLAS   10.06  DEC  7.50  UFL XU  0.75  50     6.75  27.2%
COOL    9.56  DEC  7.50  QOO XU  0.31  64     7.19  14.0%
TUTS   39.69  DEC 30.00  QSS XF  0.81  2     29.19   9.3%
LTXX   18.56  DEC 15.00  UXT XC  0.31  20    14.69   7.4%

Company Descriptions

CPTH - Critical Path Inc $61.38  *** E-mailers ***

Critical Path is a leading provider of email hosting services
designed to allow a wide range of organizations; ISP's, web
hosts, web portals and other companies to reduce costs and
improve customer service by outsourcing their email systems.
They offer products that support growth, enhance reliability,
and allow access to advanced technologies with high levels of
security. A slew of upgrades recently, based on the purchases
of Amplitude, Fabric and dotOne; giving CPTH ample ability to
meet growing demand for managed messaging services. A two week
play to hold near-term support at $45.

NOV  45.00  UPA WI  Bid=0.63  OI=156  CB=44.37  ROI=4.9%

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


ICIX - Intermedia Communications  $28.75 *** Big Contract ***

Intermedia Communications is a telecommunications company which
installs and provides fiber optic links connecting businesses
with their long-distance carriers. Favorable earnings reported
in early November with an 8% quarterly increase in revenue. The
company announced a multi-million dollar agreement with Simon
Property group to connect retailers at shopping malls to next
generation advanced data networks. This project expects to be
the world's largest extranet for retail services. Another short
term play with a favorable cost-basis near technical support.

NOV  22.50  QIX WX  Bid=0.44  OI=157  CB=22.06  ROI=7.1%

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


NPLS - Network Plus Corp 15.56 *** Telecom ***

Network Plus is a facilities-based integrated communications 
provider offering integrated local, long distance, data and
enhanced telecommunications services. The company's customers 
consist primarily of small and medium-sized businesses located
in major markets in the Northeastern and Southeastern regions of
the United States. Last week, Network Plus announced the opening
of their CommandPlus Internet Data Centerin New York, with 26,000
square feet of carrier-class collocation space which will house 
Internet applications such as Web hosting, Internet access, and 
Voice-over-DSL technology. This appears to have excited investors
as the stock has since climbed $5. Though earnings are Wednesday,
the technicals continue to improve on this unique issue.

NOV  12.50  UTN WV  Bid=0.31  OI=20  CB=12.19  ROI=8.9%

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


RMBS - Rambus Inc.  $89.38  *** Hot Chip Sector ***

Rambus Inc. designs, develops, licenses and markets high-speed 
chip-to-chip interface technology to enhance the performance and 
cost-effectiveness of computers, consumer electronics and other 
electronic systems. The Company licenses semiconductor companies 
to manufacture and sell memory and logic ICs incorporating Rambus
interface technology and markets its solution to systems companies
to encourage them to design Rambus interface technology into their
products. Rambus has risen on the news that Intel will unveil its 
delayed 820 chipset in the next two weeks. A favorable short-term
speculation play with support above the sold strike.

NOV  65.00  BNQ WM  Bid=0.63  OI=2920  CB=64.37  ROI=3.4%

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


TFSM - 24/7 Media, Inc. $49.75 *** Merger Candidate? ***

24/7 Media, provides Internet advertising and online direct
marketing solutions for advertisers and Web publishers. The
company operates The 24/7 Network of high-profile Web sites,
CLIQNOW! networks comprising more than 75 medium to large
Web sites anchored by flagship sites, and ContentZone, a
network of over 2000 small to medium sites. In addition, 24/7
Media develops its networks' underlying adserving technology,
Adfinitya. 24/7 continues to climb amid revived speculation
about a possible merger with DoubleClick. There is also new
speculation on a strong third quarter as the company reports
operating results on November 9.

NOV  40.00  BMQ WH  Bid=0.50  OI=221  CB=39.50  ROI=4.7%

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


COOl - Cyberian Outpost Inc $9.56 *** Internet Commerce ***

Cyberian Outpost is a leading global Internet-only retailer of
computer products to the consumer and small office/home office
marketplace. The company's online store features a fun, easy to
navigate interface with competitive pricing. Outpost.com is now
one of the most widely known and used e-commerce sites and has
received recognition from numerous publications. New contracts
and agreements will provide online revenue and the company plans
to target more business-to-business sales. Technically favorable
and the company expects to become profitable in the near future.
DEC  7.50  QOO XU  Bid=0.31  OI=64  CB=7.19  ROI=14.0%

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


FLAS - FlashNet Communications $10.06 *** Speculation ***
FlashNet is a nationwide provider of consumer Internet access
and business services, offering high speed Internet access and
related services that enable customers to outsource Internet 
and electronic commerce activities. Flashnet announced record 
new subscribers for the third quarter but there is no news to
explain the recent jump in price. Plenty of "take-over" rumors
and speculation of pump-and-dump trading with a short squeeze
to complicate matters. Earnings are due later in the week but
regardless of the eventual outcome, $6.75 is a fair price for
this issue.

DEC  7.50  UFL XU  Bid=0.75  OI=50  CB=6.75  ROI=27.2%

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


LTXX - LTX Corp  $18.56 *** Stage II Technicals ***

LTXX designs, manufactures, and markets automatic test equipment
for the semiconductor industry that is used to test system-on-a-
chip, digital, analog, and mixed signal ICs. The Company's newly 
introduced Fusion product is a single test platform that can be 
configured to test system-on-a-chip devices, digital VLSI devices
including micro-controllers, and analog or mixed signal devices.
Morgan Stanley Dean Witter said it started coverage on with an 
outperform rating and a $25 price target. The chart is bullish
as the stock is exiting a lateral consolidation on the upside.
Earnings should be announced near the third week of November.

DEC  15.00  UXT XC  Bid=0.31  OI=20  CB=14.69  ROI=7.4%

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


TUTS - Tut Systems Inc $39.69 *** Own This One! ***

Tut Systems designs and develops communications products which
enable high-speed data access over the copper infrastructure of
telephone companies, as well as the copper telephone wires in
homes, businesses and other buildings. The products incorporate
Tut's proprietary FastCopper technology in a cost-effective and
easy to deploy solution to exploit the underutilized bandwidth
of copper telephone wires. TUTS reported quarterly results with
an upside surprise and was upgraded by Robertson Stephens. The
outlook is for continued exponential growth over the next year.
A favorable price to own this rallying issue.

DEC  30.00  QSS XF  Bid=0.81  OI=2   CB=29.19 ROI=9.3%

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



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