Option Investor

Daily Newsletter, Sunday, 11/14/1999

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The Option Investor Newsletter            Sunday  11-14-99  1 of 6
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 11-12         WE 11-05         WE 10-29         WE 10-22
DOW     10769.32 + 64.84 10704.48 - 25.38 10729.86 +259.61  +450.54
Nasdaq   3221.15 +119.95  3102.29 +135.86  2966.43 +149.88  + 84.69
S&P-100   731.09 + 12.29   718.80 +  1.77   717.03 + 31.40  + 33.88
S&P-500  1396.04 + 25.84  1370.23 +  7.30  1362.93 + 61.28  + 88.12
RUT       449.69 +  7.28   442.41 + 13.77   428.64 + 10.22  +  3.99
TRAN     3089.57 + 85.58  3003.99 - 54.99  3058.98 +195.83  +  7.67
VIX        21.68 -   .38    22.06 -  2.50    22.56 -  0.33  -  8.59
Put/Call     .51              .51              .55

Will he or won't he? Only Andrea Mitchell knows for sure. 

Only a week ago the Down gained +263 points from Thursday's lows 
to Fridays high of 10843 to lift the Dow out of a week long slump. 
The Dow would have finished much closer to the magic 10800 number 
if Judge Jackson had not announced the pending Microsoft verdict
which weighed heavily on the market to drag it back down to close
at 10704. This Friday the market spiked at the open on favorable 
economic news only to be quickly drawn back down to test the low 
for the week for the third time on news that Merrill Lynch had
downgraded Intel, a new Dow component. Microsoft also weighed 
heavily on the Dow with an opening drop based on numerous class
action suits being filed in light of the monopoly verdict.


The Dow had not been participating in the Nasdaq rally and had
lagged downward all week. The different news events all week
created a triple bottom retest of the 10600-10550 support. 10600
was the previous baseline and we successfully fought off the 
intraday sellers the last three days. The break down and recovery
today covered a 227 point spread from the almost exact bottom to
almost the exact top of our recent trading range.



By looking at the longer scale you can see the Dow clearly 
locked in the trading range while we wait for all the economic
reports and the Fed meeting climax. The Nasdaq sold off at the
open on a combination of events. The downgrade of Intel, the
class action suits on MSFT and a major trading error by a
major New York brokerage company. Even with the INTC, MSFT
and DELL anchors the Nasdaq successfully rallied back into
the trading channel and even closed above 3200 for the first


The rumor making the rounds had a broker buying 2,000,000 
S&P and 2,000,000 QQQ (Nasdaq) for their customer. Shortly
thereafter the broker realized the customer meant $2,000,000
not 2,000,000 shares and had to dump it back into the market.
Because nobody knew what was happening the markets thought
there was mass selling and the dip was dramatic. The Nasdaq
was down over -70 points on great economic news. Was that
fear we smelled briefly? Probably so for those riding huge
gains from the last two weeks but they went home happy when
the day was done. 

With only one trading session remaining before the Fed meeting
there were no indications that anyone wanted to cash in their
chips. Unless of course you were holding QCOM at +45 for the
day just before the close. There was a panic drop from $394
to $372 as the daytraders ran for cover but there was no real
selling. UNBELIEVABLE! Only 12 days ago QCOM was trading at
$202. JP Morgan raised their price target today from $315 (duh!) 
to $460 and said good things about the company. $460, Tuesday,
Wednesday maybe? If/when this thing turns it is going to be
very ugly. I tried to short QCOM on the morning drop and the
shares were not available. Wonder why? Did everybody else
have the same idea? 


Meanwhile, back in the real world, the Nasdaq did set another
record high on the fourth largest volume day ever. (2nd fourth
this week) As I have said before, rallies on strong volume are
very hard to stop. If we see the upward momentum slow but the 
volume remain high then we could be nearing the top. In spite
of the daily positive gains the Nasdaq is beginning to draw
more flys than praise. The background whispers of worry by 
veteran traders are starting to become a roar that could prevent
us from going much higher without a rest. The contrarian view
however would point to the unrest as an undercurrent of fear
that will propel the Nasdaq even higher. Even though the law
of gravity has been repealed in the case of QCOM, the last fool
theory is still alive and well.  

Just the facts. The productivity numbers came in much higher 
than expected this morning with an increase of +4.2%. The
Goldilocks economy is still alive and well! The unit labor costs
came in much lower than expected at +.6%. To summarize, we have
the tightest labor market in 30 years, the highest productivity
and the lowest increase in labor costs since 1998. Add to this
the Retail Sales from October coming in unchanged and you have
a recipe for the Dow rally. After the Intel and Microsoft induced
dip at the open, the DOW powered forward to start tacking on some
gains. There was a brief pause during the early afternoon while
President Clinton spoke and signed the Financial Reform Bill.
I think everyone was holding their breath hoping that he would 
not make a grandstand play and announce some new economic 
reform/tax/spending proposal while he had everybody's attention.
Once it was all over the banks exploded on the possibilities
for new business and acquisitions. The large gains by Dow 
components AXP +8.50, JPM +6.56 and C +2.75, made up for the
Intel downgrade loss. Bonds soared on the economic news and the 
yield dropped to 6.03%.

All the preliminaries are almost over and we are ready for 
the main event. The $64 billion question is "will the Fed 
raise rates on Tuesday". Or in reality, do we care? Some 
analysts say this is the closest decision they can remember. 
The sides are evenly divided and each has some very good 

FOR: Greenspan has said repeatedly "productivity cannot
continue to accelerate forever and the end result will be 
inflation." Although the most recent economic reports may 
indicate the economy may be slowing it is still growing at an 
alarming rate. (for the Fed) This is the last chance to take 
back the third rate cut from last year before February 2000. 
The next Fed meeting is Dec-21st, only a week before Y2K. 
Failure to raise rates will make all the Fed lions look like 
paper tigers after they have warned us all year. The Fed wants 
to get back to a pre-emptive stance instead of a reactive 
stance. The runaway market is a sore spot for the Fed and 
even though they say publicly that they won't raise rates 
"just to burst the speculative bubble" it does remain a 
strong supporting reason. 

AGAINST: What inflation? Labor costs flat. Productivity up.
Inflation nonexistent. The Fed has been strangely quiet for the
last several weeks. Normally the Fed heads drop hints in their
weekly speeches about their mindset so a raise will not catch
anyone by surprise. There have not been any notable remarks in
recent weeks. Three steps and a stumble. As the saying goes, 
three rate hikes historically causes a stumble in the markets.
The Fed does not want to do anything this close to Y2K to rock
the markets. Actually, by not raising rates, some feel that the
cloud of rate speculation may help keep the market in check.
(Sure, just like the last two weeks speculation held the Nasdaq

My position: They will because they can get away with it. This
is the last time they can justify a hike before February. The 
market is in strong rally mode and a hike is already priced in. 
If they do not raise rates the market will explode like an F15 
on after burner. There will be a six week party in the markets 
instead of Y2K caution. The $2 trillion in cash on the sidelines 
will be fighting for the same high flying stocks. In reality
this is the best of all possible scenarios. They do not raise
rates, we party. They do raise rates, we moan and groan and then
party a day later. They get a rate hike for free. Almost all
the analysts think we will see at least three more rate hikes
next year to slow down the +5% growth in the economy. A hike
now makes them even from the three cuts last year and puts us
back to square one. Next year can start out on a level interest
rate policy and the Fed will feel more comfortable.

Not only the Nasdaq and the Dow are poised to breakout even
higher, for once the broader market is also coming along for 
the ride. This chart shows the Wilshire 5000 Total Market
Index close to a new all time high.  


To be fair the contrarian view would show the DOW, NASDAQ and
Wilshire 5000 dead on their upper resistance and did I mention
that the VIX closed under 22 again? Breakout or break down, we
are only ten trading hours away from the answer.

The tension is mounting. The fuse is lit. The countdown has
begun. What are you going to do Mr. Greenspan? You can come 
out of the FOMC meeting as a cheerleader or a party pooper. 
Don't take that special invitation on Friday to the signing 
table by President Clinton as a guarantee to be re-appointed. 
A major market disaster could decide your fate sooner than
you expected. If you are nice to the markets maybe Andrea
Mitchell (Greenspan's wife and MSNBC reporter) will start 
going by Andrea Greenspan instead of her alias. 

Speaking of Y2K, there is another rumor making the rounds that
the majority of the major fund managers have agreed to go dark
the last two weeks of December. They will neither buy nor sell
in that period to avoid complicating the already very low
volume that is expected. While that may be a good idea, if you
believe it will actually come to pass then I have some lake 
front property in Death Valley I would like to sell you. The
greed factor is alive and well and most fund managers will
be positioned to take advantage of any year end volatility 
instead of avoid it.

We received a ton of email on the "Ask the Analyst" section
last week. Thank you, thank you, and thank you. This section is
going to be very popular. Check it out every Sunday and send
us the stocks you would like us to research for you. Send them
to "askoin@OptionInvestor.com".

The Entry Point educational article last Sunday was also 
well received. Numerous emails said it was like a fog had 
been lifted and now they could see for the first time what 
we meant about picking an entry point. This week the topic 
is "Fishing for Profits". It is only on the website because 
it is too big to email.

Also please check out the "State of the Art Stop Losses"
article as well for the best answer I have found to the
stop loss problem.

With the Nasdaq in nosebleed territory, the Fed meeting on 
Tuesday and CPI on Wednesday, pick your entry points carefully 
and sell too soon. If you are not out of November options 
yet, you should get out soon. They expire on Friday.

Jim Brown


This was an interesting week in the markets and it would 
have been pretty hard not to have made some good trades. The 
volatility was everywhere. Stocks were selling off intraday
giving good buying opportunities and then rebounding strong.
I was not able to trade as much as I wanted but when I was
doing the recap for this section I was surprised at how many
trades I actually made.

OEX - Puts


The Dow had spiked up on Friday, died Friday afternoon
and Monday morning after the MSFT news. After recovering
Monday afternoon we went into the close with a small dip
and it looked like a possible roll over. The Dow has not 
been able to hold 10800 for sometime. The VIX fell to 
21.50 at the close and several trading buddies and I 
decided to chance some OEX-720 Puts. I got in at 7.25
about 10 min before the close and held. The Dow spiked
on Tuesday morning but there was no breadth. When it 
started sliding within minutes of the open I doubled
up with some more contracts at $6.88. I was profitable 
within seconds and I followed them down with a trailing
stop loss and finally got stopped out at $9.63. 

MSFT - Combination play

On announcement Friday I had entered a combination play on
MSFT with the $95 calls and the $85 puts for a total of $4.25.
I sold the puts at the open on Monday for $2.75. When MSFT
started recovering I bought 20 more $95 calls for $.50 giving
me a total of 30. When MSFT was unable to hold above $90 on
Thursday and the news of the class action suits started
filtering in, I sold 30 $90 calls against the 30 $95 calls
I owned for $2.00. If you quickly do the math you will see
I made no money. The problem with the play as several readers
have pointed out in hindsight, (thank you), was that I did
not buy closer to the money on the puts. MSFT was $92 when
I opened the position and I thought the upside was a stronger
possibility than the down side. The puts were insurance in
my mind. I guessed wrong, I bought too far away and the play
did not work. I recovered the money spent by selling the 
$90 calls but that was not the plan.  I also bought some
2001-$80 leaps on the Monday drop with the intention of
selling calls against them for the next twelve months. When
MSFT failed to rally and appeared to be heading farther down 
on Wednesday afternoon I closed the leap position for a push
to wait for further developments. With the advent of the 
class action suits it could be sometime before MSFT recovers.

AOL - Calls


This play was the perfect application of the new option
stop program in my other article tonight. AOL had been
moving up strong into their split run last week. I was
looking for an entry point in the $142-$145 range on
a pullback. I set a buy stop on AOL at $142 to buy 10
contracts of the AOL-140 calls. I really did not expect
AOL to drop that far and I expected I would have to 
reset the stop higher based on market conditions. At
the open on Tuesday AOL stock dropped to $142 exactly.
My buy stop on the AOL stock triggered a buy of the AOL
calls and I was not even looking at the time. I love this
stop system. I filled at $7.25 and they traded over $10 
shortly thereafter on the rebound. I was not actively
trading and the next time I looked AOL was rolling over
again at the end of the day and closed at $8.63. If I
had been watching I could have easily gotten $10. This
buying and selling options based on a stop on the stock
price is incredible. You don't have to guess at what
the option price should be just what entry point you
want on the stock.

On Friday when AOL bounced off support again at $142
I bought the Nov-140 calls again at $6.63. When the
market rallied so strongly I started worrying about
a possible pullback on buyers remorse on Monday morning.
I also knew that the Nov time premium would evaporate
completely on Monday so I sold them at $9.63 at the close
and plan to buy December-140 on the next pull back.

DISH - Calls

This was another news driven play. After the news of the
passage of the satellite TV bill, which gives dish companies
the right to distribute local network programming, hit the
airwaves on Monday, DISH took off. I set a buy stop based on
the stock price at $73 to buy Nov-$70 calls. Bingo! I was
executed on the Tuesday morning pullback at $$5.12. When
the stock started rolling over a couple hours later I
sold at $7.12. The story did not end here however. After
the Wednesday bounce I thought the pullback on Thursday
was another entry point and I bought again at the close.
I bought again at the opening dip on Friday but closed out
the entire position at the close for a loss. The bill was
tossed back to the house for another vote after a heated
ammendment process. It is guaranteed to pass after the
funding portion was stripped but it will now take another
week or two before the final vote. Buy the rumor sell the
news bit me on the second try. I lost the $2.00 I gained 
on the first trade. It is normally a good rule to not try
and double dip a successful trade. The second entry point
and decision is normally emotional, not factual.

QCOM - calls

After the big pullback on profit taking we had on Monday, 
you can almost see it on the chart, a whole -$5.00, I
bought the dip just after the open in Tuesday. The NOV-300
calls for $13.50. I sold them on Wednesday morning for $27.38
and I REALLY wish I had them back. The one day with no double
digit gain had deflated the premiums enough to be affordable.
Today the same option is $82. The same at the money option
today ($380) is $23 and all time premium with five days to
expiration. Sorry, but not for me. I tried shorting QCOM
on several of the intraday peaks but it would not stop. I
missed the $20 drop at the close on Friday but the stock
would probably not have been available for shorting anyway.

SFE - Calls

SFE had been very volatile with $6-10 intraday swings Monday
and Tuesday. After the second dip on Wednesday I decided if
it hit $114 again and bounced I would be on it. Bingo! The
third dip came just before the close and I bought the $110
calls for $7.00. I sold at the open on Thursday for $9.38.
I tried the same thing on Friday but it stayed below $114
most of the day and I got out for a push fearing a roll over.

BRCM - Calls

One of the readers had been emailing me all week about BRCM
but it just would not pull back. I missed the entry on Thursday
because it spiked in the morning and then drifted lower all
day. It looked like a slow bleed and I lost interest. The
spike at the close was strong but I missed it. Friday morning
BRCM dipped with the Nasdaq at the open and as soon as it
turned around I was all over it. I bought the $170 calls
for 8.63 and sold them at the close for $12.75. Again, November
calls with time premium would evaporate at the open on Monday.
I plan to open a December position Monday. Strong split candidate.

JDSU - Calls

JDSU had retraced a little more than half of it's gains
from last week. I was watching all week for signs of life.
After the Nasdaq dip on Friday it started moving fast. I
was lucky to get the Nov-180 calls for a quick play at 
$13.75 and sold at the close for $18.75. Again, I did not
want to hold Novembers into Monday and I will reopen with
Decembers at the next opportunity.

SNE - Calls

Sony gaps up in the mornings in response to market gains
overseas in response to market gains here. Did that make
sense? When we have a big day the overseas markets usually
follow that night. At our open the next day we have to 
catch up to the gains they made overnight. See how SNE
trades flat all day after big gaps at the open. When SNE
pulled back on Thursday I bought some NOV-165 calls. I
did not sell on Friday because of the market confusion
at the open. When our market finished so strong I held
over, even though they were Novembers, because of the
strong possibility of a larg gap open on Monday after
their market responds to our gains Friday. Sounds
complicated but it really is not. There was only about
$1 time premium because I bought deep in the money for
the gap trade.


Recap: I only have one open position (SNE) and I can rest 
easy over the weekend about the market direction. I plan
to be very selective until direction is established AFTER
the Fed meeting. I am still concerned about the big Nasdaq
run and possibilities for a pull back soon. It is also
entirely possible we could see a buy the rumor, sell the
news event after the Fed meeting even if they do not raise
rates. I do not plan to open more than one or two plays
at a time and then monitor them closely. 

I really like the new option execution based on stock
price that I wrote about this weekend. It allows me to
focus on stock price and not option price. I plan to
"fish" for some bargains Monday/Tuesday depending on
the market.

My primary targets are still BRCM, JDSU, AOL. Also BVSN
looks like it is starting a rebound.

Check out my article tonight on Stop Losses for information 
on the new stop loss program I mentioned above. (website only)

My educational article this week is "Fishing For Profits"
(website only)

I only plan to trade when the market gives me a prefect entry
until after the Fed meeting.



By Jim Brown

Those of you who have been readers for some time know that
I personally had several online brokerage accounts. After
this week I only have one. After putting up with Etrade for
two years I quit. I kept telling myself that it would get
better. Instead it keeps getting worse. I stayed with Etrade
for so long because they offered stop losses (of sorts) on
options. Have you tried to cancel their stops and had them 
lock up until they expired after the close? Or how about 
having the stop execute several dollars below where it was 
set? Don't you just love having to reset your stops every day? 
Stop losses are hard enough to manage without having to deal 
with a broker that can't even keep their site running much 
less complicate the stop process.

Evolution of a Deal

Unfortunately I would probably still be there except I found
a better mousetrap. Not just a mousetrap but the Cadillac of
mousetraps. Actually they found me. An officer of Preferred
Capital Markets, who is a subscriber, called me one day after
seeing me complain about Etrade executions and offered his
system as a better online trading service. I tried him out
and the executions were almost instant. Compared to Etrade
they are better than warp speed. The problem was no stop
losses. I told him I liked his system but could not recommend
it because there were no stops. End of story, right? Wrong!
Dave got with his management team and programmers and we
talked at length about what option traders really wanted.
They committed to provide it and went right to work. 

State of the Art

Well boys and girls the clout of the OptionInvestor readers
has been felt. We got more than we asked for and it works
great. Not only do they offer almost instant executions but
now they have the best stop loss program I am aware of.

Option BUY/SELL Stops Based on the OPTION PRICE or STOCK PRICE !!
and they are GOOD TILL CANCELLED !!

Yes, you can say sell my AOL-140 call if it hits $12.00 but 
you would expect that as normal. 

Now picture this. Sell my AOL-140 options if AOL hits $145. 
Read that again. Stops on options based on the STOCK PRICE. 
I have used it and it works great.

Think about what you can do with this. 

AOL at $148, you target shoot AOL $145 calls based on an
intraday dip by AOL to $142. You enter, If AOL hits $142
on a dip then "buy open" 5 contracts of DEC-145 calls at market.

You do not have to know the option price. You look for an
entry point on the stock based on your chart analysis and
then enter a GOOD TILL CANCELLED order to buy options based
on the possibility of an intraday dip in the stock price. 

Lets say you own 10 contracts of YHOO calls and you want 
to sell them if YHOO hits $200 on an intraday spike. You
enter "sell 10 xxx when YHOO hits $200" GOOD TILL CANCELLED. 
Very simple, very effective.

The stops work on all BUY OPEN, SELL CLOSE, BUY CLOSE, SELL
OPEN orders. The possibilities are endless.

If you change your mind later you can cancel it in 5 seconds!!

A Very Simple System

The software is not browser based and therefore takes up much
less memory and executes much faster than any other software
I have seen. This is an example of a trading screen.


The orders are entered on the top line. When submitted they move 
to the orders working box. When filled they move to the bottom 
box. Normally this takes only seconds and you never leave the 
page. Since it is not browser based there is no paging from page 
to page to check status or positions. You can also "stage" orders 
for later execution. If you are thinking about several different 
plays but want to wait until you can confirm movement in each 
stock before making a decision then you can enter the order ahead 
of time, then stage it along with any others. When you are ready 
to execute it you are only two clicks away. Very fast, very simple.

New Features On The Way

OCO - Order Cancels Order - You can enter both a profit sell AND a
stop loss at the same time. Whichever fills first cancels the other
order.  No more missed profits because you had a stop loss working
instead of a profit sell when the stock spiked upward intraday 
while you were at work.

Online Spreads as One Order - Currently spreads must be entered as 
two orders OR called in to a live broker to execute as one order.
This is in the pipeline and will be out soon. 

Low Commissions

Stock trades start at $7.75
Option trades start at $19.95

Current Recommendation

In the last three years I have only recommended two products. 
Interquote and Qcharts. The Preferred Capital Markets stop loss 
system and order execution system is so simple and fast I am 
adding Preferred as only my third product recommendation ever. I 
am sold, I use it, and I love it. These people care about what we 
want and how we trade. If you are unhappy with your current online 
broker I strongly urge you to try them out. If this sounds like a 
commercial I am sorry. I really like the system and I know our 
readers will too. Over 250 of our readers have been beta testing 
this stop loss system for two months and everybody loves it. 

$100 in Free Trades for OptionInvestor readers

Preferred has agreed to give all the OptionInvestor.com readers 
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Preferred Trade 


Fishing For Profits, Second in a series.
By Jim Brown

Picture yourself fishing. Maybe you are on the bank of a
lake, leaning back against a shade tree. You are thinking
about when you went fishing with your dad as a kid. Or 
maybe you are the dad and your kids are with you. You have
several lines in the water angling out in different directions
and maybe each has different bait.



This week we look at GE, NXTL, HD, BOUT, and LASE.

Welcome again to OIN's "Ask the Analyst". This is our second 
installment and we are very thankful for the large positive
response to last week's opening edition. 

Remember, our goal is educational. Hopefully, you'll be able
to pick up on some of the ideas discussed and begin to apply 
them to your own research. If this is your first time, be 
sure to check out last week's ASK OIN as well.

This Sunday we highlight some interesting candlestick 
formations and a couple of reasons why technical analysis 
is not enough.



A Bad Idea That Won't Go Away 
By S.P. Brown

Elections must be getting near - the minimum wage debate has
again reared its ugly head.  This past Tuesday the U.S. Senate
voted to increase the minimum wage by $1 per hour.  



If you like the results you have been receiving we 
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The monthly subscription price is 39.95. The quarterly
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This newsletter is a publication dedicated to the education 
of options traders. The newsletter is an information service 
only. The information provided herein is not to be construed 
as an offer to buy or sell securities of any kind. The 
newsletter picks are not to be considered a recommendation 
of any stock or option but an information resource to aid the
investor in making an informed decision regarding trading in 
options. It is possible at this or some subsequent date, the 
editor and staff of The Option Investor Newsletter may own, 
buy or sell securities presented. All investors should consult 
a qualified professional before trading in any security. The 
information provided has been obtained from sources deemed 
reliable but is not guaranteed as to accuracy or completeness.
The newsletter staff makes every effort to provide timely 
information to its subscribers but cannot guarantee specific 
delivery times due to factors beyond our control.

The Option Investor Newsletter              11-14-99
Sunday                        2 of 6


Sunday, November 14, 1999


There is an old adage on Wall Street that is very technically 
sound and has been very beneficial in the past for all traders; 
and it is that "volume precedes price." What this means, both 
positive and negative, is that when you see giant increases in 
volume, it is a very good indication of future price movements. 
The big money is either flowing in, or out of the market or an 
individual security. Have you ever witnessed a stock that started 
trading big volume, and then several days/weeks later make a major 
announcement, either good or bad, and the equity goes through the 
roof or cellar? 

Now, we have seen volume explode during the last several weeks, 
and below, we have listed the top 12 volume days in history for 
the Nasdaq. Now isn't it ironic that 9 out the top 12 are from the 
last couple of weeks. If we go back another week to October 20, 
1999, not only did we have the 3rd largest point gain in Nasdaq 
history, with a +99.55 gain, but it was also a big volume day that 
used to be in the top 12, but no longer does! Let's now move to 
October 29, 1999. This was the 6th largest point gain in Nasdaq 
history, with a +91.21 point gain. It was also, and still stands, 
as the 2nd largest volume day in history, with 1.44 billion traded. 
Now look at some of your favorite stocks, and see where they were 
trading on October 29, or worse, on Oct 20th. We are sure that they 
were probably a lot lower than where they are now. Now just 
imagine (as long as the Fed doesn't ruin things this week) where 
these stocks can be at the end of this month, or at the start of a 
new decade. Today's stocks/options prices will probably look 
pretty cheap in comparison.   

Date Nasdaq Trading Volume Records	
11/9/99	  1,467,511,104      
10/29/9	  1,438,161,300
4/14/99	  1,416,188,400
11/12/99  1,410,555,000
11/11/99  1,384,479,000
11/4/99	  1,361,143,600
4/13/99   1,341,700,100
11/5/99	  1,341,427,900
11/3/99	  1,333,454,800
6/30/99   1,328,065,200
11/8/99	  1,296,405,200

Below is a top-ten list of stocks whose open interest is greater 
on the put side, which would indicate extreme bearish sentiment. 
Now from a contrarian standpoint, we would find this to be very 
favorable. As you can see, it is a pretty good group of stocks to 
be associated with.

Apple Computer       JP Morgan     Texas Instruments    Rambus  
General Electric     Qualcomm      Electronic Arts
Gateway Computer     Microsoft     Telephone de Mexico

For OEX traders based upon our Pinnacle Index figures; overhead 
resistance continues to lighten up, and support continues to 
increase. In comparison to last week, the numbers have increased 
favorably for a continuation to the upside. Based on statistics, 
there is a 50% chance that the OEX rallies to 745 in the next two 

In summary, as long as the Fed doesn't ruin the party, and volume 
and cash inflows continue, look for this market to continue on 
higher. Valuations and PE ratios currently don't matter. Today's 
current market environment is best exemplified by freshman year in 
college, taking ECON 101. It is as simple as supply and demand, 
with lot's of cash chasing the few leading stocks. 


Cash Flow:
The amount of money being poured into this market is phenomenal. 
The trading volumes on the exchanges is a good example of this, as 
well as last weeks 2 IPO's of UPS and CHTR which brought in over 
$10 billion in new money. 

There is an old saying, that volume precedes price, and it 
couldn't be better exemplified that the last two weeks.

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 and the quarter ended up 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.

Advance/Decline Line:
The A/D line is looking significantly better than the past 6 months.

Mixed Signs: None.


Volatility Index (21.68):
The VIX continues to prove that the low 20's have been a good exit 
point. The low close for the VIX was on July 16, when it closed at 
18.13, so should its current level not hold, we could be in for 
more upside in the market.

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%
Friday, November 12       94,610      +142.1%

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                       (11/12)

Overhead Resistance (720-740)     3.45 

OEX Close                       731.12

Underlying Support (700-715)      1.58

What the Pinnacle Index is telling us:
Based on 11/12, support is still light but gaining strength, 
and overhead resistance is moderate and is on the decline. Should 
the PI drop even further, this would suggest the OEX may be 
breaking out to the upside.

Put/Call Ratio                  Friday
Strike/Contracts                (11/12)

CBOE Total P/C Ratio             .68
CBOE Equity P/C Ratio            .51
OEX P/C Ratio                   1.53

Peak Open Interest (OEX)  Friday
Strike/Contracts          (11/12)

Puts                    700 / 12,420
Calls                   740 / 10,728
Put/Call Ratio            1.16

Volatility Index    Major
Date                Turning Point       VIX

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

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

October 15, 1999    Bottom?             32.06

November 12, 1999                       21.68 

Investors Intelligence  Major             Percent     Percent
Date                    Turning Point     Bullish     Bearish

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

Oct. 13, 1999           Bottom?           39.2        37.5

November 11, 1999                         44.4        35.9


As of Market Close - Friday, November 12, 1999 

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

DOW Industrials   10,750  11,320  10,769    Neutral  11.12  *
SPX S&P 500        1,315   1,385   1,396    BULLISH  11.12  *
OEX S&P 100          675     725     731    BULLISH  11.12  *
RUT Russell 2000     425     445     450    BULLISH  11.12  *
NDX NASD 100       2,320   2,520   2,889    BULLISH  10.28
MSH High Tech      1,120   1,250   1,471    BULLISH  10.28

XCI Hardware       1,000   1,095   1,118    BULLISH  11.11
CWX Software         770     800   1,072    BULLISH   9.03
SOX Semiconductor    475     525     656    BULLISH  10.29
NWX Networking       550     615     731    BULLISH  10.28
INX Internet         495     525     551    BULLISH  11.05

BIX Banking          645     690     677    Neutral  10.28
XBD Brokerage        395     450     459    BULLISH  11.12  *
IUX Insurance        610     650     628    Neutral  11.09

RLX Retail           875     910     916    BULLISH  11.12  *
DRG Drug             375     390     396    BULLISH  11.04
HCX Healthcare       750     790     780    Neutral  11.09
XAL Airline          180     190     152    BEARISH   5.21
OIX Oil & Gas        285     305     305    Neutral  11.09

Posture Alert    

Buying the dips is in full effect, as the Nasdaq rebounded Friday 
afternoon from earlier losses, to make it 10 records in 11 days. 
The biggest leaders Friday (Brokerage +8.63%, Banking +4.33%) were 
a direct result of the Gramm-Leach banking bill, which is the 
repeal of the Glass-Steagall Act. This will fuel further mergers 
and acquisitions. With Friday's action, the posture board has 
upped the S&P 500, Russell 2000, S&P100, Brokerage, and Retail to 
BULLISH from Neutral. Not to be outdone, the Dow finally closed 
above resistance, and as such, has been upped to Neutral from 


For the week of November 15, 1999


Business Inventories     Sept   Forecast: 0.3%   Previous:  0.3%
Atlanta Fed index        Oct    Forecast: --     Previous:  11.6


Federal Reserve Meeting *********** Results at 2:15 ET

Industrial Production    Oct    Forecast: 0.2%   Previous: -0.3%
Capacity Utilization     Oct    Forecast: 80.3%  Previous: 80.3%


Consumer Price Index     Oct    Forecast:  0.2%  Previous:   0.4%
Housing Starts           Oct    Forecast: 1.60m  Previous:  1.618M
Building Permits         Oct    Forecast: --     Previous:  1.506M
Real Earnings            Oct    Forecast: --     Previous:  -0.4%


Jobless Claims           11/13  Forecast: --     Previous:  285K
International Trade      Sept   Forecast: $24B   Previous: $24.1B
Money Supply             11/8   Forecast: --     Previous: $14.1B
Phil Fed Survey          Nov    Forecast: --     Previous:  6.9 


None scheduled

Week of 11/22

11/23 Durable Goods Orders - Oct
11/24 GDP - Q3-Pre
11/24 Help Wanted Index - Oct
11/26 APICS Survey - Nov
11/26 Personal Income/Spending - Oct
11/26 Existing Home Sales - Oct


It's Better to Be Lucky

It's nice to be right, but it's better to be lucky. That's what 
I am thinking on Friday morning. The second half of my HD Nov 75 
call play fills at a limit sell of 5. I bought that position at 3, 
so the second half of my exit nets me a 66% gain. That's before I 
rolled out of bed to check the market near the end of amateur hour. 
AOL has been consolidating, but I've played this one before, know 
it's splitting in a little over a week, and noted the probable 
support at its 10 Day Moving Average around 141 that the newsletter 
noted. I back up the truck on AOL Nov 140 Calls at 6 and 6.125.
Not much target shooting, just a gut call. An hour later, AOL is 
up to 146, and the contract is trading at 8. I have already set 
my limit sells at 12, 14, 16. I also note that DISH is in the 
probable support level that the newsletter noted between 70 and 
72. I buy DISH Nov 70 Calls at 4.75. An hour later, DISH is almost 
at 74, and the bid on the contract is at 5.625. The mini sell off 
in the averages at the end of amateur hour shakes me -- how about 
that oex put contract? But what keeps me in the game is that on
my quote sheet, all of my plays, except for one (AAPL), remain in 
the positive column -- AOL, SCH, BVSN, SUNW, SNE. I consider 
reentering a HD play, but decide not to. I've made money there in 
my "do it myself" investing. It's been a hard day at the office.

Now the market is closed and I am sitting at a sushi place out in 
San Francisco's Richmond district. The sushi chef has stock picks 
and the staff knows me as "computer man," because of my lap top 
and wireless modem. A half hour ago, I sat down, 10 minutes left 
in the trading day, markets clearly rockin. I figure lots of buy 
on close orders. I figure next week will be positive because the 
Fed decision will remove uncertainty, one way or another. I scope 
out a OEX Nov 730 contract trading at 7. I buy 30 of em at 7.25 
and 7.375. I figure I am going to try something that a trader in
our local club mentioned. In the last minute of trading, I enter 
two limit sell orders, one at 7.75, and the other at 8. Minutes 
tick by. Sure enough, the oex inches up, up, 730, 731. Buy on 
close orders, late settlement, whatever. So does the price on 
the oex contracts. I get fills on both of em. So I have 10 open 
contracts awaiting a continued rally next week. OEX has to get to 
737 for me to break even if i hold em through Friday. Meanwhile, 
I have made $1250 on my 10 minute/ 20 contract trade since sitting 
down to sushi. Today I could do no wrong. I want to remember these
days when it all goes to crap. 

I really want to emphasize how invaluable the Tuesday & Thursday 
play updates are. Take two of my plays this week -- BVSN & AOL. 
The newsletter write up said that BVSN had support at 80 - 82. 
In qcharts, I have different quote sheets for both the stocks 
and the options on the stocks. I put those support levels in a 
comment column right next to the price column on the stock. When 
BVSN was at that 80-82 range yesterday, I entered a play on the 
BVSN Nov 80 Call at 6.5. I held through the turbulence yesterday, 
in part because I had confidence in the newsletter's support 
level. Today, at the close, BVSN is up 6 to 88.5. Half of my 
position is already sold at 8, one of the limit sells which I 
entered right after opening the play. Or take AOL. Last night's 
newsletter said support was around 141, also the 10 Day Moving 
Average (DMA). AOL has bounced off its 10 DMA on its up moves. I
was thinking about AOL anyway, and, this morning, backed up the 
truck, as Chris likes to say, on the AOL Nov 140 Call at 6 and 
6.125. AOL closed today at 148.5. At least one other member of 
our local club made this play. As Jim has been emphasizing, 
successful option trading is all about entry points. Pay 
attention to those support levels mentioned in the newsletter,
and you will do much better.

Good Luck

(PS -- I want to apologize to any reader's who found the last 
column at all sexist. I just want to point out that the most 
successful trader in our local club is a woman, and some of 
the comments which I reposted in that column came from a woman.) 

Janar Wasito

A readers response:

Janar Please!!!!

You do realize don't you, that things work both ways? Finding 
good looking, intelligent, men ...that are not threatened by 
good looking, intelligent women - who are risk tolerant, 
independent and successful in option trading, ...is probably 
much harder to find. Men aren't as accustomed to women throwing 
large sums of money around. Men who don't understand trading, 
get very threatened by confident women who do.

I just had to remark because your comment sounded so gender 
oriented. Regardless of how many pieces there are to your 
bathing suit, its hard to meet someone of the opposite sex 
that not only understands "the markets", but also wants to 
share your enthusiasm. Jealousy seems to frequently be hiding 

I agree, what a luxury it would be, to be able to talk about 
the markets with someone at the end of the day. I would love 
that. I find trading a very lonely profession, especially 
coming from medicine where everyone hung on every word you 
said. The isolation of trading is difficult for me and is a
constant challenge for someone who prefers being around people. 
It's not noticed as much when you're involved with someone. 
It's just those in-between-times (and relationships), that 
really get to you. Your girlfriend sounds like a nice girl 
that at least has learned enough about what you do, to throw 
you some zingers from time to time. That's more insightful 
than many beginning traders!

Sorry, Your comments about talking to "her" and getting rid 
of "her" just got to me. It seemed awfully harsh......and 
not funny.



The difference between News and Hype....

Bloomberg Television, CNBC, Financial News Network, among 
others put their spin on events and many times try to create 
news not report news. Always be mindful of the fact that they 
are in the entertainment business and it is their job to make 
every day exciting and emotionally charged. The daily events 
are exaggerated and dramatized to make investors feel that 
they are missing out or have made some bad decisions. HYPE 
leads to action. And hopefully for the news outlets, continued 
interest in the market. These channels are not providing a 
public service but fighting for viewers and therefore 
advertising dollars. One of the first things a veteran trader 
will teach someone is that PRICE MAKES NEWS. Any time an 
individual stock moves significantly the explanation is often 
short sighted and simplistic. Large market factors that effect 
the prices of securities have been broken down to the fast food 
mentality that the new television services provide. The stock 
market is not an entertaining sitcom that is summed up in a 
half hour show or news block.

On a positive note, the dramatic increase in information 
sharing and the speed of communication has led to much more 
informed investing. As technology grows, the world is becoming 
a smaller place and we now all have access to information and 
therefore knowledge. Fortunately there are people that can help
traders use that knowledge in a disciplined manner for 
profitable gains.

Not a day goes by that I do not have clients try to trade based 
on the news. Common sense should hopefully make people realize 
that they are not the first to get the information. MARKETS ARE 
EFFICIENT, all of the positive news is balanced with the negative
news and leads to the equilibrium prices that stocks trade. Most
times when an individual trader learns of a stock upgrades or 
earnings warnings the market has already adjusted to those 
factors and has moved on to new concerns. That is why stocks 
open much higher or lower than the previous close because of the
news released.

Individual traders often emotionally react to news and usually 
overreact. The day-to-day swings in emotions lead to wild swings
in prices. The key to trading success is to be disciplined and 
more importantly when trading options select the combination of 
strike price and time duration to give you the highest probability
of success. Act with a trading plan and positive results should 
follow. Enjoy the financial channels but try not to be a part of 
the soap operas that they have become.

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


Dear OIN-

The new additions of Technical Analysis and Options 101 were 
superb!! They are the best I've seen anywhere. I have suggested 
to some newsletter sites before, to add this feature in their 
discussions of TA in order for people to "see" what you are 
saying as a technician. Usually, only a chart is shown without 
the analysis drawn in. These are fabulous additions to your 
already extensive site. Thanks for the improvements!!! The hard 
work is evident. I already recommend your site every chance I 
get, but this is even one more reason to do it. Now, even the 
non-option player has reason for OIN. Who knows, maybe they 
will test the waters of option trading....and add to the momentum
of our winning plays. Good Luck with your continued success!!
Renee White



Great letter, I have found slow and easy the best way to trade 
options and lots of paper trades. Your newsletter is so detailed 
it would take a fool not understand the dangers of the market. 
I have traded sucessfully off your newsletter and have positive 
cash flow months since January. Cash flow of 5000 to 9000 per 
month. I find the waiting for the right time to trade the most 
important and the toughest to deal with. Again thanks for the 
newsletter and the continued reality checks that you pass on

Regards, Terry C


Jim: Somehow I missed your 11/7 Options 101 piece "Entry Point, 
Entry Point, Entry Point" until just now. As I read it I reviewed
this week's price action versus your comments. What a dynamic and
insightful charting tutorial this write up has turned out to be. 
With a very limited understanding of technical analysis I would 
love to see more of this in the newsletter to aid me in better 
understanding better entry points. Indeed may I suggest that this 
type of analysis be included in each recommended call or put play. 
I have found your newsletter to be far superior to all others I 
have read but inclusion of this type of analysis with each 
recommended call/put would elevate the newsletter into a league 
of its own! The newsletter continues to get better all the time!

John Grady


OIN Staff, 
I wanted to tell you how much I enjoy your newsletter and all 
the information it contains. I've profitted considerably over 
the recent months by following the Skybox as well as some of 
your call picks. I wanted to share an experience with your 
readers that really takes target shooting to new proportions. 
I position trade options when I am in town and not travelling 
due to business. I've disciplined myself to not open any trades 
I can't monitor due to travel. A week ago, I kept noticing QCOM's 
run towards earnings and wanted to participate, so I target shot 
for some Nov 210 Calls @ 15(They were trading at 20 I believe), 
continued my travel--and forgot about the limit order completely. 
Yesterday, I returned from my travels, checked my account and was 
surprised to find 10 contracts at 15, now worth over $54,000. 
Today, I've noticed QCOM is continuing to move up. It's funny, 
disciplined or not, target shooting can work rather profitably. 
I'll probably get out of the position later tonight, since I'll 
be travelling next week and can't monitor it. 
Good Luck,  Todd


For the record, I have learned more from this website and your 
staff than I ever thought possible. if people arn't making money, 
the problem isn't here at this site.
Before I found this site, I made AND lost a $500,000 account. I 
am not back at that level yet, but well on my way and now I trade 
with confidence instead of stress and fear. It has been most 
reassuring to see even the experienced guys like yourselves trade 
with emotion at times. And that mistakes are part of the game.

Enjoyed the Money Show very much. Great Job. Do you plan on being 
at the one in Florida in January?

Thanks again for your services. I am doing things I never dreamed
of thanks to your newsletter. Don't let the unprofitable ones get 
you down.

David H


Thank you so much for putting on the seminars at the money show 
in San Francisco. I really enjoyed meeting everyone and I learned
a lot from the seminars. 

I was also very happy to see your column on Entry Point last week.
I thought that was the most useful seminar I went to at the show, 
but you went one step beyond normal technical analysis in your 
newsletter.  You did something refreshing. You showed how to
technically analyze CURRENT and FUTURE plays. I get frustrated 
watching someone go over a past graph and then say, "obviously 
this stock will go up" when they then show you that wow it really
did go up the month after they predicted it would. Well, duh, I 
can do great seminars showing people that Microsoft and AOL and 
whoever else had great moves after a technical indicator, but the 
trick is being able to do this BEFORE the move. I learned a lot 
by "not knowing the answers" to whether or not this will go up. 
I will be tracking those plays you recommended an see if they do
as you think and why or why not. Successful trading needs 
continous learning and with OptionInvestor helping me think 
trades through like that I know I can be successful.

Thanks again for a great site and always doing new things on the 
site to help give us that edge we need to beat the market.

I will be attending the OIN/Optionetics seminar for the second 
time next week. I can tell anyone thinking about attending that 
you really get schooled on the basics and learn how to manage 
risk if you go to one of these seminars. 

Well, I am off to sell too soon!

Mike DeMange


Sunday, November 14, 1999


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


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

TIME: 6:00 PM

David joined our group just last month and volunteered to share 
some information he has been using to play the OEX calls and puts. 
He will present his information, then I'll review a few things I 
learned from attending the Thursday evening OIN session at the 
San Francisco Money Show last weekend. Austin puts together the 
OEX Skybox on the Option Investor website. I'll be following the 
OEX this week and next week and review how his recommended plays 
have gone.

While at the SFO Money Show, I spoke with Jim Brown and he 
mentioned that there are two persons living in the SLC area who 
write for the OI newsletter. E-mails are going back and forth 
and I'm trying to set up a presentation by one of the two persons 
for our December or January meeting.  There is a Straddle 3 day 
seminar in SFO on the 17-19 of November that I'll be attending. 
The plan is to share some of that info with you all at the December 
meeting. Since we have people from Ogden to Provo, a suggestion has 
been made to alternate locations from downtown one month to Sandy 
area the next month so the further out people don't have to travel 
so far. So we'll plan to have the December meeting at the Sandy 
Library if we can get the space reserved.

Please return e-mail me if you plan to attend so I can let David 
know how many copies of info to make. Thanks and hope to see you 
next Thursday.

Carol Mortensen - cm538@concentric.net


Daily Results

Dow      10769.32  64.84
Nasdaq    3221.15 118.86
$OEX       731.09  12.29
$SPX      1396.04  25.81
$RUT       449.69   7.28
$TRAN     3089.57  85.58
$VIX        21.68  -0.38

Calls              Week

SNE        176.50  11.81  Turns it up with another great week
SUNW       119.31   9.75  We are riding the waves in the sun
QLGC       126.44   9.13  Possible split announcement?
SFE        112.50   9.00  Higher lows converging with resistance
EMC         82.69   8.94  New, buyers step back into the ring
VRTS       116.06   8.00  One week left of this split play
CMVT       121.25   7.50  The action has returned to CMVT!
LSI         65.50   7.50  New, new 52-week high and target price
LSCC        45.00   6.59  Lattice made a good move up last week
SLR         87.88   6.38  New highs are the name of the game
NOK        122.25   6.38  New, who needs news? Look at the chart
BVSN        88.50   5.00  Broadvision pumps up the volume
CNCX        33.69   4.69  Signs of a possible major breakout
NT          72.56   3.75  Nortel continues to do some groovin'
TMX         99.00   3.00  New, excitement about potential split
LVLT        73.94   2.81  LVLT's story remains consistent
AOL        148.50   2.75  One week left for this split run
HD          80.44   2.44  Dropped, earnings are on Tuesday
AAPL        90.63   2.31  AAPL flirts with the elusive $100
MXIM        87.38   2.06  What a difference one day can make
DISH        71.88   1.81  Dropped, first you see it, now you don't
ADPT        50.50   0.19  Dropped, technical picture stalls
KMB         65.50   0.00  Dropped, too slow, too steady
EMLX       180.00  -2.63  Stock split date announcement 11/18
VSTR        94.25  -2.75  Dropped, one step forward two back
INTC        76.19  -6.19  Dropped, the axe falls too hard


MSTR        82.63 -13.25  New, MSTR hits its head on ceiling
RMDY        36.31  -4.03  New, another short-term correction
TXT         68.94  -3.44  Nervous investors spur rollover
CSC         63.63  -3.38  New, shows weak relative strength
GT          36.81   0.13  Dropped, GTs trend stabilizes
NDB         35.38   0.13  Dropped, a breakout in financials



LSI - LSI Logic Corp.
EMC - EMC Corporation
TMX - Telefonos De Mex 
NOK - Nokia


RMDY - Remedy Corporation
CSC  - Computer Sciences Corp.
MSTR - Microstrategy Inc


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.


KMB $65.50 (+0.00) We liked KMB because it was a slow and 
steady mover, but come on already!  KMB wound up even-steven 
for the week.  KMB's only divergence from this rather flat 
trading pattern was a mid week dip on Wednesday and Thursday, 
obviously not the direction that we were seeking.  KMB looked 
to be making some good headway in late day trading on Thursday 
but flattened out once again on Friday.  There is simply not 
enough momentum to warrant a continuation of this play when 
there are so many other movers out there.

VSTR $94.25 (-2.75) VSTR has continued to take one step forward 
and two steps back.  We have been waiting patiently for VSTR to 
settle back into its previous channeling pattern, but we can 
wait no more.  Every time we think, "Yes! This is it! Here goes 
VSTR!", it takes back two points the next day.  Frustrating to 
say the least.  Rather than prolonging our frustration, we have 
decided to bid VSTR adieu and move on to plays which that are 
more apt to stay on track.  Nevertheless, we did see nice 
initial profits since we picked it at $85.75.

DISH $71.88 (+1.81) First you see it, now you don't (on our 
play list, that is).  Our focus in adding DISH as a call play 
Tuesday was based on a piece of legislation in Washington 
concerning Satellite TV reform.  Lawmakers had reached an 
accord allowing satellite firms to carry programming from 
local TV stations, which would level the playing field between 
cable companies and satellite firms.  Senate Banking Committee 
Chairman Phil Gramm threw a monkey wrench in the deal when he 
said he would block the legislation unless a provision is 
removed that would set up a $1.25 billion loan guarantee to 
encourage non-profit groups and companies to provide satellite 
TV service in rural area.  The Senate agreed to strip the 
language from the legislation.  Although a vote is expected 
on the "new" version of the legislation next week, we are 
dropping DISH as a call play for now, basically because the 
new deal will force the bill back to the House of Reps and 
delay signing.  With the news of the revised version of the 
legislation DISH dropped $3 yesterday to close at $71.88 and
appears to be headed south.  We will keep an eye on DISH for 
any other developments, but for now we will stand aside. 

HD $80.44 (+2.44) Time to close the door on this play.  As we 
mentioned in Thursday's write-up, HD has earnings on Tuesday 
the 16th and therefore it is time for us to end this play.  
Again, we stress the importance of closing out your positions 
by Monday afternoon, as HD is set to announce before the bell.  
We have earnings, a possible split-announcement and the Fed 
meeting, all on Tuesday.  Busy day!

ADPT $50.50 (+0.19) The rotation of new money into networking 
equipment companies seemed to fizzle out near the end of this 
week after a lot of positive news came out.  CSCO's earnings 
were out and Newbridge Networks denied the rumor that they were 
in buyout talks with Ericsson.  This and the technical picture 
for the sector has begun to stall, at least for now the momentum 
to the upside has slowed.  Shares of the most popular companies 
had fractional loses on Friday- Cisco was down $0.31, 3com was 
down $0.56, and ADPT was also off just fractionally $0.13.  If 
these stocks don't move, we don't make money and they seem to 
be taking a breather.  Earlier in the weak the volume remained 
slightly below average, which was also another sign that the 
price surges might be taking a break.  We will keep an eye on 
the sector and ADPT, but we will choose to take our money off 
the table going forward for now and rotate our money into faster 
moving positions.  

INTC $76.19 (-6.19) On Friday the axe fell hard on INTC.  
Joseph Osha at Merrill Lynch cut INTC to an Accumulate from a 
Near-Term Buy citing stiffer competition from rival, Advanced 
Micro Devices.  The downgrade swiftly sent investors into sell 
mode and the stock shed $3.25 on almost double the normal 
trading volume - a very bearish sentiment.  Salomon Smith Barney 
valiantly came to the stock's defense reiterating a Buy rating 
and issuing a $95 price target, but the damage was already done.  
Since INTC's 4.1% dive placed it precariously under the 10-dma 
($79.38), we're compelled to exit the play this weekend.


NDB $35.38 (+0.13) The breakout among financials on Friday 
signaled an end to our play on NDB.  In reality, this play 
was near death on Thursday and we did say it looked as if it 
were losing steam but we kept it on the old rule that you 
don't prune your flowers.  We say that because the play was 
doing well, having a steady downtrend all week.  It actually 
closed negative every day this week except for Friday.  We 
are not in the business of picking bottoms for stocks so we 
left it up to NDB to tell us when it was done falling.  It 
told us Friday.  So we are off in search of other put plays 
which is becoming exceedingly difficult in this market. 

GT $36.81 (+0.13) Headline reads, "Goodyear Gets Traction".  As 
we noted in Thursday's write-up, GT's descent was stabilizing 
above $36, and sure enough, found support at $36.50 on Friday.  
There was no profit-taking and volume continues to fall, 
indicating most of the sellers have been shaken out.  That 
alone should be our signal to exit the play.  However, Friday 
after the close, GT announced an upward revision to their last 
quarter earnings from $0.61 to $0.69, which will give long GT 
investors something to cheer about and send the GT bears running 
for cover.  While this has been a very successful put play, the 
rubber has finally met the road.  Time to go. 


The Option Investor Newsletter          11-14-99
Sunday                        3 of 6


CMVT - Comverse Tech
SNE  - Sony Corp
MXIM - Maxim Integrated Products
TMX  - Telefonos De Mex
NOK  - Nokia
QLGC - QLogic
SFE  - Safeguard Scientific Inc.
Split candidates that are not current plays:
CHKP - Check Point
MEDI - MedImmune
DCLK - Double Click


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
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 Paradigm 2:1 11-30-99 ex-date 12-01
ORBK - Orbotech         3:2 11-30-99 ex-date 12-01
VIGN - Vignette Corp    2:1 12-01-99 ex-date 12-02
OATS - Wild Oats        3:2 12-01-99 ex-date 12-02
BRCD - Brocade          2:1 12-02-99 ex-date 12-03 no optn
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
CMTN - CopperMountain   2:1 12-09-99 ex-date 12-10 (KUA)
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:

NOK - Nokia $122.25 (+6.38)

See details in sector list

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


EMC - EMC Corporation $82.69 (+8.94)

See details in sector list

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

Put play of the day:

TXT - Textron Inc $68.94 (-3.44)

See details in put list

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


SLR - Solectron Corp $87.88 (+6.38)

Solectron is a premier global provider of customized 
manufacturing services rendering electronic solutions for 
original equipment manufacturers (OEM's).  They have won the 
Malcolm Baldrige Award twice for their manufacturing excellence.  
Solectron has a wide range of clients including Cisco, Hewlett-
Packard, and Mitsubishi.  

On November 2nd there was lots of news surrounding Solectron's 
acquisition of two manufacturing units from Ericsson AB which 
were bought specifically to boost the company's manufacturing 
capacity.  No financial terms were released however analysts 
speculated the deal to be worth $100 to $200 mln based purely 
on company size and manufacturing output.  That same day, SLR
reported it had also completed its acquisition of NULOGIX 
Technical Services, a wholly owned subsidiary of IBM Canada 
which is a world leader in repair, re-manufacturing, and 
renovation.  In support of the recent deals Herve Francois, 
analyst at CSFB reiterated his Buy rating.   SLR steadily began 
its ascent and within two days successfully broke through  
opposition at $75.  New 52-week highs then became the name of 
the game in this momentum play.  The latest record was set on 
Thursday when SLR pinnacled at $90 late afternoon. 

When we first picked up SLR we were looking for a pullback 
ahead of the FOMC meeting to get a solid entry into the play; 
otherwise we were faced with jarring for an intraday bottom on 
the climb as SLR was further establishing higher-lows.  Friday's 
session afforded us that pullback dipping as low as $84.50 on 
low volume - a good sign that there wasn't any panic selling.  
Plus the 10-dma ($81) is still just a dot in the  rear view 
mirror which is also a bullish indication.  We'd like to see 
this momentum propel SLR into its earnings next month confirmed 
for Monday, December 13th.  In the news, CSFB came out again 
on Thursday and reiterated their Buy rating.  Earlier in the 
week Eugene Peroni, equity research director for firm John 
Nuveen, was quoted as saying he believes shares of SLR "could 
rise as earnings increase and technology advances".  The week 
finished on a positive note with Needham & Co reiterating their 
Buy rating and issuing a $105 price target.

BUY CALL DEC-80 SLR-LP OI=237 at $10.75 SL=8.50
BUY CALL DEC-85*SLR-LQ OI=246 at $ 7.63 SL=6.00
BUY CALL DEC-90 SLR-LR OI= 21 at $ 4.88 SL=3.25 low OI
BUY CALL JAN-85 SLR-AQ OI=540 at $ 9.38 SL=7.00
BUY CALL JAN-90 SLR-AR OI= 19 at $ 7.13 SL=5.25 low OI

SELL PUT NOV-85 SLR-WQ OI= 52 at $ 1.00 SL=2.00
(See risks of selling puts in the play legend)

Picked on Nov 11th at    $88.94    P/E = 76
Change since picked       -1.06    52-week high=$90.00
Analysts Ratings      8-9-2-0-0    52-week low =$29.12
Last earnings 08/99   est= 0.32    actual= 0.33 surprise +3.1%
Next earnings 12-13   est= 0.35    versus= 0.26
Average Daily Volume = 1.35 mln
Chart = http://quote.yahoo.com/q?s=SLR&d=3m


AAPL - Apple Computer $90.63 (+2.31)(+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 continues power itself upwards 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.  Plus this 
week Judge Jeremy Fogel granted Apple Computer a preliminary 
injunction against not only Future Power, but also against 
Daewoo Group and any others from distributing iMac look-
alikes during the holiday season.  

AAPL flirted with the elusive $100 mark on Monday and stopped 
just shy at $97.75 driven by news of the MSFT defeat in the 
monopoly battle.  The rest of the week was relatively calm 
waters for AAPL.  The consolidation period that followed 
provided lots of opportunity for entry into this momentum play.  
Friday would have likely had more action especially with Dell 
reporting earnings' right in line with analysts' expectations 
coming in at $0.18 p/s and $6.78 bln in quarterly revenues.  But 
all was for naught as Intel's downgrade by Merrill Lynch put 
quite a damper on the Nasdaq.  Support is firm at $88 just above 
its 10-dma ($87.16).  Watch for a strong bounce to confirm 
a charge toward $100 and remember that dollar figure likely 
represents a psychological barrier so be prepared for 
resistance.  For the conservative players, you may want to 
wait and see the outcome of the FOMC meeting before entering 
any more positions.  We are listing the NOV-90 puts to sell 
but with AAPL at $90.63, it is a risky one.  We would be more 
comfortable waiting for AAPL to move higher even it means 
selling those contracts for a lower premium.  

BUY CALL DEC-85 AAQ-LQ OI=1017 at $9.50 SL=7.25
BUY CALL DEC-90*AAQ-LR OI=1141 at $6.75 SL=5.00
BUY CALL DEC-95 AAQ-LS OI=1519 at $4.50 SL=2.75
BUY CALL JAN-90 AAQ-AR OI= 909 at $9.50 SL=7.25
BUY CALL JAN-95 AAQ-AS OI= 191 at $7.38 SL=5.75

SELL PUT NOV-90 AAQ-WR OI= 404 at $2.19 SL=3.75
(See risks of selling puts in the play legend)

Picked on Nov 7th at     $88.31    P/E = 25
Change since picked       +2.31    52-week high=$97.72
Analysts Ratings      7-6-7-0-0    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 = 6.03 mln
Chart = http://quote.yahoo.com/q?s=AAPL&d=3m


EMLX - Emulex Corp.  $180.00 (-2.63)(+27.06)(+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.

The volatility in the shares of EMLX continued on Friday as 
the shares dropped to as low as $169, before bouncing back
strong to close at $180.  if you were not aware, EMLX has
announced a stock split and the date for the split will be
given on Thursday the 18th.  This will give us better trading 
parameters to work with after we know the ex-div date for 
the split.  Expect further volatility in the shares ahead of 
this announcement and be very cautious ahead of Tuesday's FOMC 
meeting, the profit-taking could increase.  Keep this stock on 
the radar screen, the major pullbacks have provided us with 
good buying opportunities so far and should again as we expect 
to continue on the split run.  Don't be surprised if we see 
major swings in the shares, it has run up over 50 points since 
we begun coverage.  Support remains in the $170-171 area and 
a short-term resistance point sits at $185.  Pick your spots 
wisely in the midst of volatility, but protect recent gains 
with trailing stops. 

EMLX partnered this week with Eurologic, Seagate technology,
and high flying IPO Finisar to demonstrate a 2Gb/s fibre
channel SAN solution during the Comdex Conference.  The 
Emulex LightPulse fibre channel host adapter and re-timing
hub will operate in conjunction with Eurologic's data storage
system, Finisar's GBIC and fibre channel analyzer, and 
Seagate disc drives, all operating at 2 Gb/s data rate. 

BUY CALL DEC-180*UMQ-LP OI= 570 at $20.88 SL=17.63
BUY CALL DEC-185 UMQ-LQ OI=  73 at $18.38 SL=15.13 low OI
BUY CALL JAN-180 UMQ-AP OI= 106 at $28.75 SL=25.50
BUY CALL JAN-185 UMQ-AQ OI=  19 at $25.88 SL=22.63 low OI

Picked on Oct 17th  at $128.00    P/E = 255
Change since picked     +52.00    52-week high=$195.50
Analyst Ratings      4-3-0-1-0    52-week low =$ 10.06
Last earnings 07/14  est= 0.16    actual= 0.26
Next earnings 01/31  est= 0.27    versus= 0.05
Average daily volume =   491 K
Chart = http://quote.yahoo.com/q?s=EMLX&d=3m


QLGC - QLogic Corporation $126.44 (+9.13)  

The competition in their industry is very stiff, yet they lead
the market in Fibre Channel host bus adapters.  Located in 
Costa Mesa, California, QLogic Corporation makes integrated 
circuits and adapter boards that connect peripheral devices 
to computers.  Their input/output subsystems handle data flow
between computers and peripheral devices such as hard disk,
tape, and CD-ROM drives.  QLogic has expanded its product line
to include the higher-performance fibre channel standard.  They 
also make chips for the mass storage and server markets. 
Sun Microsystems is one of QLGC's better known customers, 
although about 40% of their sales are outside the U.S.  Their
top competition comes from Adaptec, Cirrus Logic and Emulex.

Friday morning QLGC gapped up at the opening bell making a new 
high at $135.63.  Less than an hour later you could buy a share
of QLogic stock for about $122.75.  QLGC fell along with the rest 
of semiconductor stocks on the downgrade by an analyst at Merrill 
Lynch on Intel.  Apparently he didn't agree the his buddies at
Merrill who upgraded about a dozen stocks in the industry on 
Thursday.  That one downgrade shaved about 6.0 percent off the 
price of Intel.  The rest of the industry gave back just under 
1 percent of recent gains on Friday.  We are looking for an 
opportunity to buy calls in QLGC.  We are also looking for a 
potential split announcement to come out of QLGC headquarters, 
which would give play in QLGC more substance.  Shareholders 
recently approved an increase in the amount of authorized shares 
from 50 mln to 150 mln.  The $122 area held on Friday.  A solid 
bounce off the those levels accompanied by strong volume could 
provide us with the entry we have been looking for.  However,
many of the stocks in the chip sector have had quite a ride in 
the last couple of weeks and we may see profit-taking continue 
next week.  If we get a pullback or retracement in QLGC that 
would be even better for our entry point into this hot sector.  
We have Mr. "G" and his associates at the Fed meeting Tuesday, 
so it may be a good idea to wait until after 2:00 PM ET Tuesday 
to consider a new play in QLGC.  The options on QLGC are pricey 
as QLGC is a volatile stock.  This play may not be for everyone.  
As always consider the potential profit and loss prior to 
entering any trade.

Other news concerning QLGC, came in yesterday with analysts
at DLJ reiterating their Buy recommendation.  They said they
expect a solid 2nd quarter.  They also raised their year 2000 
earnings estimates from $1.23 to $1.38.
BUY CALL DEC-120*QLC-LD OI= 35 at $17.50 SL=13.75 low OI
BUY CALL DEC-125 TXN-LE*OI=248 at $15.13 SL=11.75
BUY CALL DEC-130 TXN-LF OI=  3 at $12.88 SL=10.00 low OI

Picked on Nov 11th at $130.06    P/E = 118
Change since picked     -3.63    52-week high=$135.63
Analysts Ratings    3-4-1-0-0    52-week low =$ 23.25
Last earnings 09/99 est= 0.31    actual= 0.35 surprise +12.9%
Next earnings 01-20 est= 0.36    versus= 0.19
Average daily volume =  774 K
Chart = http://quote.yahoo.com/q?s=QLGC&d=3m


LSCC Lattice Semiconductors $45.00 (+6.59) (+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. 

Aside from the dip that we saw in early trading on Friday, 
which we attribute to the Intel downgrade (see news below), 
LSCC is still managing to hit some higher lows.  LSCC has 
made a good move up, giving us nearly $7 for the week.  It 
is difficult to identify definitive support for LSCC due to 
the meteoric rise as of late, however, LSCC has support at 
it's 10-dma of $41 which should hold if we have a collapse 
in the sector (you never know, with the frequency of 
earthquakes lately...)  If the semis continue to be hot next 
week, we may have to wait for an intraday dip before making 
an entry.  The only resistance in sight is the new 52-week 
high of $48, which LSCC hit on Thursday.  Semiconductor 
stocks are a little tougher to trade due to the volatile 
movements typical among commodity related plays.  They don't 
trend similar to other industries.  Therefore, if you are 
unsure on the intraday entry points, wait for a gap down 
back to support before playing. 

Osha giveth and Osha taketh away...LSCC felt the impact of
Merrill Lynch analyst Joe Osha's Intel downgrade on Friday. 
Interestingly enough, it was Joe Osha's positive comments
regarding the semiconductor industry which helped LSCC make a 
move up in trading on Thursday.  The semiconductor industry is 
still a hot one and we look for LSCC to pick up the pace once 
again in trading next week. 

BUY CALL DEC-40*LQT-LH OI=1761 at $7.63 SL=5.75
BUY CALL DEC-45 LQT-LI OI= 168 at $4.63 SL=2.75
BUY CALL DEC-50 LQT-LJ OI=  41 at $3.25 SL=1.50 low OI

Picked on Nov 7th  at   $38.41      PE = N/A                           
Change since picked      +6.59      52-week high=$48.00 
Analysts Ratings     9-8-4-1-0      52-week low =$15.44                  
Last earnings 10/99  est= 0.19      actual= 0.23                             
Next earnings 01-21  est= 0.34      versus= 0.23                            
Average Daily Volume =   582 K
Chart = http://quote.yahoo.com/q?s=LSCC&d=3m


SNE - Sony Corp $176.50 (+11.81)(+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.   

Turn it up!  SNE gapped up at the open on Friday and managed 
to tag yet another new 52-week high of $177.25.  Sony then 
entered into a bit of a mid-day lull before rallying late day 
to close up near the high.  SNE had a great week, gaining 
nearly $12.  Sony still maintains psychological support at 
$170 although with the momentum that SNE seems to have, it 
could very well touch $180 before $170.  Resistance is the 
52-week high of $177.25.  Our fundamentals for this play 
remain intact.  The Japanese economy continues to recover.  
This has helped the sentiment along with the expectation of 
a strong holiday shopping season.  This is the time of year 
that SNE sells a lot of video game cartridges and DVD players.  
Not to mention we are in stock split territory.  Unfortunately, 
we don't know what the catalyst would be for an announcement.  
SNE has rarely split their stock and just passed their earnings 
date in October with no split news.  This is wild card to the 
play but you would think that it will become more and more 
likely as SNE goes higher.  Also, watch out on the options as 
the open interest is always low in SNE contracts.  You will 
want to be using limit orders to avoid being taken to the 
cleaners by the market makers. 

Sony will be participating in the annual Comdex show, which 
will be held in Las Vegas.  This is the computer industry's 
biggest yearly trade show.  Sony's president and co-chief 
executive, Nobuyuki Idei, will be speaking.  He will be 
demonstrating the new Playstation 2, which is expected to 
make it's appearance in the United States next year.  Perhaps 
the most anticipated feature of the new Playstation is its 
connectivity to the Internet along with the ability to play 
digital video-disks and a hard disk drive for data storage.  

BUY CALL DEC-170*SNE-LN OI=120 at $12.63 SL=10.00
BUY CALL DEC-175 SNE-LO OI= 13 at $ 9.50 SL= 7.00 low OI
BUY CALL JAN-170 SNE-AN OI= 57 at $16.38 SL=12.50
BUY CALL JAN-180 SNE-AP OI=  5 at $10.50 SL= 8.25 low OI

SELL PUT DEC-165 SNE-XM OI=  4 at $ 3.00 SL= 4.75 low OI
(See risks of selling puts in the play legend) 

Picked on Nov 7th at  $164.69   P/E = N/A 
Change since picked    +11.81   52-week high=$177.25 
Analysts Ratings    0-1-0-0-0   52-week low =$ 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 =  175 K 
Chart = http://quote.yahoo.com/q?s=SNE&d=3m


LVLT - Level 3 Communications $73.94 (+2.81)(+2.81)(+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. 

LVLT's story this week remained consistent with previous 
patterns from the last two weeks that we have been providing
coverage of the stock.  Lets review, the charts have told
us that volatility is the name of the game, with a tug of 
war between buyers and sellers, and then buyers and sellers.
I repeated buyers and sellers on purpose that wasn't a typo.
Each time the prices surge, the stock pulls back to fill the
gap, and then starts its way up again to new highs.  On 11/9
the shares surged and then pulled back on 11/10, retraced
slightly on 11/11, and then 11/12 came all the way back to 
close at a weekly high at the high end of the trading range.
This is a classic stock to trade, a stock we can get in and 
out of with small tradable gains.  Remember past performance 
is no guarantee of future results, but you get the picture.  
Wait for the stock to pullback to support or ride the upward 
momentum when you see developing price surges.  Looking ahead, 
movement above $74.44 should push the stock a lot higher.  
Possibly to the June highs.  Another possible entry point 
could be on a pullback near the $70 level.

In the news, LVLT announced that it launched communications 
Services in the Miami metropolitan area.  They are building
the first international network fully optimized for Internet
Protocol technology.

BUY CALL DEC-70*QHN-LN OI=1294 at $ 7.75 SL=6.00
BUY CALL DEC-75 QHN-LO OI=1277 at $ 5.25 SL=3.50
BUY CALL JAN-70 QHN-AN OI= 612 at $10.25 SL=7.75
BUY CALL JAN-75 QHN-AO OI=  71 at $ 6.25 SL=4.50 low OI

Picked on Oct 28th  at   $68.63     P/E = N/A
Change since picked       +5.31     52-week high=$100.13
Analyst Ratings       5-3-1-0-0     52-week low =$ 32.75
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  


SUNW - Sun Microsystems, Inc.  $119.31 (+9.75)(+3.75) 

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.

With a few trading days to go before the FOMC decides if they
will raise short-term interest rates, you would think that 
the risky sectors in this tech-driven market would have taken 
a breather.  This is just not the case, and it leads us to 
believe that whether the Fed raises interest rates or not 
next week won't likely change the sentiment or damage U.S. 
tech stocks.  That remains to be seen, but for now we will 
ride the wave and SUNW is making major waves.  Tacking on
another $9.75 points last week and seemingly getting stronger.
It rolled right through its record date on Thursday with no
problem and reached higher-highs on Friday and closed at the
higher end of the trading range, which leads us to believe 
that higher prices are still ahead.  If you do not know by 
now, SUNW will be splitting its stock 2:1 on Dec 9th and
is having a nice run thus far in front of that split.  But 
we are all reluctant to give back profits so keep the stops 
set to guarantee yourself a profitable trade.  We continue to 
like the stock with three more weeks of split-run but we are 
just urging a little caution.  Current resistance is at the
extended price of $119.44.  Look for the shares to firm up if
there is a pullback at $111.50.  Keep SUNW under a close watch
for the next few days.

Although the stock split had been announced back in October, 
the company reported on Friday that shareholders had approved 
an increase in its shares to provide for that split.  

BUY CALL DEC-115*SUX-LC OI=2003 at $10.00 SL= 7.50
BUY CALL DEC-120 SUX-LD OI=2139 at $ 7.38 SL= 5.63
BUY CALL JAN-115 SUX-AC OI=2646 at $13.13 SL=10.63
BUY CALL JAN-120 SUX-AD OI=1886 at $10.75 SL= 8.63

Picked on Nov 7th at    $109.69    P/E = 78
Change since picked       +9.63    52-week high=$119.44
Analyst Ratings      9-12-3-0-0    52-week low =$ 29.75
Last earnings 10/29   est= 0.31    actual= 0.33
Next earnings 01/20   est= 0.40    versus= 0.34
Average daily volume = 11.2 mln 
Chart = http://quote.yahoo.com/q?s=SUNW&d=3m


LSI - LSI Logic Corp. $65.50 (+7.50)

LSI Logic, The system on a Chip Company, is a leading supplier 
of custom high performance semiconductors, with operations
worldwide.  The company enables customers to build complete
systems on a single chip with its CoreWare design program, 
which increases performance, lowers system costs and 
accelerates time to market.  LSI Logic develops application
optimized products in partnership with trend setting customers
and operates leading-edge manufacturing facilities to produce
submicron geometry chips.

LSI saw its shares surge to a new 52-week high on Friday, after
the price target was raised by Merrill Lynch from $62 to $73.
The sector is looking very strong as the industry continues to
improve, because of the demand for applications used in wireless
communications and Internet infrastructure.  LSI being a world
leader in communications and networking chips saw a big piece 
of the pie as worldwide sales increased 24% in the month of 
September for the industry, with momentum appearing to be 
building.  LSI looks to be forming a new leg up and we are
bullish on the sector in general as money is flowing heavily
into these stocks.  Until the inflows of large amounts of 
capital stop coming into the sector we should have a nice run.  
Pullbacks ahead of the Fed meeting this Tuesday would be a good 
buying opportunity.  There is tradable support at $61.75.

The semiconductor stocks as a sector have been soaring for the
last few weeks across the board, with most of the favorites 
hitting new highs.  The SOX index which tracks sixteen of the 
chip manufacturers and chip-equipment makers has risen nearly
86 percent this year.  Merrill Lynch upped there targets on 
11 semiconductor companies this week, to name a few: TXN, LLTC, 
and LSI.  The analyst believe we are at the beginning of 
semiconductor prices going much higher.  

BUY CALL DEC-60 LSI-LL OI= 521 at $ 7.88 SL=6.38
BUY CALL DEC-65*SI-LM OI= 251 at $ 5.00 SL=3.25
BUY CALL JAN-60 LSI-AL OI=2775 at $10.38 SL=7.63
BUY CALL JAN-65 LSI-AM OI=2980 at $ 7.50 SL=5.75

Picked on Nov 14th  at    65.50     P/E = 120
Change since picked       +0.00     52-week high=$65.50
Analyst Ratings      13-6-3-0-0     52-week low =$15.19
Last earnings 10/29   est= 0.30     actual= 0.35
Next earnings 02-02   est= 0.43     versus= 0.00
Average daily volume = 2.14 mln 
Chart = http://quote.yahoo.com/q?s=LSI&d=3m


EMC - EMC Corporation $82.69 (+8.94)

Memory hardware and software is their primary focus.  EMC
Corporation is the #1 maker of mainframe computer disk memory
hardware and software.  EMC makes memory storage and retrieval
systems for larger mainframe computers as well as UNIX and 
Windows NT systems, using redundant array of independent disks
or (RAID).  With an emphasis on overseeing a corporation's 
Internet data, EMC continues to boost its presence in software
and related services.  About 80 percent of EMC's revenue comes
from storage hardware.  Over the last 5 years EMC's earnings 
have increased an average of 30 percent annually.  EMC competes
in the market place with IBM, Compaq and Hitachi. 

October 20th EMC reported third quarter earnings.  The following
day shares of EMC dropped $4 as traders tried to digest the 
information.  What the sell-off amounted to was the culmination
of a 3 week decline and the buyers were ready to step back in 
and begin drive the price of EMC stock to new highs.  EMC had 
just beat the street estimates by $0.02, but more importantly 
profits jumped 54 percent over the same period last year.  Not
only did EMC'c performance get the attention of traders and 
investors but it apparently garnered the attention of Wall
Street analysts.   Thursday shares of the hardware stocks
soared after Merrill Lynch praised the chip sector and investors 
anticipated the earnings news from Dell, which achieved a 41% 
increase in revenue.  Thursday EMC broke though the $78 area 
which had proved to be top back in early October.  Friday the 
momentum continued as EMC marked $82.88 as its new 52-week 
high, before settling at $82.69, up $0.69 for the session.  
EMC added over $8 for the week and with the momentum behind 
the stock it may not be done yet.  Volume the last three days 
of the week has been solid averaging 6.2 mln shares per day.  
Not only were the final three days of the week good for the 
price of the company's stock, but analyst Daniel Kunstler from 
J.P. Morgan initiated coverage of EMC with a Buy recommendation.  
Kunstler said new applications and increased use of databases 
involved have lifted the performance requirements of data 
storage technology.  "Only a few companies can meet those 
requirements and EMC is one of those few companies."   He also 
expects revenues to grow 40% from 2000 to 2003.  In the event 
of a pullback or consolidation the $78-$80 area should provide 
support for EMC.  Before initiating any new play, assess your 
risk profile first.

Wednesday Data General a Division of EMC, Microsoft, and CIBER
unveiled the Business Intelligence Solution Center(BISC).  The 
BISC is a combination of technology solutions designed to enable
company's to achieve a competitive advantage.  Late last week
Merrill Lynch also reiterated a Buy rating on EMC, citing 
success in the dot com arena.

BUY CALL DEC-70 EMB-LN OI=2191 at $14.13 SL=11.25
BUY CALL DEC-75 EMB-LO OI=1804 at $ 9.88 SL= 7.50
BUY CALL DEC-80*EMB-LP OI=2367 at $ 6.50 SL= 4.75
BUY CALL DEC-85 EMB-LQ OI=1251 at $ 3.88 SL= 2.50

SELL PUT NOV-80 EMB-WP OI= 991 at $ 0.88 SL= 1.75
(See risks of selling puts in the play legend)

Picked on Nov 14th at    $82.69    P/E = 81
Change since picked       +0.00    52-week high=$82.88
Analysts Ratings     16-7-2-0-0    52-week low =$33.00
Last earnings 09/99   est= 0.27    actual= 0.29 surprise +7.4%
Next earnings 01-25   est= 0.31    versus= 0.24
Average daily volume = 5.80 mln
Chart = http://quote.yahoo.com/q?s=EMC&d=3m


The Option Investor Newsletter             11-14-99
Sunday                4  of  6



CNCX - Concentric Network Corp.  $33.69 (+4.69)

Concentric Network Corporation provides complete, easy-to-use
Internet business solutions for small to medium sized 
companies and customized Virtual Private Network and data 
center services for larger organizations.  Concentric's
portfolio of services for small to medium sized companies
includes high-speed DSL access, Web hosting and e-commerce.
For larger enterprises, the company offers dedicated Web
hosting and data center services.

The market seems to be digesting the takeover rumors and CNCX's
counter attack to the possible hostile takeover by adopting a
shareholders rights plan.  A normal reaction to a shareholders
rights plan is a sell-off which is not happening in the shares 
of CNCX, at least not yet.  In fact just the opposite, it is 
now beginning to show signs of a possible major breakout.  From 
looking at the charts, the stock has clearly broken the recent
downtrend slide, and a minor breakout to the upside has taken
place.  It is bullish, but a hurdle to climb still sits at the
$40 dollar level.  But that is six points away and there is 
nothing technically standing in the way of that price range, 
giving us the potential for a quick play.  Any pullback in the 
short-term would be a buying opportunity as long as we get a 
bounce.  We see support at $30, reinforced by the 200-dma at 
$29.50.  We like CNCX at this level in a pullback or above $35 
on a breakout.

There has been a lot of positive sentiment for the smaller 
ISP's over the last month or so.  Money managers are in search
of that l billion dollar market cap ISP, that will be the next 
BUY CALL DEC-30 QXF-LF OI=1452 at $6.50 SL=4.75
BUY CALL DEC-35*QXF-LG OI= 428 at $3.88 SL=2.38
BUY CALL JAN-30 QXF-AF OI= 823 at $8.00 SL=6.25
BUY CALL JAN-35 QXF-AG OI= 961 at $5.63 SL=4.00

Picked on Nov 9th  at    $32.00    P/E = N/A
Change since picked       +1.69    52-week high=$57.63
Analyst Ratings       5-6-2-0-0    52-week low =$10.69
Last earnings 10/29  est= -0.69    actual= -0.65
Next earnings 01-25  est= -0.69    versus= -0.85
Average daily volume = 1.38 mln 
Chart = http://quote.yahoo.com/q?s=CNCX&d=3m


AOL - America Online Inc $148.75 (+2.75)(+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 strong earnings' run last month, the momentum picked 
back up in anticipation of AOL's second stock split this year 
and we added it to our call list.  The pay date is now just 
around the corner.  AOL splits its stock 2:1 after the bell on 
Monday, November 22nd.  The split run is the main catalyst 
for our current play on AOL.

After going higher on Monday, AOL started to show signs of 
weakness as investors were taking more cash off the table, 
pushing the stock closer to near-term support at $141-$142.  
While this level is a great point of entry, we warned on 
Thursday that if it broke the 10-dma (now at $142.90) we'd 
exit the play regardless of the upcoming split.  As it turned 
out Friday's session was quite profitable with a $6.50 gain 
on moderate volume.  In fact, AOL was one of the few stocks 
going higher during the Nasdaq slide Friday morning.  Still 
there are no guarantees going into next week since Internets 
are so touchy when it comes to the interest rate issues.  In 
other words, be careful ahead of the FOMC meeting on Tuesday!  
You should plan to be out of AOL by Friday's close to avoid 
any post-split depression.  

BUY CALL DEC-145 AOO-LI OI= 9574 at $12.75 SL=10.25
BUY CALL DEC-150*AOO-LJ OI=10978 at $10.38 SL= 8.00
BUY CALL DEC-155 AOO-LK OI= 5846 at $ 8.00 SL= 6.25
BUY CALL JAN-150 AOO-AJ OI=20078 at $15.25 SL=12.00
BUY CALL JAN-155 AOO-AK OI= 3720 at $12.88 SL=10.50

SELL PUT DEC-145 AOO-XI OI= 1535 at $ 7.38 SL=10.00
SELL PUT DEC-150 AOO-XJ OI= 1674 at $10.00 SL=12.50
(See risks of selling puts in the play legend)

Picked on Oct 31st at   $129.38    P/E = 203
Change since picked      +19.38    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 = 16.8 mln
Chart = http://quote.yahoo.com/q?s=AOL&d=3m


VRTS - Veritas Software $108.06 (+8.00)(+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.

Here comes the split - 3:2 that is, scheduled for Monday, 
November 22nd.  While we don't encourage holding a position 
over a split for the same reason we don't encourage holding 
over earnings (the stock goes down), VRTS has shown strength 
despite lack of volume in the last three days of trading.  It 
also set a new closing high on Friday, which just happens to 
be previous resistance.  Technically, that's good.  But with 
the split now real and volume in descent mode, it remains to 
be seen if the price will continue up or if Friday's move was 
just day-traders moving in, hoping for a fast buck on Monday 
morning - a "buy the rumor, sell the news" thing.  That's our 
hunch.  That said, you may want to harvest some profits in 
amateur hour on Monday morning.  The more risk tolerant types 
can wait to see if volume swells and pushes the price higher.  
Just remember that you'll never go broke taking a profit.  If 
we don't see more strength on Monday or Tuesday, we'll likely 
start looking for an exit point.  Be careful opening any new 

The one thing that could keep VRTS moving up is for Seagate 
(SEG) to get a buyout offer (a current rumor from Business 
Week 11/22/99).  Why is that?  According to the article, SEG 
owns 60 mln shares of VRTS (about 1/3 of the outstanding 
shares) effectively creating a buyout of 1/3 of VRTS shares.  
Keep your eyes open.

BUY CALL DEC-110*UQJ-LB OI=418 at $13.38 SL=10.75
BUY CALL DEC-115 UQJ-LC OI=186 AT $10.75 SL= 8.50
BUY CALL DEC-120 UQJ-LD OI= 90 at $ 8.00 SL= 6.25

Picked on Oct 21st at   $92.94     P/E = N/A
Change since picked     +23.13     52-week high=$117.44
Analysts Ratings    5-12-2-0-0     52-week low =$ 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 = 2.0 mln 
Chart = http://quote.yahoo.com/q?s=VRTS&d=3m


BVSN - Broadvision $88.50 (+5.00)(+9.94)

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.

Spiking up to $96 on Tuesday's amateur hour from the previous 
Friday's close at $83.50, BVSN settled into $90 support before 
suffering some profit-taking back down to $80 going into 
Thursday's close, where it found legs.  Friday, BVSN pumped up 
the volume to 80% over its ADV and tacked on almost $7 in the 
process.  Volume remains huge, telling that institutions are 
buying this issue on any dips.  Support is at $81, a break over 
$90 with any conviction will set BVSN up to retest $96.  Volume 
is the key.  However, until the market is convinced it should 
go for a day or two of profit-taking, target shooting at $81 
may be difficult.  Consider moving up the target only if it 
fits your risk profile.  Otherwise consider making the entry 
when the price moves over $90 with conviction.  Conviction will 
be determined by what the rest of the market is thinking at 
that time.  The market may be due for some quick consolidation, 
volume or not.  Plan your entry carefully.

In the news, Shop at Home (the cable shopping channel) has 
formed an Internet subsidiary called Collectibles.com to sell 
(you guessed it!) collectibles.  BVSN will provide the software 
infrastructure to handle the transactions.

No January strikes available yet.

BUY CALL DEC-80 BDV-LP OI=906 at $15.50 SL=12.00
BUY CALL DEC-85*DV-LQ OI=567 at $12.75 SL=10.25
BUY CALL DEC-90 BDV-LR OI=797 at $10.38 SL= 8.00

Picked on Nov 7th at    $83.50     P/E = 544
Change since picked      +5.00     52-week high=$95.94
Analysts Ratings    5-16-1-0-0     52-week low =$ 4.81
Last earnings 09/99  est= 0.13     actual= 0.16
Next earnings  1-27  est= 0.16     versus= 0.08
Average Daily Volume = 1.3 mln
Chart = http://quote.yahoo.com/q?s=BVSN&d=3m


TMX - Telefonos De Mex (ADR) $99.00 (+3.00)

Telefonos de Mexico (Telmex) is a telecommunications provider 
of domestic and international telephone services in Mexico.  
Telmex also provides ISP connections to over 300K subscribers 
and is involved in reselling long-distance along the US borders.  
The wireless end of the business is handled by its subsidiary 
Telcel, which provides cellular service to over 3 mln customers. 

This play is based purely on the excitement of an intended stock 
split.  The Board of Directors announced on November 11th a 
proposal to split its shares 2:1 to boost trading activity. 
Shareholder approval is required and a vote will be taken at 
the next General Meeting.  Unfortunately at this time, Telmex 
has not released that date.  Assuming the stock split takes 
place, the ADR's traded on the NYSE would be affected as well.  
An investor would receive 2 ADRs or every 1 they owned.  By 
the way 1 ADR represents 20 shares of Telmex stock.    

The ADR price charged ahead on Thursday following this 
announcement breaking the $100 mark for the second time this 
week.  Friday TMX slipped a little closing with a $1.94 loss 
possibly due to a rating downgrade from a Buy to a Hold by CSFB.  
However, the firm maintained its 12 to 15-month price target 
of $101 and offered no other comments.  Technically, support 
is firm at its 10-dma at $94.93, but a dip below this level 
should raise the red flags.  Look for an intraday entry at 
this level assuming you've confirmed upward direction first.

BUY CALL DEC- 95 TMX-LS OI= 394 at $8.00 SL=6.25
BUY CALL DEC-100*TMX-LT OI=2338 at $5.25 SL=3.50
BUY CALL DEC-105 TMX-LA OI= 547 at $3.63 SL=2.00
BUY CALL JAN-100 TMX-AT OI=1123 at $7.25 SL=5.50
BUY CALL JAN-105 TMX-AA OI= 103 at $5.13 SL=3.25

Picked on Nov 14th at    $99.00    P/E = 21
Change since picked       +0.00    52-week high=$102.50
Analysts Ratings      1-3-5-0-0    52-week low =$ 39.88
Last earnings 09/99   est= 1.31    actual= 1.67
Next earnings 02-03   est= 1.45    versus= 1.26
Average Daily Volume = 1.41 mln
Chart = http://quote.yahoo.com/q?s=TMX&d=3m


NOK - Nokia $122.25 (+6.38)

Finnish Phone Firm, Nokia is the world's number one maker of 
wireless cellular phones, ahead of Motorola, Ericsson and 
Qualcomm.  In addition they make wireless networking equipment, 
PC monitors and workstations, digital satellite and cable 
network systems and set-top boxes.  However mobile phones 
make up 80% of their $18.5 bln in annual sales.  Return on 
equity is an industry smokin' 43%, and they currently sit on 
$3.3 bln cash, or slightly over $3 per share.  Only a hunch, 
but do you think they'd make a great candidate to purchase 
QCOM's handset business?

Who cares about the news?  Look at the chart!  Since the end of 
October when NOK broke through prior resistance of $100, it's 
been on the move, adding 20% to the price since then.  After 
some testing of the $112 range over the last 10 trading days, 
NOK moved up to an intraday trading high of $119 on Thursday.  
Finally, it blew through it on Friday, closing at $122.25 after 
first bouncing hard off $115, a new level of support.  Volume 
was about 60% greater than the ADV of 2.5 mln shares.  If we 
see a dip into the $119 range then a bounce, we will have 
confirmation of the move to higher ground.  You may want to 
consider staggering your target orders for both $115 and $119.  
Given the strong volume and investors fascination with all that 
is wireless (an appropriate fascination given the industry 
changes and growth), we think NOK will easily get through 
resistance at $123.75, market willing.  That's the rub.  Tech 
gains (as measured by new NASDAQ records) in 10 of the last 
11 trading days are setting the odds in favor of profit-taking 
soon.  One clue, but by no means conclusion, is the FOMC meeting 
on Tuesday where investors may chose to take profits before or 
after depending on sentiment at the moment.  The point is, 
target shoot at your comfort level and be prepared to get out 
when the charging bull stops to catch its breath.

Nokia and IBM announced at the end of October that they would 
jointly develop voice recognition applications for Cell phones, 
as if users need another reason to upgrade their cell phones. 
This follows IBM's announcement that it will add voice-activated 
capabilities to AOL's Netscape and MSFT's Internet Explorer 
browsers, which will allow text to be translated to speech, thus 
giving your wireless phone the power of your desk-bound PC.  
Anybody think NOK might sell a few more handsets if this were 
possible?  Yep, us too.  Rumors still swirl that NOK may be 
a suitor for 3Com, but those are old with no confirmation at 
this point.

BUY CALL DEC-115 NAY-LC OI=349 at $10.63 SL=8.25
BUY CALL DEC-120*NAY-LD OI=351 at $ 8.00 SL=6.25
BUY CALL DEC-125 NAY-LE OI=  0 at $ 4.63 SL=2.75 new strike

SELL PUT NOV-115 NAY-WD OI=566 at $ 1.38 SL=2.75
(See risks of selling puts in the play legend)

Picked on Oct 21st at  $122.25     P/E = 103
Change since picked      +0.00     52-week high=$123.75
Analysts Ratings    13-8-0-0-0     52-week low =$ 43.38
Last earning 10/99   est= 0.52     actual= 0.57 surprise= 9.6%
Next earning 01-28   est= 0.66     versus= 0.58
Average Daily Volume = 2.6 mln 
Chart = http://quote.yahoo.com/q?s=NOK&d=3m


NT - Nortel Networks $72.56 (+3.75)(+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, LANs, 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.

NT, now the second largest communications equipment manufacturer 
in North America, held an analyst conference with over 400 
analysts in attendance last Wednesday.  There, CEO John Roth 
reported sales would grow 20-21% in FY2000, and that $10 bln 
alone would come from sales of new optical networking gear.  CS 
First Boston stepped in to note that they think margins are 
increasing too.  This is music to fund managers' ears, and they 
responded with volume of their own, pushing NT to another all 
time high.  While there was some profit-taking on Friday, support 
came at $70.56, still above its previous all time high, which 
is a bullish technical sign, especially give the strong volume 
we've seen from NT.  Part of what makes NT so compelling is 
that they trade at "just" four times sales compared to six 
times sales for Lucent.  Anyway, support is strong at $70, 
which used to serve as resistance.  Market wide profit-taking 
may turn this into a moving target, but as long as volume remains 
strong (signifying that funds are buying), and the rest of the 
market turns back in your direction, you may want to buy the 
dips, no matter how small.

Other than the above, not much news.  However, for the fun fact 
file, note that John Roth, NT CEO said that they may move the 
company out of Canada to follow its best and brightest workers.  
This was reported in the Ottawa Citizen.

BUY CALL DEC-65 NT-LM OI=1121 at $9.75 SL=7.25
BUY CALL DEC-70*NT-LN OI=1600 at $6.38 SL=4.50
BUY CALL DEC-75 NT-LO OI= 452 at $3.88 SL=2.00

SELL PUT NOV-70 NT-WN OI= 983 at $0.94 SL=0.00
(See risks of selling puts in the play legend)
Picked on Nov 7th at    $68.81     P/E = 464
Change since picked      +3.75     52-week high=$75.69
Analysts Ratings   12-12-3-0-0     52-week low =$21.69
Last earnings 09/99  est= 0.26     actual= 0.28 surprise=7.7%
Next earnings 01-26  est= 0.44     versus= 0.36
Average Daily Volume = 3.5 mln
Chart = http://quote.yahoo.com/q?s=NT&d=3m


CMVT - Comverse Technology $121.25 (+7.50)(+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. 

The action has returned in our play of CMVT.  A week ago we 
talked about how trading had really quieted down as CMVT was 
only up a quarter for the week.  But we also noticed that 
the lows were getting higher, forming an ascending bullish 
triangle pattern that usually signals a move to the upside.  
In fact, Jim outlined this in his Options 101 article last 
Sunday if you want to go back to see the pattern to compare 
with the result.  The result was a strong move up starting at 
the beginning of the week.  CMVT ended over $120 on Monday 
and hit $130 by the close on Wednesday.  The beauty to this 
play is the intraday pullbacks that CMVT offers as entry 
points.  In has routinely come off the highs and back to 
support before going higher once again.  As you know, we are 
playing this on the earnings run, which are due Nov 30th after 
the close.  We are seeing an increased intensity in the run 
due to the high probability of a split announcement.  Like 
always, we will drop the play ahead of earnings to avoid the 
inherent risks associated with holding over earnings.  But 
we will consider bring CMVT back depending on the timing of 
the ex-date.  For now, a dip back to $120 could be considered 
for an entry point.  You may want to use caution ahead of 
the FOMC on Tuesday though.  Resistance is the new high set 
at $130.  CMVT has never broke the 10-dma (currently $117.50) 
and any close below it would be a bad development.  Place 
your stops accordingly.  

In typical CMVT fashion, the news is light.  In fact, there 
was only one article on the newswire this week relating to 
Comverse.  On Monday, it was announced that Norstan Inc will 
incorporate CMVT's Infosys' Ultra and Mentor products.  Terms 
of the agreement were not disclosed and this kind of news has 
relatively little impact on CMVT's stock price. 

BUY CALL DEC-115 CQV-LC OI=308 at $11.38 SL=9.00
BUY CALL DEC-120*CQV-LD OI=723 at $ 8.50 SL=6.50
BUY CALL DEC-125 CQV-LE OI=313 at $ 6.13 SL=4.25
BUY CALL DEC-130 CQV-LF OI= 69 at $ 4.38 SL=2.50 low OI

SELL PUT NOV-115 CQV-WC OI=113 at $ 1.13 SL=2.50
(See risks of selling puts in the play legend)

Picked on Oct 21st at  $102.13    P/E = 66
Change since picked     +19.13    52-week high=$130.50
Analysts Ratings     8-3-0-0-0    52-week low =$ 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 = 1.3 mln
Chart = http://quote.yahoo.com/q?s=CMVT&d=3m  


MXIM - Maxim Integrated Products $87.38 (+2.06)(+6.38)(+2.56)

Maxim 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.

What a difference a day makes.  Thursday we had analysts at 
Merrill Lynch and Prudential upgrading numerous stocks in the
semiconductor industry.  Life was good, the Tech sector would
lead the Nasdaq higher indefinitely, and everyone could go home 
and sleep well knowing their investments were safe and secure. 
But the alarm went off Friday morning in the form off Joe Osha, 
another analyst at Merrill.  Apparently he missed the announcement
on Thursday with all the upgrades.  Mr. Osha shook traders out 
of bed with his downgrade of Intel to an Accumulate from a Buy.
His report knocked the (SOX.X) semiconductor index off its it
recent highs.  INTC lost nearly 6% for the day.  Traders sold 
shares of MXIM at the outset, dropping the stock to a low of 
$83.88 in the first 45 minutes of the session.  Buyers jumped
back in and bid MXIM higher for the balance of the day, closing
at $87.38, up $0.31 over Thursday's close.  Our interest in MXIM 
besides sector strength, is for an anticipated split announcement.
The annual shareholders meeting for MXIM is scheduled for this 
Thursday and the Board of Directors have requested a vote to 
increase the number of authorized shares from 240M to 480M, 
which should be approved.  If you have a position in MXIM, you 
may have been stopped out Friday, depending on the placement 
of your stops.  The strength that MXIM showed coming back after 
the early decline yesterday was impressive.  On an intraday 
basis the $85-$86 area should provide support and a bounce off 
that level would provide a good entry point.  The next areas 
of support fall near $83 and $80.  Should we see MXIM continue 
its momentum to the upside we would probably begin to add to 
positions but use caution ahead of the Fed on Tuesday.  Keep 
your stops close.  Conservative traders may want to sit out 
until after the Fed meeting.

There is no other news at this time.

BUY CALL DEC-80 XIQ-LP OI= 426 at $11.00 SL=8.75
BUY CALL DEC-85*XIQ-LQ OI=1225 at $ 7.88 SL=6.25
BUY CALL DEC-90 XIQ-LR OI=  24 at $ 5.38 SL=3.75

SELL PUT NOV-80 XIQ-WP OI= 281 at $ 1.63 SL=3.50
(See risks of selling puts in the play legend)

Picked on Nov 2nd at     $81.50    P/E = 66
Change since picked       +5.88    52-week high=$87.88
Analysts Ratings      7-6-2-0-0    52-week low =$34.50
Last earnings 09/99   est= 0.35    actual= 0.37 surprise +5.70%
Next earnings 01-27   est= 0.40    versus= 0.31
Average daily volume = 1.50 mln
Chart = http://quote.yahoo.com/q?s=MXIM&d=3m


SFE - Safeguard Scientific Inc. $112.50 (+9.00)

Safeguard is an Internet-centric holding company that finds, 
acquires, operates and manages business-to-business companies 
engaged in e-commerce, e-communications, and e-business software 
and services and has interests in several private equity funds.  
Safeguard generally acquires ownership interests in companies 
that allow it to have a significant influence over their 
direction and management over the long-term.  Safeguard assigns 
a dedicated team to each partner company and actively assists 
its partner companies in their management, operations and 
finances.  Safeguard seeks to maximize shareholder value by 
actively providing operational assistance and expertise to 
help its partner companies grow and develop and by giving its 
shareholders the opportunity to participate in the initial 
public offerings of its partner companies while retaining a 
significant ownership interest after the initial public 

Whew!  Did anybody see a bounce off $117, $116 of $114?  Neither 
did we.  That was a pretty powerful downdraft all the way to 
$110.50 before a large buy order picked SFE up off the floor.  
It spent the rest of the day nursing its wounds and bouncing 
north of $112.50 on three occasions, where it ultimately closed.  
The bounce looks good; the close doesn't, especially when the 
rest of the market is in rally mode.  Volume was about 200% of 
the ADV for the day and moving up into the close as the price 
was falling.  So why keep this play?  The reason still stands - 
higher-lows converging with resistance indicates a probable 
breakout to the upside if typical chart patterns hold.  The 
resistance is $120, which we expect will be blown right through 
with any volume to back it up; support just over $110.  If it can 
hold $110 and bounce with volume, we have a play.  If it breaks 
south with volume backing it up, you probably ought to cross it 
off your play list (you do have one, don't you?).  Frankly, our 
timing could have been better.  ICGE, a competitor reported 
earnings Thursday after the close and sold off Friday, pulling 
the sector down with it.  With that out of the way, perhaps SFE 
has given us a better buying opportunity.  Wait for your entry.

No news on Friday, but the previous news is still relevant.  On 
November 4 (not September 4, for those having read Thursday's 
write-up), CS First Boston issued a Buy rating.  While there is 
no great detail, there have been many articles lately about B2B 
Internet growth in which SFE is nicely positioned.  Much like 
CMGI, SFE has numerous companies in the pipeline, which they 
plan to take public in 2000.  Only SFE has a reasonable p/e 
of 47.  By definition, it's profitable.

BUY CALL DEC-110 SFE-LB OI=572 at $12.25 SL=9.75
BUY CALL DEC-115*SFE-LC OI=415 at $ 9.88 SL=7.25
BUY CALL DEC-120 SFE-LD OI= 85 at $ 8.25 SL=6.25

Picked on Nov 11th at  $118.75     P/E = 48
Change since picked      -6.25     52-week high=$121.00
Analysts Ratings     8-3-1-0-0     52-week low =$ 24.50
Last earnings 10/99  est= 0.14     actual= 0.26  surprise = 85.7%
Next earnings 02-17  est= 0.16     versus=-0.23
Average Daily Volume =   431 K
Chart = http://quote.yahoo.com/q?s=SFE&d=3m


Current Plays


EMC       11/07/99   JAN-2001 $80  ZOH-AP at $21.63
                     JAN-2002 $90  WUE-AR at $25.38
DELL      11/07/99   JAN-2001 $50  ZDE-AJ at $ 7.63
                     JAN-2002 $50  WDQ-AJ at $11.75
GPS       11/07/99   JAN-2001 $40  ZGS-AH at $ 8.00
                     JAN-2002 $45  QGS-AI at $ 7.75
IBM       11/07/99   JAN-2001 $100 ZIB-AT at $16.63
                     JAN-2002 $110 WIB-AB at $19.63
WMT       11/07/99   JAN-2001 $70  ZWT-AN at $ 6.63
                     JAN-2002 $75  WWT-AO at $ 9.75

New Plays

LU - Lucent $72.50

After nearly four months of consolidation, Lucent appears to 
have righted the ship.  Some would say that the ship was never 
in trouble, just that it needed to slow down after the long 
journey.  The journey we are referring to is LU's appreciation 
from $20 to $80 in a year and a half, so they were due for a 
rest.  But it looks like they have once again regained their 
strength.  Probably in part to news that their technology will 
help to increase Internet speeds up to ten times.  This isn't 
far off either.  With the growth and development still left 
in the industry, we see LU headed higher.  Support is at $70 
which makes for a good entry.  Or if LU decides to take off 
sooner than later, a breakout over $80 is bullish.

BUY LEAP JAN-2001 $80.00 ZEU-AP at $12.88
BUY LEAP JAN-2002 $90.00 WEU-AR at $16.13



CSCO - Cisco $83.44

It is hard to beat the long-term upward trend that Cisco has 
given during the 1990s.  This is mainly because of their role 
in building the infrastructure for the Internet.  This has 
helped make CSCO a well-known name.  Some analysts (and we 
agree) say the Internet craze is still only in the 2nd inning.  
That means CSCO's trend may keep going through the next decade.  
There were concerns recently that Cisco may see slowing growth 
in their revenues but with their recent earnings release, 
those fears have been calmed.  CSCO hasn't moved up as rapidly 
in 1999 as in the past but appears to be ramping up now.  With 
Thursday's close over $80 and at a new high, we are now ready 
to grab some leaps.  If you are expecting a Nasdaq retreat, 
CSCO has support at $80.  In a major sell-off, CSCO has great 
support at $74 but that might be asking too much.

BUY LEAP JAN-2001 $80.00 ZCY-AP at $19.13
BUY LEAP JAN-2002 $90.00 WIV-AR at $22.00



SLR - Solectron $87.88

Are you looking for the biggest component manufacturer in the 
world for OEMs?  Well, you've found it.  Solectron is king when 
it comes to providing electronic systems and subsystems.  This 
powerhouse builds parts for Hewlett-Packard, Mitsubishi and 
Cisco.  If we are bullish on CSCO, then SLR should do good as 
well.  The summer doldrums helped cool off SLR's stock but it 
never fell below key support levels as it always held above 
the 100-dma.  Now SLR is in the midst of the Nasdaq breakout 
and gunning for higher prices.  Almost every analyst covering 
this stock is in the Strong Buy or Buy category and SLR's P/E 
for coming years is still relatively low.  And, at this level, 
could be considered a split candidate at any time.  A pullback 
to support at $80 would be nice but with the higher-lows now 
forming, we may need to target shoot an entry on any intraday 

BUY LEAP JAN-2001 $85.00 ZSR-AQ at $21.75



MSFT $89.19 Despite having the potential to have offered some 
profits already on your LEAPs due to the weak opening for MSFT 
on Monday, we have decided to close out this position.  The 
word of class action lawsuits against the company was what did 
it for us.  Those can drag on for extended periods of time 
and is usually quite a weight for the stock to carry.  It can 
bring on downgrades, short sellers and an overall negative 
sentiment.  Not to mention MSFT will have the government on 
their back for a few more years.  Therefore, we would rather 
put our money into a stock that is better suited for LEAP 


The Option Investor Newsletter             11-14-99
Sunday                        5 of 6


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.


TXT - Textron Inc $68.94 (-3.44)

Textron is a diversified company that operates in the Aircraft, 
Automotive, Industrial and Finance sectors.  Their aircraft 
business makes Cessna aircraft and Bell helicopters.  Their 
automotive business makes trim products, fuel systems and 
components.  Their industrial group makes fasteners, golf 
carts and lawn products.  Their finance division finances 
commercial equipment lease-loans.  They do business around 
the world but the U.S. still accounts for 65% of sales.

The news from management that all is well has done little to 
calm nervous investors and TXT has rolled over once again.  
On Thursday we talked about the surprise announcement from 
Textron management that all is well and they are on target 
as far as Q4 earnings.  This announcement probably stems from 
the break below $70 (which was a key support level) in their 
stock.  The problem we see with TXT is that investors aren't 
selling because of a pending earnings warning but because 
investors or institutions don't see the kind of growth from 
TXT that they have come to expect in this market.  Meeting 
expectations does little to spur new investment in this era 
of high growth and productivity with little inflation.  So 
what happened after the TXT announcement?  Nothing but more 
entry points for our play.  The stock quickly bottomed on 
the news Wednesday and ran up to resistance at $70.  Here the 
sellers reemerged to pressure TXT back down.  That is exactly 
what we were looking for.  Now that we are back in the trend, 
we have the same goal, to see TXT fall to $60.  That is where 
the next support lies.  As we said above, resistance is at 
$70.  If we get a close above $70, it is probably time to 
start looking for an exit.  The only concern on the horizon 
is that TXT will try harder to support their stock.  This 
can come in the form of product announcements or by buying 
back shares of the stock, which they have said they will be 
doing.  But until we see evidence of such actions, we will 
go with the flow and that flow is still down.  

BUY PUT DEC-75 TXT-XO OI=84 at $7.38 SL=5.50
BUY PUT DEC-70*TXT-XN OI=53 at $3.63 SL=1.75

Average Daily Volume = 415 K
Chart = http://quote.yahoo.com/q?s=TXT&d=3m


RMDY - Remedy Corporation $36.31 (-4.03)

Remedy develops, markets and supports client/server software 
for support and business processes.  They are the #1 maker of 
help desk management software for computer networks, primarily 
used for the internal application for tracking and resolving 
support requests in PC, NT and UNIX computing environments.  
They have more than 3000 customers in 60 countries including 
AT&T and Motorola and over 60% of sales come from the company's 
own sales force.

Remedy is in the midst of a short-term correction that is now 
becoming standard procedure every 4 months.  In general, RMDY 
has had a good year as it has appreciated from the mid-teens 
to its present value near $36.  But for some reason or another 
it has been plagued with a correction every couple of months.  
It happened in late-January, July and now again in November.  
There is some discussion as to why it is correcting again but 
we feel there are reasons to justify a little profit-taking.  
One is the very reason we stated above, the stock has tripled 
in 1999.  Most of the talk right now is that insiders are 
selling to lock in gains.  That is to be expected and should 
help to pressure the stock.  The bigger play though lies in 
the fact that RMDY is sinking while the Nasdaq and software 
sector are red hot.  This is what really helped us to decide 
to look at puts on RMDY.  Even on Friday, RMDY closed right 
at the day low.  We expect RMDY to drop back to firm support 
at $29.  This means RMDY will need to pass through the 10-dma 
at $32 so watch for some support there also.  Watch for company 
specific news to impact our play.  Any positive development 
from the company could end this play in a hurry.  Remember, 
puts on companies that are doing well, but in a short-term 
correction, have more risk than a company with a longer-term 
downward pattern.  With that said, a break below $36 would 
signal time for a play, with support at $32 and $29.

BUY PUT DEC-35*LRQ-XG OI= 5 at $3.13 SL=1.50 low OI
BUY PUT DEC-30 LRQ-XF OI=37 at $0.81 SL=0.00 High Risk!

Average Daily Volume = 416 K
Chart = http://quote.yahoo.com/q?s=RMDY&d=3m     


CSC - Computer Sciences Corp. $63.63 (-3.38)

Computer Sciences Corp. is a provider of information 
technology services.  The company was founded in 1959 and 
specializes in management consulting; information systems 
consulting  and integration and; outsourcing.  The United 
States Government accounts for an approximate 25% of CSC's 
business.  CSC also has plans in the works to delve into 
the world of e-commerce.

It was a decent week for the technology sector and still CSC 
managed to lose nearly $3.50.  CSC has been in a downward 
trend since the end of October, knocking through support 
levels with ease.  CSC has violated it's 10-dma of $64.75 
and seems to be headed for its next support level, which is 
all the way down at $60.  Should CSC break through $60, the
next support holds right around $58.  CSC traded below the 
$63 level on Thursday, however, $63 managed to hold CSC on 
Friday.  We are going to want to see another breakthrough 
and some consistent trading below this level to confirm the 
continuing negative momentum before entering a new play.  
It is the weak relative strength against the technology sector 
and the building negative momentum that lead us to believe that 
CSC is going to provide us with a good play.  Keep in mind, 
the Fed is meeting on Tuesday, and should the market rally 
because of the meeting, it could very well pull CSC up with 
it.  This scenario has the potential to create some attractive 
entry points, as we feel that CSC would fall back into its 
downward trend shortly thereafter.  In September, CSC announced 
a merger with Nichols research.  The exchange ratio was set 
for the merger of Nichols Research into CSC at 0.423 shares 
of CSC common or each share of Nichols.  This was announced on 
Thursday, November 11th .  The merger is subject to shareholder
approval at an upcoming special shareholder meeting on Nov 16th.

BUY PUT DEC-65*CSC-XM OI=314 at $4.38 SL=2.50
BUY PUT DEC-60 CSC-XL OI=453 at $2.00 SL=1.00

Average Daily Volume = 843 K
Chart = http://quote.yahoo.com/q?s=CSC&d=3m


MSTR - Microstrategy Inc $82.63 (-13.25)

MicroStrategy is an e-business company.  MSTR makes software 
which empowers organizations to understand the interactions 
they have with their customers, suppliers, and business.  This 
insight enables MicroStrategy's industry-leading clients to 
improve operations, analyze marketing effectiveness, and 
create and deliver targeted, one-to-one marketing campaigns 
to customers through common communication channels such as 
the phone, e-mail, pager, and the web.  MicroStrategy is 
helping its customers make information a valuable source of 
strategic insight that drives intelligent business, generates 
new, more profitable sales and strengthens customer loyalty.

MSTR looks to have hit its head on the ceiling.  MSTR had a 
wonderful uptrend heading into November but apparently, when 
MSTR broke through the psychological support level of $100 on 
November 5th, investors decided that enough was enough.  MSTR 
was trading at $18 back in May so it has come a long way in a 
relatively short period of time.  It is possible that the 
investors who have been riding MSTR up are nervous as to just 
how far it is going to drop.  Therefore, they have decided to 
take their money and run.  MSTR tried to hold $90 on Thursday 
and collapsed in trading on Friday.  This seemed to scare up a 
slew of sellers as MSTR had higher than average volume.  MSTR 
flirted around $83 in late day trading on Friday and a dip 
below this would indicate a continuation of negative momentum,
seemingly the catalyst on this play.  The next psychological 
support level is at $80, so use caution around this level.  If 
it breaks through, we expect to see another bout of selling, 
as we did this last week when MSTR broke through $90.  If you 
are going to play this one, you are going to need to keep an 

BUY PUT DEC-85*EQU-XQ OI= 2 at $10.88 SL=8.75 low OI
BUY PUT DEC-80 EXQ-XP OI=32 at $ 8.00 SL=6.00

Average Daily Volume = 264 K
Chart = http://quote.yahoo.com/q?s=MSTR&d=3m


Stocks Rally After Encouraging Economic Reports..

Increased productivity and a favorable bond market helped push
U.S. markets higher Friday. The Dow Jones Industrial Average rose
174 points to 10,769 while the Nasdaq composite gained another 23
points to close at a new record of 3,221. The S&P 500 index moved
14 points higher to 1,396. In the broader market, advancing stocks
outpaced declining issues 17 to 13 with 900 million shares traded
on the NYSE. The 30-year Treasury bond rose 26/32 with the yield
falling to 6.03%.

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

Echelon      ELON  MAY10C/NOV10C   $2.38   debit   calendar 
Loral Space  LOR   APR20C/DEC20C   $1.81   debit   calendar

The new spread positions were quite active on Friday morning and
both issues traded beyond our initial expectations for the first
day. Echelon opened $0.38 higher and after a brief pause, moved
above $10. The upward movement prevented a simultaneous (spread)
order at the target price but the stock traded actively after
moving into the new range, allowing a favorable individual entry.
The November option had far less premium but with the short-term 
volatility, we will have a much better opportunity to adjust the
spread next week. Loral fell lower at the open and continued to
slump, reaching $17 by midday. The position was available at the
suggested price.
Portfolio plays:

Equities rallied again Friday on strength in financial issues
and speculation the fed will leave interest rates unchanged
when the FOMC meets next Tuesday. The signing of a financial
deregulation law contributed to the bullish activity and also
fueled the merger rumors of various banking industry companies.
Many of the issues in our portfolio participated in the rally
and technology stocks were among the leaders. At the top of the
heap were two well-known stocks. Qualcomm (QCOM) rocketed $32,
closing at an unbelievable high of $378 and JDS Uniphase (JDSU)
moved up $19 to end at $200. Another of our recent performers,
Gemstar (GMST) rose almost $5 to finish at a new 52-week high
near $100.

Bank and brokerage issues moved higher and Etrade Group (EGRP)
led our bullish (diagonal spread) portfolio with a $5 climb to
$36. The April position is now $6 ITM and can be closed for a
$5 credit. Data Broadcasting (DBCC) is also in that section and
today the stock price rose $1.25 to end at $14.50, bringing our
bullish spread to a $2.25 credit. Many of our small-cap stocks
continued higher and the leading positions in that group were 
Global Crossing (GBLX), up $3.68 to a recent high near $38 and
Nvidia (NVDA), which moved up another $1.62 to close near $32.
Our recent 3Com (COMS) position offered another entry today as
the stock fell from recent gains on profit-taking. The issue
traded as low as $31.88.

The calendar spread section had some favorable surprises today
as Multex.com (MLTX) and Toys-R-Us (TOY) both rebounded back to
favorable prices. Toys-R-Us recovered on news that the number of
visitors to their website was far above expectations with online
shoppers displaying an overwhelming desire for early Xmas gifts.
Multex climbed $3.25 to $19 and now appears to be on the verge
of a technical break-out. This position should be monitored for
further upside movement. Monsanto (MTC) dropped $1.06 to finish
just above $45 and the play offered another favorable entry with
the (JAN50C/NOV50C) spread debit near $1.75. Zoltek (ZOLT) made
another confusing move to the $9 range with the standard lack of
news to support the rally. The activity next week will determine
whether or not we adjust the play to reflect the recent bullish

The LEAPS/CC's portfolio continues to recover with the market
rally and for that we are grateful. Stocks like Exxon (XON) and
General Motors (GM) have moved closer to old trading ranges and
the profits from these plays are once again favorable. However,
issues like Sun Micro (SUNW) continue to confound and perplex as
they climb higher on a weekly basis. Another stock that has been
rising steadily is Cabletron Systems (CS). Today the issue made
a $4 move to $25 and closed at a recent high. Fortunately, this
position is diagonal (LJAN15C/DEC17C) with no upside risk. The
difficulty now is chasing the stock to maximize profit in the
spread. The Limited (LTD) and Polaroid (PRD) are the laggards
of the group and no significant change of character is apparent
in either issue.

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


On Friday, financial reform legislation signed by the President
boosted banks and insurance companies. Stock prices soared as
merger speculation continued and brokerages received a bullish
surprise when an analyst from Hambrecht & Quist reported that
recent customer order flow at electronic brokers surpassed the
already strong October data. These new plays are based on the
initial indications of an apparent sector rotation to the bank
and financial service stocks. The issues have favorable trends
but current news and market sentiment will have an effect on
the positions so review each play individually and make your
own decision about the future outcome of the stock price.

AMTD - Ameritrade  $21.93   *** Sector Rally ***

Ameritrade Holding Corporation is a pioneer in the discount and
online brokerage industry. They provide brokerage services and
clearing services to self-directed individual consumer investors
and other financial institutions through subsidiaries including:
Ameritrade, a leading online discount brokerage firm; Accutrade,
a discount brokerage firm delivering superior levels of personal
service and support to its clients; AmeriVest, a provider of
third-party discount brokerage services and financial services
to commercial banks, credit unions and thrift institutions; as
well as Advanced Clearing, a securities clearing firm providing
clearing services to each subsidiary as well as other financial

Ameritrade recently announced that customers can now receive 
personalized financial information via digital mobile phones, 
alphanumeric pagers or email. The Ameritrade Reports and Alerts
Service gives investors more convenience and control, providing
them a new way to follow and invest in the securities in their
portfolios. The service delivers scheduled news and updates on
the performance of customers' investments including stock price
changes, earnings estimate changes, earnings surprises and
rating changes. In addition, the service provides weekly market
and portfolio summaries including performance comparisons and 
price/volume charts.
A nice bullish chart with lots of room for upside potential and
the small disparity in option premiums will allow us to open a
bullish position at a discount.

PLAY (conservative - bullish/diagonal spread):

BUY  CALL JAN-21.62 TAZ-AB OI=382 A=$3.88
SELL CALL DEC-25.00 TAZ-LE OI=636 B=$1.50

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


TWE - Td Waterhouse  $16.63   *** Brokerages Are Hot! ***

TD Waterhouse Group is a leading online financial services firm
and the world's second-largest discount broker, and operates in
the United States, Hong Kong, Canada, Australia and the United
Kingdom. They provide investors with a broad range of brokerage,
mutual funds, banking and other consumer financial products on
an integrated basis. The firm has three million customers and
$113 billion in assets under administration.

The number of online accounts has skyrocketed from three million
in 1997 to about eight million today. That level is expected to
triple over the next four years and in the short-term, online
trading volumes are hitting extraordinary levels. Hambrecht &
Quist analyst Greg Smith says the current environment resembles
the climate during April, characterized by a strong technology
market, skyrocketing IPOs, and heavy speculative fever. In a new
report, he recommends TWE as a "strong buy" and this coincides
with a review last week from Credit Suisse First Boston. They
also started the company with a "strong buy" rating and price
target well above the current range.

With many of the online brokerage stocks down 50% from the highs
reached in April, their is plenty of upside for these issues.
The small premium disparity allows us to participate with a low
cost, conservative (bullish) outlook.

PLAY (conservative - bullish/debit spread):

BUY  CALL DEC-12.50 TWE-LV OI=624 A=$4.38
SELL CALL DEC-15.00 TWE-LC OI=726 B=$2.38
INITIAL NET DEBIT TARGET=1.88 ROI(max)=32% B/E=$14.38

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


MEL - Mellon Financial  $39.19     *** Technical Break-Out! ***

Mellon Financial is a global financial services company. One of
the world's leading providers of wealth management and global
asset management for individual and institutional investors, as
well as investment services for businesses and institutions.
Mellon also offers a comprehensive array of banking services for
individuals and small and large businesses and institutions in
selected geographies.

Activity in the financial services sector has been incredible
with the growth of online trading and recent actions in Congress
provoking investors to get involved in the banking issues. The
big news is the repeal of the Glass-Steagall Act, a depression
era law that prevents banks from underwriting stocks. This will
lead to slew of merger and acquisition activity. The Insurance
companies are expected to buy banks with their excess capital
and banks are going to buy brokerage firms. Where it will end,
nobody knows.

Mellon is seen as one of the premier institutions in the sector
and last year they turned down an extremely lucrative offer from
Bank of New York. It appears that the issue is ripe for more
speculation and the option interest suggests that traders are
willing to participate. We offer this position as an aggressive
opportunity to profit from the current bullish trend.

PLAY (aggressive - bullish/debit spread):

BUY  CALL DEC-37.50 MEL-LU OI=2660 A=$2.75
SELL CALL DEC-40.00 MEL-LH OI=5372 B=$1.18
INITIAL NET DEBIT TARGET=$1.38 ROI(max)=81% B/E=$38.88

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

Volatility Play

BCR - C.R. Bard  $56.25   *** An Old Favorite ***

C.R. Bard is a leading multinational developer, manufacturer and 
marketer of health care products. They design and distribute
medical, surgical, diagnostic and patient care devices. Major
hospitals, physicians and nursing homes purchase most of the
company's products, which are generally used once and discarded.

Our old friend is back and open interest in the November options
is extreme even by speculative standards. No news on the recent
merger rumors and the stock has settled into a relatively small
range near $55. We like the probability of profit in this play
and the one-week position is based on a large premium disparity
in front-month option prices.

PLAY (aggressive - neutral/calendar spread):

BUY  CALL DEC-60 BCR-LL OI=289  A=$3.38
SELL CALL NOV-60 BCR-KL OI=4336 B=$1.12

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


The effects of the broad market rally are finally staring to show 
in the straddles portfolio as some of the older issues are making
topside break-outs. Federal Express (FDX) was a mover this week,
climbing to a recent high on the hype of United Parcel Service's
(UPS) public offering. The credit for the April ($35) straddle
reached $13.50 during Friday's trading. Another transport issue, 
Continental Airlines (CAL) is now at the break-even point on the
bullish side of the straddle. The March-$35 call option will pay
for the entire position if the underlying can move $1.50-$2.00
higher in the next few weeks. One of the oldest straddles in the
portfolio is making a strong comeback from recent lows. Donaldson,
Lufkin and Jenrette (DLJ) climbed another $5.00 with the bullish 
brokerage stocks and it appears this will be our first play to
profit on both sides of the straddle. That means it will have
traded above and below the break-even points for the position. 
Currently, the stock price is about $5 below the upside profit
range but the rally in financial issues should propel it higher
in the coming weeks.

Our recent group of Internet straddles has exceeded even the most
optimistic expectations and with the speculation winding down, it
is probably best to close those plays and move on to new issues.
If you decided to exit the Ebay (EBAY) straddle on an individual
position basis (selling the put during the successful test of
recent support near $128), then you may consider closing the call
option if the stock fails at the current resistance area (25 dma)
of $137. Overall, these three plays (AOL, EBAY and GNET) produced
a net gain of approximately $13 in less than one month. All other
positions in the Optionetics group including Exxon (XON), General
Motors (XON) and Union Carbide (UK) should be now be closed.

Today we have another new play; a candidate from Tom Gentile of
Optionetics. The position is based on Tom's formula for favorable
straddles; Consolidating markets, inexpensive options and upcoming
news or events.

These three criteria will help increase profits, while limiting
risk on straddle positions. As with all candidates, review each
play carefully and make your own decision about the future of the 
underlying issue.

Tom was very generous to provide another of his great straddle 
candidates this weekend and he mentioned that seats are almost
gone for the remaining OptionInvestor/Optionetics seminars. If
you would like to learn more about delta-neutral trading, as
well as many other option strategies, then join him in the last
class of 1999.

Find out more at:


LCOS - Lycos  $58.94     *** Ready To Go! ***

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

Lots of news and announcements on this issue and earnings are
due next week. All of the straddle criteria are favorable and
Tom suggests that buyers should place "tight" limit orders on
this position as there are not many market-makers that trade
in these options. The result is the "bid/ask" spreads are wide.

PLAY (conservative - neutral/debit straddle):

BUY  CALL JAN-70 QWW-AL OI=3529 A=$7.00
BUY  PUT  JAN-70 QWW-ML OI=319  A=$7.75

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


Contrary Opinion Indicators...

The most common methods of technical analysis use quantitative
measures that characterize price movement to determine the
future outlook for a particular instrument. Even the popular
charting indices (advance/decline lines, overbought/oversold etc.)
are based on historical statistics. There is however, another
class of indicators that doesn't rely on the mathematical
analysis of specific trends or changes in volume and accumulation
patterns to produce trading signals. The theory behind these
measures is called the Contrary Opinion (generally referred to as

Contrarian indicators are subjective and they don't rely on any 
specific signals, as opposed to most chart reading methods that
measure quantity and quality. The underlying theory is that human
nature and the herd mentality affects all investors (and most
analysts) because people feel comfortable when they have common
beliefs and opinions. Humans tend to coalesce around popular ideas
even when there is no substantial evidence to support the base
theory. They ignore evidence that would lead to other conclusions.
This type of behavior in the market is exhibited in the excessive
optimism that investors display just before a significant
correction occurs. It is also seen in the negative outlook that
becomes widespread as the bottom of a bear market becomes evident.
Many professional traders who can identify the opinions of the
majority or signals of a consensus will use this knowledge and
position their portfolio with the opposite outlook.

The most common Contrarian indicators are the equity put/call
ratios and the bullish/bearish sentiment indices compiled by
market research services such as Investors Intelligence. The
(equity-only) put-call ratio is computed daily by dividing the
put volume of all stock options by the call volume of all stock
options. This is an excellent contrary sentiment indicator; when
too many people are buying calls, it indicates a sell signal for
the broad market. The P/C ratio did a fine job of foreshadowing
the most recent rally when it moved to its most pessimistic level
in a year. Investors Intelligence was one of the first services
to exploit the fact that when too many people are bullish on the
market, it usually pays to be more defensive. The company started
back in the 50's, and they are best known for the Market Sentiment
Index. This indicator reflects how many investment newsletters are
bullish or bearish on the market.

There are some good examples of how a prevailing theme, played
through the media, can become thoroughly accepted among mainstream
investors. In August 1987, the sentiment index indicated there
were over 60% Bulls compared to 19% Bears. The psychological
climate was extremely positive even though a major top was forming.
One of the popular headlines said "Dow 3,000: Not If, But When."
The Dow would soon drop over 20% in a single day. In December 1994,
with the Dow at 3700, there were two weeks in a row with the Bears
indicator above 59%, the highest reading in 12 years. Since so
many of the other long-term indicators were also turning positive
at the time, this was a great opportunity to disregard the fear
syndrome gripping Wall Street and start buying. That single move
carried the Dow thousands of points higher in the years to follow.

Contrary opinion indicators are valuable tools when used properly
but one thing to be aware of is that any technique you subscribe
to should always be used to confirm other buy or sell signals from
different types of analysis. When these indicators provide well-
defined signals that agree with your other gauges, be sure to take
the appropriate action.

Good Luck!


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

CYOE    5.56   6.81   NOV   5.00  1.06  *$  0.50  11.1%  16.1%
SATH   11.06  10.75   NOV  10.00  2.31  *$  1.25  14.3%  12.4%
LIPO    7.56  11.06   NOV   7.50  0.75  *$  0.69  10.1%  11.0%
FLAS    9.63   7.75   NOV   7.50  2.63  *$  0.50   7.1%  10.3%
MRVT   11.38  10.25   NOV  10.00  2.13  *$  0.75   8.1%   8.8%
ITIG    8.06  15.13   NOV   7.50  1.25  *$  0.69  10.1%   8.8%
LTXX   15.19  18.88   NOV  15.00  1.25  *$  1.06   7.6%   8.3%
ZIXI   33.00  39.25   NOV  25.00  9.88  *$  1.88   8.1%   7.1%
COOL    8.53  10.88   NOV   7.50  1.88  *$  0.85  12.8%   6.9%
PILL   13.88  12.13   NOV  12.50  2.75   $  1.00   9.0%   6.5%
CNCX   26.50  33.69   NOV  22.50  5.25  *$  1.25   5.9%   6.4%
SFSK    8.44   9.81   NOV   7.50  1.25  *$  0.31   4.3%   6.2%
RRRR   11.44  21.00   NOV  10.00  2.25  *$  0.81   8.8%   5.5%
PILT   12.69  18.44   NOV  10.00  3.38  *$  0.69   7.4%   5.4%
NPIX   23.25  37.44   NOV  17.50  6.75  *$  1.00   6.1%   5.3%
COOL    9.06  10.88   NOV   7.50  2.06  *$  0.50   7.1%   5.2%
BNYN    8.72  12.63   NOV   7.50  1.63  *$  0.41   5.8%   5.0%
ASMI    8.50  13.88   NOV   7.50  1.56  *$  0.56   8.1%   5.0%
ELON    8.91  10.25   NOV   7.50  1.88  *$  0.47   6.7%   4.8%
PAIR   13.44  14.81   NOV  12.50  1.81  *$  0.87   7.5%   4.6%
ABTL   15.13  15.00   NOV  12.50  3.13  *$  0.50   4.2%   4.5%
DRYR   17.13  17.00   NOV  15.00  3.13  *$  1.00   7.1%   4.4%
EGGS    9.38  10.94   NOV   7.50  2.31  *$  0.43   6.1%   4.4%
NPIX   23.00  37.44   NOV  17.50  6.50  *$  1.00   6.1%   4.4%
GBLX   35.38  38.50   NOV  30.00  6.75  *$  1.37   4.8%   4.2%
NVDA   22.63  32.00   NOV  20.00  4.62  *$  1.99  11.0%   4.0%
NPNT   22.13  37.63   NOV  17.50  5.25  *$  0.62   3.7%   4.0%
IRF    17.44  22.50   NOV  15.00  3.00  *$  0.56   3.9%   3.4%
MAPX    9.06   7.38   NOV   7.50  2.06   $  0.38   5.4%   3.4%
BNBN   20.00  17.69   NOV  17.50  3.38  *$  0.88   5.3%   3.3%
PRGY   21.75  22.75   NOV  17.50  4.88  *$  0.63   3.7%   3.2%
LCBM*  14.06  12.06   NOV  12.50  2.50   $  0.50   4.3%   2.7%
NEM    23.25  21.94   NOV  22.50  2.25   $  0.94   4.5%   2.4%
CS     16.69  21.75   NOV  15.00  2.38  *$  0.69   4.8%   2.1%
PILL   14.88  12.13   NOV  12.50  2.88   $  0.13   1.1%   1.2%
LCBM*  14.88  12.06   NOV  12.50  3.00   $  0.18   1.5%   1.1%
EGHT    5.00   4.00   NOV   5.00  0.88   $ -0.12  -2.9%   0.0%

ITIG   10.00  15.13   DEC  10.00  1.25  *$  1.25  14.3%   8.9%
BTOB   18.38  19.94   DEC  15.00  4.63  *$  1.25   9.1%   6.6%
CYCH    8.38   9.56   DEC   7.50  1.44  *$  0.56   8.1%   5.8%
RRRR   14.75  21.00   DEC  12.50  3.25  *$  1.00   8.7%   5.4%
WAVX   13.19  14.25   DEC  10.00  3.88  *$  0.69   7.4%   5.4%
DRIV   22.75  33.25   DEC  20.00  4.25  *$  1.50   8.1%   5.0%
DIGE   14.44  17.88   DEC  12.50  2.75  *$  0.81   6.9%   5.0%
PILT   15.94  18.44   DEC  12.50  4.25  *$  0.81   6.9%   5.0%
PRGY   25.38  22.75   DEC  22.50  4.50  *$  1.62   7.8%   4.8%
LTXX   16.00  18.88   DEC  15.00  2.06  *$  1.06   7.6%   4.7%
TOPP    9.81  11.00   DEC   7.50  2.75  *$  0.44   6.2%   3.9%
DGII   13.56  14.63   DEC  12.50  1.69  *$  0.63   5.3%   3.8%
JDAS   11.63  16.38   DEC  10.00  2.13  *$  0.50   5.3%   3.8%

Ticker* = Position closed early for profit.
*$      = Stock price is above the sold strike price.

Comments/Observations on Open Positions:

Nam Tai Electronics (NTAM) was unplayable Monday morning after 
reporting earnings and opening down $2.69 from Friday's close. 
The Lifecore Biomedical (LCBM) positions could have been exited
for small profits as listed above. The Gold rebound is helping
Newmont Mining Corp (NEM). Proxymed (PILL) and Mirvant Medical
(MRVT) look bearish and continue to weaken. Evaluate the "cost"
of keeping your money in these issues (and rolling forward) or
moving on. Flashnet (FLAS) should hold current levels as it is
being purchased by Prodigy (PRGY). Mapics (MAPX) and 8x8 (EGHT)
have tested support and may be exited on any rally or closed
(quickly) if they move lower.

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

FSII   10.44  DEC 10.00  FQH LB  1.81  1195   8.63  15.9%  15.9%
ABTE   10.75  DEC 10.00  QZB LB  1.63  2355   9.12   9.6%   9.6%
ALGO   15.25  DEC 12.50  GQL LV  3.75  80    11.50   8.7%   8.7%
WSTL    8.00  DEC  7.50  QLW LU  1.06  107    6.94   8.1%   8.1%
AND     8.38  DEC  7.50  AND LU  1.38  312    7.00   7.1%   7.1%
CRUS   13.94  DEC 12.50  CUQ LV  2.19  987   11.75   6.4%   6.4%
PILT   18.50  DEC 15.00  PTU LC  4.38  263   14.12   6.2%   6.2%

Company Descriptions

ABTE - Able Telecom Holding  $10.75  *** Fiber Optics ***

Able Telecom is a leading turnkey network and systems integration
provider to the communications and transportation industries in 
the U.S. and South America. Able's unique one-stop service 
capabilities include development, design, engineering, project 
management, installation, construction, operation and ongoing 
maintenance services both for telecommunications/communication 
systems and for intelligent transportation and automated toll 
collection systems. Able is acquiring new businesses and landing
new projects while its revenues increase. The chart suggests
ABTE is ready to move out of a long term ascending triangle.

DEC 10.00 QZB LB Bid=1.63 OI=2355 CB=9.12 RC=9.6% RNC=9.6%

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


ALGO - Algos Pharmaceutical  $15.25  *** Speculative ***

Algos Pharmaceutical is a leader in developing proprietary pain 
management products. The Company's products combine existing 
analgesics and anesthetics with NMDA-receptor antagonist drugs.
In August, Algos dropped $14 when it received a "not approvable"
letter from the FDA for MorphiDex®, an NMDA enhanced opioid 
analgesic. There is no recent news to explain the rise in price
but the message boards are getting active. This is a very 
speculative play as buyers await news on the FDA application
and/or a buyout. The issue does have strong support at $10.
Comprehensive due-diligence required.

DEC 12.50 GQL LV Bid=3.75 OI=80 CB=11.50 RC=8.7% RNC=8.7%

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


AND - Andrea Electronics  $8.38  *** Stage I ****

Andrea designs, develops and manufactures audio technologies and 
equipment for enhancing systems that require high performance
and high quality voice input. Applications for the company's 
technologies include: speech recognition programs, Internet 
telephony, video/audio conferencing, automobile PCs, home 
automation systems, hand-held devices and multiplayer online 
games, among others. Andrea is working hard to overcome its 
declining revenue as it forms alliances and expands R&D. A new
management team appears to please investors as the stock 
continues its up-trend from August lows. We favor the support
at the cost-basis and the strong accumulation since September.

DEC 7.50 AND LU Bid=1.38 OI=312 CB=7.00 RC=7.1% RNC=7.1%

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


CRUS - Cirrus Logic  $13.94  *** Strong Sector ***

Cirrus Logic is a premier supplier of high-performance analog 
circuits and advanced mixed-signal chip solutions. The company's 
products, sold under its own name and the Crystal product brand, 
enable system-level applications in mass storage, audio and 
precision data conversion. With last quarter showing a sequential
increase in revenue, Robertson Stephens upgraded Cirrus to a "Buy"
and set a year-end target of $15. The spike in price on Wednesday
occurred after Forward Concepts confirmed that Cirrus is the 
world's largest supplier of CD-RW encoder/decoder chips with more
than 35% of the market. The question is where to enter the over-
extended yet strong issue? We favor the cost basis at the
September high, which now provides support. 

DEC 12.50 CUQ LV Bid=2.19 OI=987 CB=11.75 RC=6.4% RNC=6.4%

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


FSII - FSI International  $10.44  *** Stage I ***

FSI is a leading global supplier of processing equipment used at 
key production steps to manufacture microelectronics, including 
semiconductor devices and thin film heads. The Company develops, 
manufactures, markets and supports products used in the technology
areas of microlithography and surface conditioning. FSI customers
include microelectronics manufacturers located throughout North 
America, Europe, Japan and the Asia-Pacific region. Lower sales
last quarter impacted the price in mid October. The recent run-up
in price appears related to FSI's investment in Metron Technology,
a new IPO. We favor FSI as it exits a long-term Stage I base with
improving technical strength and signs of strong accumulation.

DEC 10.00 FQH LB Bid=1.81 OI=1195 CB=8.63 RC=15.9% RNC=15.9%

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


PILT - Pilot Network Services  $18.50  *** Break-Out! ***

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. Pilot recently announced earnings with revenues up 89%
and reached an agreement with Greyrock Capital for $8 million in 
financing. Aspect Communications is subscribing to the security 
infrastructure provided by Pilot Networks. The break-out after a 
successful retest of support bodes well for a new up-trend.

DEC 15.00 PTU LC Bid=4.38 OI=263 CB=14.12 RC=6.2% RNC=6.2%

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


WSTL - Westell Technologies  $8.00  *** Telecom - DSL ***

Westell is a holding company for Westell and Conference Plus. 
Westell manufactures and licenses DSL systems and value added 
Customer Premise Equipment, and manufactures telecommunications
access products. Conference Plus is a multi-point telecom service
bureau specializing in audio teleconferencing, multi-point video
conferencing, broadcast fax, and IP multimedia conferencing
services. Westell quickly rebounded after reporting earnings
(a loss) that showed a sharp increase in DSL related revenue. 
There is no news on Friday's spike but the technicals have been
improving steadily since October. Though this issue could 
blast-off, we favor the cost basis within support (providing a
reasonable return), given Westell's recent history.

DEC 7.50 QLW LU Bid=1.06 OI=107 CB=6.94 RC=8.1% RNC=8.1%

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


Market Cycles: The Technology Sector...

Understanding how historically repetitive rhythms affect the
market is a mandatory requirement for successful trading. The
most common trends or cycles can be recorded, tracked, and
interpreted because the market itself prolongs their movements.
With technology issues, there is a well-defined seasonal pattern
of outstanding performance in the current period that can provide
important timing signals to support upcoming investment decisions.

For most investors, the worst period of the year is in the fall
quarter near the dreaded month of October. Even with a broad
market rally, the final months of the year can be a period of
feast or famine for many large-cap stocks. After the September
quarter is reported, the expectation is generally over for the
current year. A few industry leaders continue to revel in their
recent successes while the remaining under-performers fall further
into the anonymity. Analysts turn their attention to the upcoming
year and only those companies that can prove their market share
will increase (and earnings will grow), are offered upgrades and
favorable estimates for the future.

Historically, this is perhaps the best time to look for bargains
in the technology industry as these types of stocks tend to be
very volatile from Labor Day through mid-October and can offer
excellent buying opportunities. All year long, analysts worry
about earnings for the current year but in September, concerns
over impending third quarter numbers reach a plateau as companies
reveal the shortcomings of summer sales and pre-announce the slim
prospects of a favorable report. Rumors circulate about upcoming
orders and contracts while accountants attempt to determine if
revenues will be delayed until the December quarter. To complicate
matters, most mutual funds recognize capital gains and losses by
the end of October and in the weeks prior, they frantically rotate
their positions to improve portfolio performance. As fund managers
compete for stocks that will make their annual returns favorable,
equity prices among the market leaders inflate to new highs and
the rally begins. This combination of institutional churning and
the intense focus on earnings tends to propel the top-of-the-line
stocks higher and the excess money simply waterfalls into smaller
technology issues with recognized growth potential. The end result
is that gains in lower priced hi-tech stocks begin to accelerate
into the (January effect) New Year and their large-cap brethren
are pulled along in the slip-stream.

With the Nasdaq Composite setting records on a daily basis and the
Russell 2000 reaching for new highs, the outlook appears almost
too good to be true. In most cases, it usually is..

Good Luck!

                      *** WARNING!!! ***
Occasionally a company will experience catastrophic news causing
a severe drop in the stock price. This may cause a devastatingly
large loss which may wipe out all of your smaller gains. There is
one very important rule; Don't sell naked puts on stocks that you
don't want to own! It is also important that you consider using
trading STOPS on naked option positions to help limit losses when
the stock price drops. Many professional traders suggest closing
the position when the stock price falls below the sold strike or
using a buy-to-close STOP at a price that is no more than twice
the original premium from the sold option.


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

NPLS   15.56  17.56   NOV  12.50  0.31  *$  0.31   8.9%  19.4%
NVX     7.94   5.69   NOV   5.00  0.56  *$  0.56  26.0%  16.2%
ICIX   28.75  28.63   NOV  22.50  0.44  *$  0.44   7.1%  15.4%
DUSA   14.94  16.06   NOV  12.50  0.50  *$  0.50  12.4%  13.4%
HELX   40.31  46.19   NOV  35.00  1.00  *$  1.00   8.5%  12.3%
DRIV   22.75  33.25   NOV  20.00  0.56  *$  0.56   8.1%  11.7%
SUPG   26.56  27.38   NOV  22.50  0.75  *$  0.75  10.3%  11.1%
ENMD   24.75  22.25   NOV  20.00  0.75  *$  0.75  12.7%  11.0%
NPIX   23.00  37.44   NOV  15.00  0.81  *$  0.81  15.0%  10.8%
PRGY   21.63  22.75   NOV  17.50  0.50  *$  0.50  10.0%  10.8%
NSPK   12.44  15.44   NOV  10.00  0.44  *$  0.44  14.8%  10.7%
CPTH   61.38  66.03   NOV  45.00  0.63  *$  0.63   4.9%  10.6%
TALK   14.94  17.06   NOV  12.50  0.38  *$  0.38   9.7%  10.5%
USIX   35.00  59.00   NOV  25.00  0.75  *$  0.75   9.7%  10.5%
TFSM   49.75  53.00   NOV  40.00  0.50  *$  0.50   4.7%  10.2%
DUSA   14.38  16.06   NOV  10.00  0.44  *$  0.44  13.3%   9.6%
NPIX   23.25  37.44   NOV  15.00  0.56  *$  0.56  10.7%   9.3%
LTXX   15.56  18.88   NOV  12.50  0.38  *$  0.38  10.7%   9.3%
SUPG   24.38  27.38   NOV  20.00  0.63  *$  0.63  10.5%   9.1%
IRF    19.63  22.50   NOV  17.50  0.38  *$  0.38   6.2%   9.0%
KIDE   40.44  76.94   NOV  25.00  1.13  *$  1.13  12.3%   8.9%
NEWZ    9.47  11.13   NOV   7.50  0.31  *$  0.31  14.1%   8.7%
SPGLA  12.00  12.44   NOV  10.00  0.38  *$  0.38  11.9%   8.7%
VERT   39.75  93.00   NOV  30.00  1.25  *$  1.25  13.6%   8.4%
BNYN    9.91  12.63   NOV   7.50  0.31  *$  0.31  13.5%   8.4%
CNCX   26.50  33.69   NOV  20.00  0.44  *$  0.44   7.7%   8.3%
RMDY   43.00  36.31   NOV  35.00  0.50  *$  0.50   5.2%   7.5%
RMBS   89.38  88.00   NOV  65.00  0.63  *$  0.63   3.4%   7.4%
RMDY   29.00  36.31   NOV  22.50  0.50  *$  0.50   7.9%   6.9%
SUPG   22.50  27.38   NOV  17.50  0.56  *$  0.56  11.1%   6.9%
TALK   12.63  17.06   NOV  10.00  0.31  *$  0.31  10.9%   6.8%
NPIX   23.88  37.44   NOV  15.00  0.31  *$  0.31   6.1%   6.6%
ZOMX   34.63  33.44   NOV  25.00  0.69  *$  0.69   9.1%   6.6%
EXTR   80.31  88.00   NOV  60.00  0.75  *$  0.75   4.5%   6.5%
ZIXI   33.00  39.25   NOV  20.00  0.50  *$  0.50   7.0%   6.1%
LGE    22.44  21.38   NOV  20.00  0.56  *$  0.56   7.9%   5.7%
TUTS   34.69  39.00   NOV  25.00  0.38  *$  0.38   5.2%   5.6%
NPIX   19.13  37.44   NOV  12.50  0.38  *$  0.38   9.0%   5.6%
HRBC   17.00  19.88   NOV  12.50  0.31  *$  0.31   8.4%   5.2%
CPTH   44.19  66.03   NOV  30.00  0.56  *$  0.56   6.0%   5.2%

FLAS   10.06   7.75   DEC   7.50  0.75  *$  0.75  27.2%  19.7%
STRX    7.63   7.50   DEC   5.00  0.44  *$  0.44  22.3%  13.9%
COOL    9.56  10.88   DEC   7.50  0.31  *$  0.31  14.0%  10.1%
MLTX   16.19  18.94   DEC  12.50  0.50  *$  0.50  13.4%   8.3%
IONA   21.38  32.88   DEC  15.00  0.56  *$  0.56  11.6%   7.2%
TUTS   39.69  39.00   DEC  30.00  0.81  *$  0.81   9.3%   6.7%
LTXX   18.56  18.88   DEC  15.00  0.31  *$  0.31   7.4%   5.4%

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

Comments/Observations on Open Positions:

Can North American Vaccine (NVX) last five more trading days?
The buyout proposal on Monday should help. Remedy (RMDY) is 
consolidating (nearing the $35 strike) and should be monitored

Positions Closed: Ardent Software (ARDT); 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

DBCC   14.38  DEC 10.00  BQD XB  0.63  331    9.37  18.0%
NSPK   15.50  DEC 12.50  NNQ XV  0.50  105   12.00  13.5%
BNYN   12.75  DEC 10.00  QYN XB  0.38  5      9.62  13.0%
MSGI   16.94  DEC 12.50  UMS XV  0.50  0     12.00  12.9%
NVDA   32.00  DEC 22.50  UVA XX  0.75  234   21.75  10.5%
XCED   31.63  DEC 22.50  XCU XX  0.63  125   21.87   9.1%
MTSN   15.56  DEC 12.50  QQM XV  0.31  20    12.19   8.9%
NPIX   37.44  DEC 20.00  XMQ XD  0.50  173   19.50   6.3%

Company Descriptions

BNYN - Banyan Systems  $12.75   *** A New IPO ***

Banyan Systems designs, develops and markets standards-based
networking directory and messaging products that help people
communicate across enterprise networks and the Internet. They
are a pioneer in the computer networking field, and offer a
range of software products, professional services and several
intra-net solutions. Switchboard, their wholly owned Internet
based network filed to raise $60 million in a public offering.
Switchboard.com allows users to search for information about
people and businesses around the United States.

DEC  10.00  QYN XB  Bid=0.38  OI=5   CB=9.62  ROI=13.0%

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


DBCC - Data Broadcasting  $14.38   *** Own This One! ***

Data Broadcasting distributes financial data and business
information on a subscription basis to a range of individual
and professional investors and businesses. They provide data
through DBC West/BMI and Capital Management Sciences and DBC
West/BMI sells access to its networks which provide real-time
news and financial information. A favorable cost-basis for an
issue with solid technicals and excellent upside potential.

DEC  10.00  BQD XB  Bid=0.63  OI=331  CB=9.37  ROI=18.0%

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


MSGI - Marketing Services Group  $16.94   *** Take-Over? ***

Marketing Services Group provides database management, custom
telemarketing/telefundraising and direct marketing services to
a diverse group of clients. These services include customer and
market data analysis, database creation, data warehousing, and
predictive behavioral modeling. They also offer list processing,
brokerage and management, data enhancement, and numerous direct
marketing information services. A recent takeover rumor and new
insider buying are moving the issue higher. A new speculation
play with technical support near the cost-basis.

DEC  12.50  UMS XV  Bid=0.50  OI=0   CB=12.00  ROI=12.9%

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


MTSN - Mattson Technology  $15.56   *** Still A Hot Sector ***

Mattson Technology designs, manufactures and markets advanced 
fabrication equipment for sale to the worldwide semiconductor
industry. Their goal is to provide advanced process capability
combined with a high productivity platform to gain a substantial
improvement in productivity over competitive equipment, and to
support this equipment with world class service. The tape tells
the story as this one appears ready to move to new trading range.

DEC  12.50  QQM XV  Bid=0.31  OI=20  CB=12.19  ROI=8.9%

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


NPIX - Network Peripherals  $37.44   *** Up, Up and Away! ***

Network Peripherals designs, develops, manufactures, markets
and supports client/server LAN solutions with leading edge
networking technologies. Its integrated solutions incorporate
high performance network adapters, network operating system
software drivers, concentrators, client/server switching hubs
and network management software. The earnings are out and the
forecast looks great as new contracts will likely contribute
$8-$10 million in revenue in FY 2000. They also plan to start
shipments into the distribution channel, as demand increases
for their stackable Gigabit Ethernet switches.

DEC  20.00  XMQ XD  Bid=0.50  OI=173  CB=19.50  ROI=6.3%

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


NSPK - Netspeak  $15.50   *** Another Break-Out! ***

NetSpeak develops, markets, licenses, and supports a suite of
intelligent software modules which enable real-time, concurrent
interactive voice, video and data transmission over packetized
data networks such as the Internet and local-area and wide-area
networks. In addition to marketing its technology, products and
systems with its strategic partners, NSPK has begun to sell its
products directly to end-users. Recent upside earnings surprise
and a solid technical history.

DEC  12.50  NNQ XV  Bid=0.50  OI=105  CB=12.00  ROI=13.5%

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


NVDA - Nvidia  $32.00   *** Earnings Speculation ***

Nvidia designs, develops and markets 3D graphics processors and
related software that provide high performance interactive 3D
graphics to the mainstream PC market. The company's 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 a simpler,
lower cost graphics solution relative to competing solutions.
Earnings are due and a "short squeeze" has propelled the stock
to recent highs. For aggressive traders only.

DEC  22.50  UVA XX  Bid=0.75  OI=234  CB=21.75  ROI=10.5%

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


XCED - Xceed  $31.63   ***  Own This One! ***

Xceed is an integrated marketing and communications company with
interactive services at its core. Xceed helps companies develop
e-commerce/e-business solutions, improving business performance
through communication tools, techniques, and technologies. A new
project involves the development of a broadband website to allow
users to watch movies as well as participate in a virtual studio
environment. Also recently acquired Catalyst Consulting, a Change
Management Consulting firm along with a new integration developer,
Distributed Systems Solutions. 

DEC  22.50  XCU XX  Bid=0.63  OI=125  CB=21.87  ROI=9.1%

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



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