Option Investor
Newsletter

Daily Newsletter, Tuesday, 11/23/1999

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The Option Investor Newsletter         Tuesday 11-23-99  
Copyright 1999, All rights reserved. 
Redistribution in any form strictly prohibited.

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

Published three times weekly, Sunday, Tuesday, Thursday evenings.
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
        11-23-99           High     Low    Volume Advances Decline
DOW    10995.60 -  93.90 11101.80 10976.40   926,190k   901  2,187
Nasdaq  3342.87 -  49.69  3411.23  3320.67 1,430,649k 1,513  2,559
S&P-100  746.95 -   7.40   756.33   745.76    Totals  2,414  4,746
S&P-500 1404.64 -  16.30  1424.10  1402.20            33.7%  66.3%
$RUT     454.45 -   6.32   461.69   454.17
$TRAN   2980.29 +  25.39  3003.15  2939.89
VIX       21.17 +   0.89    22.18    20.51
Put/Call Ratio       .47
*************************************************************

Gobble, gobble, gobble, chop!

The Nasdaq turkey, which had grown fat in a feeding frenzy for 
the last three weeks, paid a visit to the chopping block today 
in preparation for the Thanksgiving holiday. Trades started
taking profits in earnest today as they moved to the sidelines
to rest for the next rally. Many market leaders ran for cover
at the open as a large sell program attempted to take advantage
of the normal pre-Thanksgiving rally. For the last 47 years the
markets have been up on the Tuesday/Wednesday before Thanksgiving
76% of the time. The profit taking today broke with tradition 
but nobody is concerned.

The Dow may have lost -94 points but it held 11000 for the 
fourth day in a row. The volume was moderate and the advance
decline line was severely negative at 21:9 but nobody was
worried. 


 


 


 

The Nasdaq took a major hit at the open as a large sell program
pushed the Nasdaq futures into limit down mode but the sell off
was only temporary. The buyers flooded in off the sidelines and
the quick drop was history. However the tone for the market was
set and the rest of the day was spent in strong rotation mode.
Previous leaders sagged on profit taking while stocks, which had
lagged recently, were seen as value plays and received lots of
attention. 

Today was a non-event in market terms after the NASDAQ's record
+600 point November gain. The -50 point drop today barely gave
back a single days gain from the recent rally. It was just 
normal profit taking and a buying opportunity for those on the
sidelines in cash.  As you can see by the charts above, the
drop today only put the Nasdaq on the bottom of the regression
channel and after the morning drop the Nasdaq had no trouble
holding 3340 the rest of the day. While today was a welcome
breather in the markets momentum, there is still a lot of 
profit left on the table and up for grabs.

Analysts have been expecting a -5% to -7% pull back in the Nasdaq
before the customary December rallies. The January effect this 
year appears to be growing in anticipated strength. In December
funds take advantage of the tax benefits of losing positions to
lessen the taxes on their winning positions. By selling the losers
in December they raise cash to reinvest in January. They are also
making plans for a huge influx of year end retirement contributions.
This lump sum buying in January normally causes a rally. The 
anticipation of this rally causes investors to take positions in
December before the funds begin buying. This causes stock prices 
to rise in December and has been given the name of the "January
Effect."

This impact has been occurring earlier each year as traders start
earlier to beat the rush. With Y2K quickly dropping from investor
consciousness as a real threat, the money that accumulated on the 
sidelines in anticipation of a sell off is going to be spent real
soon. The 5-7% sell off may never materialize simply because of
the billions in cash that have been stockpiled. 

Traders on the floor today claim there is no letup in the flow
of institutional orders. They claim there are huge orders sitting
just under the market hoping for a dip. Look at a chart and see
how quickly the dip was bought this morning, AND THIS WAS IN AN
EXTREMELY OVER BOUGHT MARKET! Traders also claim the orders are
slowly inching up in price as each firm tries to get a sixteenth
above everybody else. With cash flowing faster than Iraqi oil
the normal dip after Thanksgiving may only be in our imagination.

Has everybody forgotten that the bond yields currently at 6.19%
are slowly moving up? Did the -.60 drop in the price of oil today
convince economists that the oil bubble had burst? No, on both
counts. This market is driven by liquidity and nothing else. It
is going up because of the wealth effect caused by the market
going up. Huh? Because the market has been going up for the entire
time that most online investors have been investing, everyone
just assumes that it must continue to go up. Don't get alarmed.
I am not building a case for a crash. I am simply pointing out
that eventually there will be some profit taking and a return 
to reality. The Internet driven, new prosperity, is making 
millionaires out of all tech investors and pushing older 
companies onto the sidelines. Take U.S. Steel. Formerly a 
Dow stock, US Steel is now barely a midcap. The valuation 
models today are so much different than just five years ago. 
The only other time the Nasdaq had a similar run was in 1991 
when the biotech boom was hot. You remember biotechs? The 
Internet stocks of 1991? Just food for thought. I wonder what 
the next hot sector will be after the Internet starts making 
a profit and has to stand on a real valuation model? 

At the San Francisco Money Show I was talking to a couple 
investment bankers about some of the recent deals they had 
done. Someone made a comment that they were surprised that 
somebody like Thestreet.com did not make us an offer we could 
not refuse just so they could become profitable. (We are 
profitable, they are not) The banker quickly answered that 
TheStreet would not do that since they did not want to be 
profitable yet. Once profitable they would lose their vaunted 
negative valuation based on pie in the sky forecasts and would 
have to revert to real world economic models. It would be a 
serious shock to their stock price. I relate this only to prove 
a point. Less than 20% of all the current Internet companies 
will ever turn a profit. If 80% of the current speculative 
Internet bubble will turn to dust in the next 3-5 years then 
what happens to the bubble? I think we have about eighteen more
months on the outside before we need a new investment sector.
Until then, we are going to "go long till we are wrong", and 
that is what is powering this rally.

Wednesday is a toss up. Friday is historically an up day on
very light volume. The Personal Income/Spending Report on
Friday is the only economic report this week and should not
be a problem. There is still a possibility of some profit 
taking at any time but with the underlying support in the 
market I think -5% (-167 points) is wishful thinking.

Good Luck, Sell Too Soon.

Jim Brown
Editor




                



**********
STOCK NEWS
**********

There is no Stock News article tonight.



**************
Market Posture
**************

As of Market Close - Tuesday, November 23, 1999 

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

DOW Industrials   10,750  11,320  10,996    Neutral  11.12
SPX S&P 500        1,315   1,385   1,405    BULLISH  11.12
OEX S&P 100          675     725     747    BULLISH  11.12
RUT Russell 2000     425     445     454    BULLISH  11.12
NDX NASD 100       2,320   2,520   3,000    BULLISH  10.28
MSH High Tech      1,120   1,250   1,570    BULLISH  10.28

XCI Hardware       1,000   1,095   1,169    BULLISH  11.11
CWX Software         770     800   1,182    BULLISH   9.03
SOX Semiconductor    475     525     624    BULLISH  10.29
NWX Networking       550     615     774    BULLISH  10.28
INX Internet         495     525     644    BULLISH  11.05

BIX Banking          635     690     639    Neutral  10.28
XBD Brokerage        395     440     443    BULLISH  11.12
IUX Insurance        610     650     616    Neutral  11.09

RLX Retail           875     910     903    Neutral  11.23  *         
DRG Drug             375     390     392    BULLISH  11.04
HCX Healthcare       750     790     775    Neutral  11.09
XAL Airline          180     190     149    BEARISH   5.21
OIX Oil & Gas        285     315     299    Neutral  11.23  *


Posture Alert    
Tuesday finally brought out some profit taking, as the broad 
market sold off on decent volume. Leading sectors were limited to 
the Internet and Airline industries, while losers included 
Brokerage (-2.80%), Semiconductors (-2.36%), and Networking 
(-2.14%). With Tuesday's action, we have lowered both the Oil & 
Gas and Retail sectors, to Neutral from Bulllish.



***************
Market Sentiment 
***************

Tuesday, November 23, 1999

Turkeys, or Bears?

Rumor has it; the Nasdaq actually closed down Tuesday! Yes folks, 
the index that could do no wrong, finally grasped for a breath of 
fresh air. This profit taking is actually very positive, and was 
needed heading into the holiday weekend. Volume was strong Tuesday, 
but the selling pressure that we witnessed was very orderly, which 
may indicate that institutional money managers who wanted to 
lighten-up ahead of Thanksgiving may have now done so. Looking 
ahead, volume during the turkey days (Wednesday, and half-day 
Friday) has historically been light and brutally slow, however; 
they usually are positive days, so enjoy them if you can!

From a sentiment standpoint, we continue to see puts coming in on 
many stocks/sectors that would indicate further upside potential. 
One stock that has greater put open interest versus call open 
interest is the QQQ. For those of you who don't know, the QQQ 
represents the Nasdaq 100. This index represents the 100 largest 
Nasdaq issues (which are obviously technology dominated), and has 
had phenomenal returns for investors. Yet, put buyers seem to be 
trying to call a market top at this point on the QQQ. This may be 
premature, and may actually give support for the index and those 
respective stocks. Even though this index has made a major run, 
and from a contrarian viewpoint, we may see more upside in the 
Nasdaq 100, thanks to the rampant bearish speculation. 

The S&P 100 has made a good run over the last 3 weeks as well. One 
common factor that we witnessed during the entire run-up has been 
put buying in various stages. This negative sentiment has only 
helped support the index, and has fueled its rising nature. On 
Friday, the Pinnacle Index for the OEX (750-760) was 8.93, 
suggesting a very bullish attitude. However, the PI for this 
level has now dropped to 1.7, suggesting that the put buyers are 
coming in to play. This rush of negative sentiment may, once 
again, help fuel further upside action in this index. If this 
bearish sentiment continues and helps fuel a further rise in these 
respective indexes, we then may not be able to tell the difference 
between the bears and turkeys. Only time will tell. Have a good 
Thanksgiving!


BULLISH Signs: 

Cash Flow:
The amount of money being poured into this market continues to be 
staggering. 

Volume:
There is an old saying, that volume precedes price, and it 
couldn't be better exemplified that the last two weeks, where the 
Nasdaq has broken record after record.

Short Interest:
Short interest for the Nasdaq is at an all-time high, and increased 
over 5% from the preceding month. Short interest on the New York 
Stock Exchange rose 72,007,030 shares in the month ending Nov. 15 
to a total of 4,061,057,060 shares.


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.

Earnings: 
The results are in and the quarter ended up solid!

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


Mixed Signs:

Interest Rates:
The yield on the 30-yr Treasury is off the 52-wk high, but has 
moved off the key 6% benchmark.


BEARISH Signs: 

Volatility Index (21.17):
The VIX continues to prove that the high teens and low 20's are a 
good exit point for bullish positions. The low close of 18.13 was 
back on July 16, which was the top of the market at that time.

Investor Intelligence:  
The rapid change from bearish to bullish sentiment has been too 
great, and may indicate a near term top in the market.

Energy Prices:
With the rapid rise in crude oil, everything from manufacturing to 
transportation will be affected by higher costs. These higher cost 
will be felt more 1-2 quarters out, and could put pressure on 
profit margins.

OTM Call Analysis

As we move closer to the November expiration cycle, Pinnacle is 
tracking the level of call buying (OTM) between 720-810 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%

December Expiration Cycle
OEX OTM Call Analysis (Open Interest December 720-810)
Date                 Open Interest     Change %    Alert

Friday, November 19       36,165          -

The Power of Sentiment Analysis

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

 
OEX Pinnacle Index              Friday      Tues
Benchmark                       (11/19)    (11/23)

Overhead Resistance (750-760)    8.93        1.70

OEX Close                       749.30     746.95

Underlying Support (730-745)     1.03        1.51


What the Pinnacle Index is telling us:
Based on 11/23, overhead resistance has decreased significantly, 
which is very positive. Currently, however, we have a equal chance 
of rallying as we do selling off.


Put/Call Ratio                  Friday     Tues 
Strike/Contracts                (11/19)   (11/23)

CBOE Total P/C Ratio             .69       .68
CBOE Equity P/C Ratio            .33       .38
OEX P/C Ratio                   1.41      1.24


Peak Open Interest (OEX)
                     Friday           Tues 
Strike/Contracts     (11/19)          (11/23)

Puts                 680 / 5,980      680 / 6,451
Calls                780 / 4,889      750 / 5,885
Put/Call Ratio         1.22             1.10




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 19, 1999                       19.63 
November 23, 1999                       21.17


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 18, 1999                     52.1        29.9



Please view this in COURIER 10 font for alignment
*************************************************
CHANGES THIS WEEK

Daily Results

Index      Last    Mon    Tue   Week
Dow     10995.63  85.63 -93.89  -8.26
Nasdaq   3342.87  23.31 -49.69 -26.38
$OEX      746.95   5.05  -7.40  -2.35
$SPX     1404.64  -1.06 -16.30 -17.36
$RUT      454.45  -0.50  -6.32  -6.82
$TRAN    2980.29  -4.33  25.39  21.06
$VIX       21.17   0.65   0.89   1.54

Calls              Mon    Tue   Week

JDSU      238.31  14.19  10.31  24.50  "We must pay homage...
SDLI      167.50  22.88   0.50  23.38  New, takeover candidate
VRSN      187.00  14.69   2.25  16.94  New, split is coming
CMGI      137.56  18.38  -5.69  12.69  A possible earnings run?
BVSN      109.63  12.13   0.00  12.13  A testimony of strength
GMST      112.19   4.50   3.06   7.56  GMST offers solid gains
QLGC      119.00   4.00   3.50   7.50  New, it's back!!!
MACR       67.56   4.25   0.69   4.94  New, breakout ahead??
MSFT       89.63   3.81  -0.19   3.63  MSFT has determined buyers
SNE       180.00   3.94  -0.56   3.38  A great start to the week
ICGE      170.13  15.50 -12.31   3.19  Dropped, announces a split
NOK       141.00  -2.75   5.75   3.00  Can you say "gap open"?
YHOO      221.19   8.06  -5.63   2.44  Definite split candidate
VRTY       99.81   6.13  -5.44   0.69  VRTY has good intentions...
HLIT       72.56   2.19  -1.69   0.50  Provides tradable entry
EMC        87.97  -0.31  -0.56  -0.88  Looking for a breakout
NT         79.69  -0.38  -0.81  -1.19  Minimal profit-taking
GTW        77.44   0.75  -2.06  -1.56  Bargain buying opportunities
SUNW      127.13  -3.00   0.56  -2.44  A little "turkey picking"
LSI        61.13  -2.19  -3.13  -5.38  Dropped, taking a break
QCOM      360.25  -7.06   0.25  -6.81  Takes a bit of a breather
SFE       115.13  -1.50  -7.38  -8.88  Dropped, the party ends
CMVT      127.06  -6.44  -8.94 -15.38  Dropped, what happened?

Puts

KIDE       42.25  -7.75  -7.00 -14.75  Keeps running downhill
RFMD       63.50  -3.31  -4.19  -7.50  New, what is going on?
RMBS       75.00  -2.94  -4.19  -7.13  What a beautiful chart!
ALTR       54.88  -2.63  -2.13  -4.75  New, life was good but...
CI         81.16   1.25  -3.75  -2.50  Our put play kicks in
AMR        61.19   1.31   2.13   3.38  Dropped, AMR flies high



**************
WOMANS WORLD
**************

Losing Money On Vacation

Thank you for the overwhelming volume of support received, from 
both men and women. To be honest, there were a few mean emails, 
but only a few. (samplings of each, at end). To set the record 
straight, I am not macho, a women's lib-er, a feminists, or a 
sexist. I am just 100% woman. I believe  trading is non-gender, 
although the approach may be different. The market is the great 
equalizer. I am not speaking "for" anyone else. I am only 
expressing my views, which hopefully will help many. I will not 
tell you what to buy or sell. I am no expert. I may misspell a 
word or misquote a fairy tale. I will risk sharing both my 
mistakes and what/how I learned from them. I will discuss wining, 
losing and learning. I hope to help you think through your own 
plays. One can't grow unless we know our strengths and weaknesses. 
Many of you trade larger accounts than mine. The dollar amount 
is not important. The percentage gain or loss is. We are all 
learning.

To all the supportive men, Thank You, for understanding my tongue 
& cheek humor. To the others, well, don't take things so personally. 
Learn from the diversity. Newspapers have both a sports section 
and a women's section. Most people don't read both. There are fewer 
opportunities for women to connect in this field, than men. Our 
goals are the same. How we approach the discussion though, may be 
unique. Read the message, not the words. There's room for all of us. 
Now, the article.



Are you getting a feeling of Déjà vu? Boy, I'm getting dizzy and 
I'm doing things differently this time around. Nasdaq is feeling 
just a little too good to be true, (as of the close on Monday). 
I've been here before. I want to share with you how I got there, 
the mistakes I made from feeling indestructible and on Sunday, 
the lessons learned with the changes I've made to my trading 
style, to protect against a re-occurrence. Let me tell you a 
little story about overconfidence.

Last year, April 1998, I almost died. A freak medical emergency, 
landed me in the hospital. Not accepting my unusual situation, I 
found myself trading online from my hospital bed...as the patient 
this time. Looking back, that was REALLY stupid.  While there, 
I exited my plays, not knowing it would be a market peak, but 
by accident because too many doctors & nurses were interfering 
with my concentration (in my hospital bed). Once discharged, I 
re-entered my plays, not realizing it was on the dip, but knowing
in 3 months (July) I was to have surgery to correct the problem. 
So, naturally I rode it till early July, exiting again by accident, 
at the July highs, due to surgery.  Taking time off for recovery, 
I waited to re-enter until early October, unbelievably at the 
October lows, which I was not even aware of. To some, it could 
look like great market timing, but I promise you, it was nothing 
more than pure stupid luck! I was in graduate school (occasionally 
trading  during lectures, like Janar) and maintaining a full time 
professional job. I paid little attention to day to day market 
movements because I was juggling so many other things. All I knew 
was that my account was growing.

The luck continued. In October, I entered several AOL positions. 
Not 10, 20 or 30 contracts, just 1s, 2s, and 3s, here, there and 
yonder. (more on that another time) AOL started going up daily. 
Day traders pumped that baby constantly. Then a stock split run 
up, then entry into the S & P. A false sense of security developed, 
as it would with ANY naïve option trader who had not learned how 
to do their own homework. The January rally was next,...well, you 
get the point. Could nothing stop this rocket??? My account 
literally doubled from December to January. It was too easy and 
I began to get concerned, but where do you stop? When is enough, 
enough? I initially knew little about the Internets. My year had 
been spent studying science and technology commercialization.

Like an idiot not understanding pure luck, by February I had 
bought a really nice calculator, to calculate out my anticipated 
retirement. I decided to cut back on my day job to trade more in 
1999, just to see where it would take me. The luck continued 
daily with only little dippies here and there. Just little 
annoying dips. I held, they always came back. Luck? Didn't know. 
But do you notice that "luck" is a four lettered word. How 
prophetic. Hindsight, you know?

I saw there was a seminar coming up. I didn't like the timing, 
occurring in April with earnings, but I realized that I was 
starting to feel like a car speeding out of control. I was 
afraid that I could hit a wall. Although I recognized this, I 
had no idea what to do about it. I did not know how to handle 
the swings that were starting to occur in my account over night. 
They were wild, both up and down, as I held during the dips. By 
this time, I was more of a fundamentalist. I looked at the core 
competency of the companies I traded, along with their financials. 
I did not have a quote service, knew little more about technicals 
other than they looked like something fun to ski, had no exit plan 
and had a brokerage account that was not trader friendly. Not 
realizing what it felt like for my trades to REALLY go against me 
or come back up, I held on to everything and left on vacation for 
a conference. I knew I had a lot to learn. I left with about a 
million open positions. I mean, you're supposed to diversify, 
right?    Ho Ho Ho!!!

Without going into detail, suffice it to say that AOL lost 35 
points while I was there. When I returned home, I did not exit. 
It looked to be coming back.  (just a bigger dip?) Hanging in 
there lead me into the May/June slump and all my open positions 
had a massive melt down. I told you last time, eventually I lost 
75% of my account from its high, a slow bleed from holding too 
long, after doing so well. SPLAT !!!  I had hit the wall! (This 
was all before I found OIN)

These are the things I now know, I did wrong.
1.	Having a false sense, of not being at risk for big losses. 
   Doing too well for too long
2.	Believing I knew what I was doing, because I had winning plays, 
   in an up market
3.	Not researching my plays
4.	Having too many open positions at once, at too many strike 
   prices (the 1s, 2s, and 3s)
5.	Playing too many companies
6.	Not understanding the value of technical analysis and indicators
7.	Not understanding how to correlate the stock with the sector, 
   market, sentiment & vix
8.	Not having an exit plan
9.	Not buying at good entry points
10.Not knowing markets have historical yearly cycles, when the 
   odds are against you
11.Buying OTM calls when I didn't know why
12.Not following my cost basis, due to #3 & 4 above
13.Not understanding the expense, of not having real time quotes 
   for the full time trader
14.Not taking money off the table, instead playing with all my profits
15.Not having a trader friendly brokerage account
16.Entering shorter term trades and more contracts in a down market, 
   trying to recover my losses
17.Leaving town with many open vulnerable positions
18.Never having ever been taught, "Sell Too Soon"

Well, I'm sure there are more. It was a very expensive lesson. 
One I will not have to learn twice. Thankfully, I am approaching 
full recovery. At times like today, with recent highs, getting 
nervous again, I make sure my account is prepared for the worse. 
Expecting a pull back this week or next, I bought OEX puts last 
Thursday & evaluated all open positions. I am going on vacation, 
but this time I feel at peace. Sunday, I'll share with you what 
changes I've made.

Renee
renee@OptionInvestor.com

***********
Some Email:  Pros & Cons
***********

Just what we need is another Feminist telling us all how bad 
men are, how stupid they are, and how the world just can't go 
on with men around. I hope you find yourself real happy sitting 
on your pile of money, reading your copy of Ms magazine......alone.
Your attitude about men and women is probably a great method of 
birth control. No one wants to be near you. I hope your "woman 
intuition" brings you happiness. That's about all you'll have 
left with that attitude. Your missing the whole point of life 
here. We were placed on this earth to get along with each other. 
How much money you make means nothing on your death bed. Remember 
this....we all leave this earth with the same thing. Only our 
soul. How many toys you leave behind doesn't do you any good at 
all. Think about it.....   Steve 
Steve- You obviously know very little about me. Interesting that 
you feel we were placed here to get along with each other, yet 
it appears you have perfected taking criticism to a higher level. 
Regardless, you are entitled to your opinion. Sorry it made you 
so angry. I can't please everyone.

Damn the torpedoes, full steam ahead! Go get 'em ma'am. 
Good luck. Former Sgt  USMC
Sarge - I really appreciate your support & humor. I left 
your name off to protect YOU. 

-My wife and I just started trading this year...we had great 
instructors and get excellent advice and I enjoyed your positive, 
yet humble opening message. We are looking forward to "your" 
viewpoint! Terry and Linnea 
-Hi Renee, I enjoyed your options article.  You are obviously 
smart and you write well with insight, attitude, and informed 
opinion.  I look forward to hearing a lot more from you! I also 
love diversity so having another perspective such as yours is 
very appealing. Ted 
Renee.I have made more money listening to smart women than with 
the "advice" of smart men. The reason is simple...the answer is 
"balance"...both male & female viewpoints are valid, but if a 
particular piece of logic fits into my Trading comfort zone, then
I use it. Male or Female...who cares as long as it feels right...and 
stimulates my mind!! I am looking forward to your cut on trading 
and if it fits into my style ,then that is great! If it doesn't 
work for me, but has insight, then I still win because it will 
help my mental process to stay "crisp" .Best Wishes and thanks 
for putting your two cents into the mix!.....Roger
Terry, Linnea, Ted & Roger - Thank you for your encouragement, 
open minded attitude, and understanding my point. I've learned 
from men all my life, so I know there's room for both. 

Hi, I have no problem with a "macho" woman, it's your perogative. 
But if this site is to become a platform for womans rights then 
I will forgo renewing my subsription. By the way it's lose not 
loose! Stan
Stan, Stan, Stan. Have you ever heard the saying about people 
who live in glass houses? I think you misspelled both "prerogative" 
and "subscription".  You must have had your mind on other things. 

Hi Renee, Looking forward to your articles. Can't wait to see 
your map on landmines. I too am assertive, independent, good 
with numbers, money, AND I can proudly say I am a risk taker 
-- to the point that my husband totally freaks out sometimes 
(although he's really quite supportive). I've got a lot of 
learning to do though...  So -- I'll be listening intently for 
any guidance. Regards, Diane
Diane - Truly glad to hear of your support. Both with the 
column and at home.

...Thank God someone recognized that we women are out here (and 
kicking butt I might add.)...Kaye
... I could hardly wait to email my encouragement to you and look 
impatiently forward to your commentary! I am a single 42 year 
old postal carrier...Kathie
... I am ready to be taught by a woman at long last....Julie
... It will be great to see a column by a woman.   We women need 
all the role models for success that we can get....Patricia

There is room for all of our views - Renee



PICKS WE DROPPED
****************
When we drop a pick it doesn't mean we are recommending a sell
on that play. Many dropped picks go on to be very profitable.
We drop a pick because something happened to change its
profile. News, price, direction, etc. We drop it because we
don't want anyone else starting a new play at that time. 
We have hundreds of new readers with each issue who are
unfamiliar with the previous history for that pick and we
want them to look at any current pick as a valid play.


CALLS:
*****

CMVT $127.06 -8.94 (-15.38) What happened?!  CMVT was cruising 
along in an indestructible state.  Well, all good plays have 
to come to an end and with a run up like we saw in CMVT, it did 
have room to fall.  The trigger was a downgrade from Salomon 
Smith Barney.  They dropped the stock from a Buy to Outperform.  
We haven't yet seen the reasoning but it was likely due to 
valuation after the incredible move.  We were planning to be 
out of the play by Tuesday the 30th but with today's drop, we 
can't imagine anyone who is not stopped out and we don't want 
to re-initiate positions this close to the end.  This is not 
to say that it won't bounce back some but we got what we wanted 
out of CMVT when we picked it at $102 so we are replacing it 
with other plays that don't have as short of time frame.  

LSI $61.06 -3.19 (-5.38) Investors have not been bidding up 
the majority of the semiconductor stocks this week.  The 
Philadelphia Semiconductor Index has been down strong for 
the last two days.  Monday down 14.86 points, Tuesday down 
15.10 points, and it has been dragging the majority of the 
stocks down with it.  LSI's support held up nicely on Monday, 
but the follow through of selling today was too much, the 
shares continued to slide, closing out the day at the lower 
end of the range at $61.06.  There has been no bad news that 
was reported on LSI, it is simply profit-taking.  For the near- 
term it looks as though the stock is going to take a break, 
so we will look to close out the position at this point.  

ICGE $170.13 -12.31 (+3.19) After the bell on Monday we got the
news that we were looking for, ICGE announced a stock split.  
The stock was on a strong movement upward the whole day on 
Monday, but it did provide us many entry points, the follow 
through today only lasted for a few moments, so hopefully you 
were in and out with a quickly if you played ICGE, because the 
post-split announcement depression set in fast.  We will choose 
to walk away from this play at this level, the stock closed at 
the lower end of the range with no sign of a recovery.  The 
trading range today was a high of $191.75 and a low of $169.50, 
before closing out the day at $170.13.  It was a wild ride 
that ended quickly.  We will look at it again once we get 
closer to the ex-date and the investor interest returns. 

SFE $115.13 -7.38 (-8.88) The party is over.  Time to go home.  
SFE broke south of $120 support and never did recover today.  
Volume pick up later in the day as the price was falling and was 
most pronounced at the close, where SFE finished at the low of 
the day.  The signs were there on Friday with volume and the 
price flattening out on an otherwise strong day.  As we noted 
in Sunday's write-up, "cut your losses quickly if it moves south 
of $120...the ice is thin."  No news here.  SFE just got tired.


PUTS:
*****

AMR $61.13 +2.06 (+3.38) AMR has been flying high, along with 
the rest of the airline sector.  Oil prices were down slightly, 
fares are on the rise and the holidays are just around the bend.  
Not to mention a new service being offered by AMR between San 
Jose and Honolulu as of May 1st.  Okay so that last one was most
likely not a factor in AMR's recent move up but the fact of the 
matter is AMR has taken off in the wrong direction, the wrong 
direction for our put play anyway.  The time has come to grab 
our chutes and jump from this play.  Monday's rise in the 
airline sector despite record high oil prices was our first 
sign this play was going to fly. 


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

None Tonight


*****************
PICK NEWS - CALLS
*****************

EMC $88.50 -0.56 (-0.88) EMC continues to consolidate or perhaps
a better term would be struggle to continue its upward momentum.
Monday EMC opened higher but traders came back from the weekend
ready to take some money off the table pushing the stock down 
to an intraday support level near $88.  This morning the buyers 
re-entered at the open, bidding the price of EMC back to a high 
of $89.94 at the opening bell only to see the sellers return 
to the market.  As we mentioned Sunday, for EMC to continue 
to be a viable call play, we are going to have to see the 
momentum return to this stock.  EMC has made three attempts 
to take move toward the highs set last week only to succumb to 
profit-taking.  But a period of consolidation or a pullback 
to support is healthy for the over all trend of this stock.  
Should you still have a position in EMC, we would keep your
stops close under the support levels of $87 depending on your 
entry point to protect any profits.  If EMC can re-start a 
new rally, a breakout over $90 would be buyable.

GMST $112.19 +3.06 (+7.56) We mentioned Sunday that our split 
run play was beginning to set up nicely.  Since being selected 
last Thursday, GMST has given us a couple of good entry points 
into our play.  On Friday GMST pullback to $101 and bounced 
back into the close at $104.63.  Monday shares of GMST continued 
the move and started the week off in positive territory, closing 
up $4.50 at $109.13.  This morning GMST gapped up to $110.75 at 
the open and sold off.  The impressive part of the day is two-
fold.  First, after the sellers stepped in and drove the price 
of GMST down late this morning, the $106 level of support held 
just like clockwork.  The second impressive part of the trade 
today was the buyers that stepped up to the plate and drove 
GMST to a new high at $114.  GMST finished the day with solid 
gains at $112.19 up $3.06 for session.  The stock was a bit 
volatile this morning but at this point couldn't be working 
out better, had we scripted the moves of the last three days.  
The open interest in the December 115 Calls increased by about 
2000 yesterday.  The volume behind today's move was rather 
light at 745 K.  For the rest of the week if you entered a 
position, in GMST assess your risk profile and adjust your 
stops accordingly.  If we get a pullback we would look for a 
bounce off the intraday support areas of $110, $108, and $106 
respectively as a possible entry point to a new play.     

CMGI $137.56 -5.69 (+12.69) Depending on your trading style 
and risk tolerance, CMGI gave us a very good entry point for 
our new play.  CMGI gained $18.38 on the day which was news 
filled.  CMGI which invests in, and develops and operates a 
number of funds focused on the Internet, announced they were 
launching a new business to business venture fund.  The fund 
is expected to reach up to $1 bln in capital.  The new fund 
will build on the success of the current funds and their strong 
track record in B2B investments.  Investors must have agreed 
as the volume behind yesterday's increase was a strong 7.2 mln 
shares.  Other items concerning CMGI was the rumors surrounding 
a merger with 24/7 Media.  Rumors have been circulating for 
months concerning the on again off again potential deal for 
24/7 to be picked up by either CMGI or DoubleClick.  It's back
to CMGI now.  In recent months CMGI has beefed up its holdings
in online advertising companies, with stakes in Adsmart, Engage
Technologies, Adforce and Flycast Communications.  As is 
customary neither company would comment on the rumors.  CMGI 
gave back only $5.69 of yesterday's gains, which leaves our
play in good shape for a holiday week.  Intraday support for
CMGI lies near $137 and again between $132 and $133.  If CMGI
retraces and bounces, those would be levels to consider a new
play, as long as the bounces are supported by good volume.
Although it may be a bit premature, CMGI announces earnings on
December 15th, we could see a run to new highs in anticipation
of their earnings report.            

SNE $180.00 -0.56 (+3.38) Sony had a great Monday session, 
breaking through the rather elusive $180 level with strong 
volume and a close just pennies short of the high for the day.  
Tuesday, SNE followed the rest of the market down and fought 
yet another round of profit-taking as many traders are closing 
out positions before the holiday.  Sony bumped its head on $180 
in late day trading and finally opted to just to hang out there 
for the night.  Before entering a new play, we will definitely 
want to see some consistent trading above $180, since SNE has 
really struggled with this level. Sony has tested and bounced 
from it's 10-dma, which is currently at $178 and until we see 
a breakdown, we are not convinced that Sony is relinquishing 
any of it's positive momentum.  Japanese financial markets 
were closed on Tuesday for Labor Thanksgiving Day with trading 
resuming on Wednesday. 


SUNW $127.13 +0.56 (-2.44) Today the profit-taking finally 
put a dent in the tech-heavy Nasdaq and the technology stocks
were whipped.  The Nasdaq was down 49.68 points today, this
had the bellwether stocks like SUNW seeing lower prices today,
but not a major sell-off, just some pre-Thanksgiving "turkey
picking."  SUNW actually ended up $0.56 but down for the week 
a little over two points.  We remained focused on the stock
holding above major support points, and when the profit-takers
step up during the last few trading sessions, buyers continue
to step in and buy on any dips.  Going forward profit-taking 
could continue, but we believe not very heavily ahead of the  
2:1 stock split on Dec 9th.  The overall picture in SUNW from 
a fundamental, technical, news, etc continue to look very 
positive.  Be mindful that as we look towards the next few 
trading days, the market in the past has trading on light 
volume around the Thanksgiving holiday, and moves to the 
upside or downside could be exaggerated.  We recommend that 
you use any dips to the downside as buying opportunities.  
Major support is at the $123 level.   

HLIT $72.56 -1.69 (+0.50) The trading pattern in HLIT was
consistent with our recent recommendations.  The stock
continued to gap up on the open Monday and Tuesday.  The stock
opened the day on Monday up over 2 points at $74.50, before 
closing the day $74.25.  The shares commenced to pulling back 
to as low as $70.13, we had recommended that support would hold 
up at the $70 level.  That was a good tradable entry point.
Once again today the shares gapped up at the open at $76.63,
before commencing to trade identically to our fore-mentioned
strategy, hopefully you sold immediately and looked to get
back into the stock at the pullback low for the day, which
incidentally today was near the $70 level, before closing
out the day off of the lows at $72.56.  Hopefully you have
made some quick in and out trades on this one, and are looking
for more opportunities going forward.  There is anticipation
as we close out this holiday shortened week that the volume is 
going to slow and the profit-taking is going to pick up in the 
overall market, so be cautious.  Be disciplined and use the
intraday price swings to your advantage.  Look for another 
trading bounce off of the $70 level. 

YHOO $221.19 -5.63 (+2.44) YHOO is a definite split-candidate 
especially now that the stock has moved above the historical 
split announcement levels of $200 to $220.  The stock is just 
$22.81, or 9.3% from last April's peak of $244!  A new 52-week 
may just be in the cards.  Yesterday YHOO tagged $230 near the 
close on rising volume setting the mark for future opposition.  
Despite holiday profit-taking in today's market, YHOO appears 
to be establishing a newer near-term support at $218, the daily 
low of the past two trading sessions.  Last week entries into 
this play were attainable in the $205 to $210 range, but if 
the upward direction remains intact you may have to target 
shoot for an intraday bottom.  In company news, Yahoo! signed 
a marketing agreement with 1-800-FLOWERS.com providing subscribers 
with direct access to the popular flower and gift site.  In the 
industry, Lycos announced it's acquiring Gamesville.com, a 
gaming and marketing company in a $207 mln stock deal to extend 
its exposure on the Internet and increase advertising revenues. 

GTW $77.44 -2.06 (-1.56) GTW swept upwards to $80.63 on Monday 
trading consistently in what appears to be the first line of 
opposition.  The dips to newly established near-term support 
of $76 and $77 then offered entries into this potentially 
profitable technical and momentum play.  We added GTW this 
weekend on the basis of its repeated moves to daily lows at 
near-term support, which presented bargain buying opportunities 
in consideration of an apparent rotation into the hardware 
sector.  The volume has dissipated somewhat the past two days, 
but most likely it's a reflection of the slow week in the markets 
and not investor interest.  The next step in this play is for 
GTW to break $80 and make a charge towards $84, the new 52-week 
high set last Monday.  In the news, Fidelity Investments 
announced a cooperative agreement with Gateway today.  Existing 
and potential Fidelity clients will receive discounts on Gateway 
PCs to enhance the benefits of the Web and fidelity.com as a 
user friendly investing alternative.  Also in the news today, 
Mike Mata, VP of e-commerce and Business Development for Gateway 
announced the launch of Esource, customized Web sites for large 
institutions, educational buyers, and corporate customers to 
track and choose their purchases.  Many believe this move is 
overdue when compared to Dell's existing Premier Page service. 

VRTY $99.81 -5.44 (+0.69) Churning stocks was the name of the 
game in today's market, but VRTY managed to hold on a fractional 
portion of yesterday's profit.  We reported this weekend that 
VRTY was poised to break through that psychological $100 barrier 
and make a run for a reasonable $110.  On Monday VRTY showed its 
intent and opened strong.  The stock traded for a good part of 
the day near $105 while still offering enough volatility for 
entry into this split play.  VRTY also managed to peak at $107 
heading into the close indicating there may be more to come.  
If you got into the play yesterday and had a limit sell set for 
today's open you may have caught some profits as the stock 
spiked to $109.25 - setting the newest 52-week record - before 
holiday profit-taking went into full swing.  The market 
downdraft has placed VRTY back at strong support.  There is 
no newsworthy event to report that would affect trading, but 
of course, remember VRTY splits 2:1 on Dec 3rd.  We expect 
another upswing ahead of this date and will be looking for 
another bounce to confirm our play.



PICK NEWS - CALLS - CONTINUED IN SECTION TWO
********************************************


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DISCLAIMER
**********
This newsletter is a publication dedicated to the education 
of options traders. The newsletter is an information service 
only. The information provided herein is not to be construed 
as an offer to buy or sell securities of any kind. The 
newsletter picks are not to be considered a recommendation 
of any stock or option but an information resource to aid the
investor in making an informed decision regarding trading in 
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buy or sell securities presented. All investors should consult 
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The newsletter staff makes every effort to provide timely 
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delivery times due to factors beyond our control.
The Option Investor Newsletter         Tuesday 11-23-99  
Copyright 1999, All rights reserved. 
Redistribution in any form strictly prohibited.


*****************************
PICK NEWS - CALLS - CONTINUED 
*****************************

MSFT $89.63 -0.19 (+3.63) MSFT investors were determined to buy 
in a market that was selling off.  They pushed up the share 
price to $91.38 before a last minute plunge cost a fractional 
loss.  Yes, we were on the money when we added MSFT to our call 
list this weekend citing the stock's dip to $86 as a relative 
bottom and yes, we knew we'd have potential entry difficulties.  
Well, we got the whole basket when MSFT open up at $89.63; but 
honestly it now appears this level (at $89 to $90) may be 
evolving as near-term support and the intraday volatility will 
extend different points of entry.  Recall our play is based on 
the recent move by US District Judge Thomas Penfield Jackson to 
appoint a mediator, Richard A. Posner, Chief Judge of the 7th 
US Circuit Court of Appeals in the government's antitrust case 
against Microsoft to negotiate an out-of-court settlement.  
Jackson didn't want "divergent views" to destroy the current 
rapport "between the states and the Justice Department so far 
has been, I think enormously helpful.  And I would like to see it 
continue.  I would not like to have to deal with divergent points 
of view."  That news prompted investors to start putting their 
money back into MSFT on Friday.  This week more news surrounding  
this monster trial hit the press.  On Monday three lawyers filed 
class-action suits against Microsoft for essentially price-
fixing its Windows 95 and 98 citing they used their monopoly 
position to charge an over-inflated cost for the software.  
Since that issue was never dealt with in the trial it's unlikely 
the civil action will reap benefits for individual consumers.  
Then Consumer Group of Technology voiced their opinion today 
claiming MSFT should be required to divest its Internet Explorer
Web browser since a good chunk of the recent trial concerned 
software to surf the Web, in particular with AOL's Netscape.  
Of course, MSFT is adamant their browser is an integral part of 
its Windows system.  On a different front, MSFT along with AOL, 
AT&T, and other Internet companies are pressuring trade 
negotiators to push the WTO for the permanent extermination of 
tariffs on electronic commerce at the Seattle meeting next week. 

BVSN $109.63 +0.00 (+17.13) That BVSN did not crater with the 
rest of the NASDAQ is testimony to its strength.  Yesterday, 
Business week ranked BVSN number 2 in the "InfoTech 100" survey, 
up from #70 when it made its debut on the list back in June.  
You'd think that moving up from $83.50 just two short weeks ago 
would make BVSN susceptible to some profit-taking.  However, 
volume has remained huge in this issue (two times the ADV today), 
which helps explain today's stability, despite an overall loss 
for the market.  In fact, yesterday's volume increase and price 
rise into the close convinced us to make it the play of the 
day.  While it gained nothing today, it predictably fell back 
to support (about $100) where we could have made a great entry 
from which it traded as high as $113 - a $13 swing in one day.  
Congratulations to the agile who were able to make this play.  
For those wanting to try it again, watch for the landmines of 
market wide profit-taking, and target shoot in the support area 
of $100.  After that - $96, then $90.  Remember to use a trailing 
stop to protect your profits.  BVSN is a fast mover and carries 
a high amount of risk.

NT $79.69 -0.81 (-1.56) Well, it had to happen sometime since 
"nothing goes up forever in a straight line".  That's okay.  The 
profit-taking was minimal anyway as NT found support at last 
Friday's low around $78.50, from which it again bounced up today.  
Perhaps helping to stem the bleeding was SoundView's reiteration 
of their Strong Buy rating and price target of $110 (up from 
$75).  Optical networking business growth is the driver.  And we 
have the prospect of another split if the price can get up toward 
$90.  While in the long run, NT is a winner, volume is starting 
to fall back to the ADV indicating funds may have completed their 
buying binge on this one.  Wait to see volume picking back up 
before initiating a play.  The price may have more to fall if 
volume can't keep the sails filled.  If so, be ready to exit 
with a stop in place, or at least know your exit.  $75 is the 
next support.  

NOK $136.50 +5.75 (+3.00) Right on the money, support came at 
$130 yesterday, giving us the perfect buying opportunity.  Little 
did we know that Morgan Stanley Dean Witter would up their rating 
to a Strong Buy before today's open and simultaneously up their 
price target to $180 from $125.  Can you say "Gap Open"?  Sure, 
we knew you could.  NOK closed at a new high, however encountered 
textbook resistance at $139 ($130-$139 is the channel we noted on 
Sunday).  Our inclination at this point is to wait for the market 
to digest its gains and let NOK go with it, though with today's 
upgrade, we could get more mileage out of the current play.  Even 
so, support is mild at $135, and strong at $130.  You can target 
shoot according to your risk profile, or wait until a breakout 
over $139 with volume.  NOK becomes a split candidate again at 
$140.  Just be aware that NOK still likes to gap up and down.  A 
skipping target can be tough to hit.  So be comfortable with the 
risk since the opening direction is a bit more out of our hands.

QCOM $360.25 +0.25 (-6.81) QCOM appears to be taking a breather.  
Volume has remained substantially below the ADV over the last 3 
trading days while the price has nonetheless remained stable (a 
relative term when a company is priced at $350 per share).  
That's an indication that investors are comfortable in this price 
range and no longer desperate to part with the shares at any 
price - looks like the fire sale is over.  That's not to say that 
it can't fall further should the market suffer a meltdown, just 
that it looks like the major damage is done.  In fact in the face 
of today's losses, following the initial opening selloff, QCOM 
gained ground all day.  With an agreement once again shaping up 
to sell equipment in the development of China's new wireless 
system, the 4:1 split at the end of December, and the prospect of 
announcing a buyer for their handset manufacturing business by 
the end of the year, the future still looks good.   Support came 
today at $345, but generally can be found at $350, then $330.  
These provide good targets for shooting, or you can wait for a 
breakout over $370.  We favor the target shooting approach since 
there is plenty of time until the end of December.  Pick your 
entry carefully and keep your stops on place to protect your 
profits.  Though subject to wild swings, QCOM still provides 
many profit opportunities for the nimble, even on down days.

JDSU $238.31 +10.31 (+24.50) As Cramer says, "We must pay homage 
and glory in its greatness."  Friday's breakout powered on at 
the rate of $1.88 per trading hour.  That $222 resistance we 
noted Sunday was obliterated first thing Monday morning.  Support 
was at $227, $222, then $217.  Hmmm...anyone notice those $5 
increments?  Don't bet the farm on it, but look for $237 and $232 
to also provide some intraday support.  $252 is resistance so 
there's lots of room to run.  Volume remains strong following 
news that one of George Soros' funds owns about 440K shares - 
it's the equivalent of a strong upgrade.  JDSU will be splitting 
2:1 on December 30 too.  As long as volume remains strong and the 
market is willing, look for the rise to continue.  Target shoot 
to your own risk tolerance.  For those so inclined, you may want 
to consider this one for your long-term portfolio.  As we've 
noted, JDSU is to photons what Intel is to electrons.  It's 
in the same league as QCOM.



****************
PICK NEWS - PUTS
****************

CI $81.25 -3.75 (-2.50) After a slight bounce Monday, our put 
play in CI finally kicked in late this afternoon.  Our play 
got the nudge it needed when a group of attorneys led by anti-
tobacco lawyer Richard Scruggs, filed a national lawsuit seeking 
class action status against 5 health maintenance organizations
(HMOs) charging them with violating U.S. anti racketeering laws. 
The defendants are some of the nation's largest HMO operators, 
and CIGNA topped the list.  Whether there is any merit to the 
suit at this point didn't matter to traders as they dumped 
shares of CI late in the day.  CI which had been drifting lower 
for most of the session and lost $$2.95 in the last 2 hours of 
trading.  With the weakness in the broader markets today, we 
could see CI continue south for the balance of the holiday week 
as the sector has now rolled over as well and doesn't look to 
inviting for buyers to step in at this point.  CI could find 
support near the $80 area, but technically there is still a gap 
that could be filled all the way down to the $75 area.  If you 
did not join in on this play we would consider further weakness 
as an opportunity to do so.  Should we see a bounce back up CI 
could struggle between the $83 and $84 area, and any decline 
from those levels would also be a potential entry point.  As 
always, prior to entering any new play assess the potential for 
profits and risks involved.

KIDE $42.19 -7.13 (-14.75) Do you remember running down a hill 
as a child and gaining so much momentum, that it was difficult 
to stop without taking a good tumble?  Welcome to KIDE's recent 
trading pattern.  KIDE's downward slide continues as KIDE has 
taken back nearly $15 in the first two sessions this week.  
Today, KIDE ran down to tag a new 6-week low and has entered 
territory where it must seek support at the "psychological" 
levels, i.e., next stop, $40.  KIDE continues to close the 
day near the bottom of its trading range.  One interesting 
thing to note is the large volume posted in the last two 
sessions.  There seems to be many looking to jump ship.  Keep 
in mind, this is a high-risk play!  There is a lot of investor 
interest out there and being that we have seen such a substantial 
decline in a short period of time, it is possible that KIDE will 
make a turn around at any time.  We are expecting a bounce, most 
likely a pretty decent one, right around $38-$40 and would look 
to exit this play around that level.  So tighten your stops to 
protect profits.

RMBS $75.00 -4.19 (-7.13) What a beautiful chart!  Well, it 
is as long as you are playing RMBS as a put!  It was a rough 
session for the Semis, which made it a downright grueling day 
for RMBS.  RMBS broke through it's 50-dma in today's session and 
has widened the gap from it's 10-dma to $9.50.  $75 managed to 
hold Rambus up throughout the day, minus a brief drop to $74.50, 
and we will want to see some trading below this level to confirm 
the continuing downward trend.  We see some resistance forming 
at $76 and further, more substantial resistance at $80.  Watch 
for breakthroughs at these levels as possible indications of 
trend reversal.  We have seen an increase in volume for the 
last two sessions which is indicative of lots of sellers in 
the market.  We may be reaching the bottom of this play, which 
is why it is so important to confirm direction from $75. 



**************
NEW CALL PLAYS 
**************

SDLI - SDL, Inc. $167.50 +0.50 (+23.38 this wk.)

SDL's products power the transmission of data, voice and 
Internet information over fiber optic networks to meet the 
needs of telecommunications, dense wavelength division 
multiplexing (DWDM), cable television and satellite 
communications applications.  They enable customers to meet 
the bandwidth needs of increasing Internet, data, video and 
voice traffic by expanding their fiber optic communications 
networks much more quickly and efficiently than would be possible 
using conventional electronic and optical technologies.  SDL's 
optical products also serve a variety of non-communications 
applications, including materials processing and printing.

Move over JDSU.  Make room for your scrappy neighbor who competes 
with you in the semiconductor laser business, who also makes 
necessary component level products for optical networking 
equipment.  As we've noted in the past, this industry is 
consolidating fast with CSCO sifting to the top by making it 
known that they want to be in the optical networking business 
too.  SDLI might make a great target.  Their recent price move 
coincides with CSCO's announcement of interest last week.  The 
chart is looking strong as SDLI has set new highs every day since 
last Wednesday, reaching as high as $174.56 today.  Volume 
remains slightly over the ADV, though not the four times ADV 
experienced last Wednesday.  Earnings looked good too with a 22% 
surprise in an industry now known to be bursting at the seams.  
However, because the gains have been so rapid from the rumors and 
sympathy play with JDSU (A Soros fund disclosed that it owned 
440K shares), support is tough to find.  However, intraday, $160 
looks to be a solid bottom; $150 after that with nothing in 
between.  Entering this play should only should only be 
contemplated if you are fast on the trigger and quick to nail 
a bounce.  Target shooting here is tricky.  You'll likely want 
to keep a trailing stop in place too so you don't give back 
the gains on any profit-taking moves.

Gruntal affirmed its Outperform rating today (unimpressive, 
but perhaps a contrary indicator that more appreciation 
will follow).  At the end of October, Warburg, Dillon, Reid 
issued a Buy rating.  The last 2:1 split was announced when 
the stock traded at $72, wherein the split executed at $93.  
We're way past that now.  With only 42 mln shares 
authorized and over 35 mln issued, there is no room to 
split the shares again without a shareholder vote.  To date 
no proxy has been filed, indicating management is in no 
hurry for another split.  Their next earnings release (a 
typical time to announce a split) isn't until February.  
Even so, SDLI could surprise us - the price screams for it.

***High time value risk***

Like QCOM, this play may fit your profile for covered calls 
too.  Selling the DEC-165 produces a 10.6% return through 
December 17 if called.  Just watch the downside if the 
speculative frenzy ends.

BUY CALL DEC-150 YSL-LJ OI= 26 at $27.25 SL=21.25
BUY CALL DEC-155 YSL-LK OI=  0 at $24.38 SL=19.00 wait for OI
BUY CALL DEC-160 YSL-LL OI=  0 at $21.63 SL=16.75 wait for OI
BUY CALL DEC-165 YSL-LM OI=  0 at $19.63 SL=15.25 wait for OI

Picked on Nov 23rd at  $167.50    P/E = 249
Change since picked      +0.00    52-week high=$174.56
Analysts Ratings     8-9-0-0-0    52-week low =$ 10.69
Last earnings 10/99  est= 0.18    actual= 0.22 surprise = 22%
Next earnings 02-09  est= 0.25    versus= 0.14
Average Daily Volume =   799 K
Chart = http://quote.yahoo.com/q?s=SDLI&d=3m

****

QLGC - QLogic Corporation $119.00 +3.50 (+7.50 this week)  

The competition in their industry is very stiff, yet they lead
the market in Fibre Channel host bus adapter market.  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. 

It's Back, and in more ways than one.  We looked at QLGC about 
10 days ago as a call play just as the Semiconductor industry
hit a peak and began to consolidate.  That's exactly what 
happened to QLGC as well.  At that time, shares of QLGC were
trading near the $130 level.  Since then QLGC has traveled all
over the map, making a low last Thursday at $104.63.  QLGC
re-tested the lows of last week early this morning, hitting 
$106.88 and then surged ahead to close at $119, up $3.50 for
the session.  The strength QLGC exhibited impressed us enough
to take another look at QLGC.  One of the original reasons 
we were attracted to QLGC was the anticipation of a split 
announcement.  Stockholders recently voted to approve the number
of authorized shares from 50 mln. to 150 mln.  If you'll 
remember QLGC has split twice this year already in February and
again in early August.  QLGC made over a $12 recovery from its
lows, on a down day in the broader markets, on day when the 
semiconductor industry fell 2.0%, and there was really no major
news for the stock.  That is what got our attention.  We are
adding QLGC as a call play again primarily in anticipation of
a split announcement, and the number of buyers that stepped in
to drive the stock back up today.  As we have mentioned QLGC 
is volatile and is not a play for everyone.  If you consider a 
play in QLGC, it is one where you may want to keep your stops 
close.  Intraday support can be found near $114-$115.  Should 
we see a bounce off those levels or continued strength in the 
stock we would look to jump on board.  As always consider the 
risks, the rewards, and your own risk profile prior to entering 
any new play.

In other news QLGC announced today that its ISP2200 intelligent
Fibre Channel processors and FAS466 Fast Architecture SCSI
Processors have been implemented in the Digi-Data Fibre Sabre
Family of RAID Controllers.  

BUY CALL DEC-115*QLC-LC OI=312 at $12.75 SL=10.75
BUY CALL DEC-120 QLC-LD OI=416 at $10.25 SL= 7.75
BUY CALL DEC-125 QLC-LE OI=515 at $ 8.00 SL= 6.25
BUY CALL DEC-130 QLC-LF OI=389 at $ 6.25 SL= 4.50

Picked on Nov 23rd at  $119.00    P/E = 109
Change since picked      +0.00    52-week high=$135.63
Analysts Ratings     3-4-1-0-0    52-week low =$ 23.25
Last earnings 10/99  est= 0.31    actual= 0.35 surprise +12.9%
Next earnings 01-20  est= 0.36    versus= 0.19
Average daily volume =   830 K
Chart = http://quote.yahoo.com/q?s=QLGC&d=3m

****

MACR - Macromedia Inc. $67.56 +0.69 (+4.94 this week)

Macromedia is a leading provider of Web authoring and 
production software for professional Web developers.  Its
products range from Dreamweaver, the market-leading
professional Web authoring environment, to Flash, the 
industry standard for high-impact, vector-based Web sites 
that deliver motion, sound, interactivity and graphics.  
The company recently announced a new corporate strategy
known as the Macromedia eBusiness Infastructure, which will 
provide developers and companies with the first comprehensive,
integrated solution for creating, managing, personalizing and
analyzing Web content.

It looks as though the Multimedia and Graphics division of the
computer Software and Services sector are attracting investors.  
Lets look into it- Today Robertson Stephens reiterated its Buy 
rating on shares of Pixar ahead of the company's release of 
its next film, "Toy Story 2".  It was pointed out that this 
screening will be the most ever for a animated film.  The film 
will debut on 5,000 screens.  In other animated news MACR, who 
develops Flash animation software, is an investor in what the 
media is calling the Amazon.com for comic books from the creators 
of Spiderman, the X-Men, and the Fantastic Four comes StanLee.Net 
a comic website.  The site set to be launched in January has 
said that this project is going to involve a tremendous amount 
of animation.  Looking at the charts the uptrend is firmly in 
place, MACR has recently hit a 52-week high at $70.31, not far 
from today's close at the $67.56 level.  Volume is trading at 
higher than normal levels, the stock took a breather earlier 
in the month before resuming this current uptrend.  As we go 
into the holiday season we look to see higher highs in this 
sector and MACR.  We like the stock at current levels and will 
look a favorable entry point going forward.  Major support seems 
to be holding up at or near $62.50.  The higher-lows are pointing 
to a possible breakout over $68 soon, market willing.

MACR has recently selected "Fallon McElligott" as there new Ad 
Agency to help to establish their brand name.  This is the same
company that manages advertising for the likes of Qualcomm, 
Starbucks, and Drugstore.com just to name a few.  Positive 
sentiment is definitely with MACR, looking at the DEC 70 out 
of the money calls, 1,066 contracts exchanged hands today 
alone, which is more than 3 times the open interest (319).  
That is a bullish indication. 

BUY CALL DEC-65*MRQ-LM OI= 203 at $ 7.13 SL= 5.38
BUY CALL DEC-70 MRQ-LN OI= 319 at $ 4.50 SL= 2.75
BUY CALL JAN-65 MRQ-AM OI=   0 at $10.25 SL= 7.75 low OI
BUY CALL JAN-70 MRQ-AN OI=  24 at $ 7.63 SL= 5.88 low OI

Picked on Nov 23rd  at  $67.56    P/E = 113
Change since picked      +0.00    52-week high=$70.31
Analyst Ratings      5-4-1-0-0    52-week low =$24.25
Last earnings 11/13  est= 0.31    actual= 0.19
Next earnings 01-26  est= 0.15    versus= 0.12
Average daily volume =   896 K 
Chart = http://quote.yahoo.com/q?s=MACR&d=3m

****

VRSN - Verisign Inc $187.00 +2.25 (+16.94 this week)

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

Sheer momentum followed stellar earnings on Oct 21st, driving 
VRSN upwards to new levels.  Today VRSN reached its latest 
record achievement peaking at $194.75 on strong volume.  You'd 
expect a little back-filling today after such an enormous leap 
($14.69) during yesterday's Internet upsurge and today's 
respite.  Quite the contrary, VRSN is powering higher ahead of 
its 2:1 stock split.  The split date is just 8 trading sessions 
away scheduled to go ex-div on Tuesday, on December 7th!  
Today's support established at $180 with the 10-dma underneath 
at $170.09, marking the firm support level.  In other words, 
it's difficult to determine a solid entry level considering 
the recent spike.  Nevertheless, this HIGH-RISK and VOLATILE 
Internet generally offers enough point spread intraday for 
a player to target shoot an entry in line with their risk 
tolerance.  For those searching for an analyst view point, 
last Thursday David Zale of Sands Brothers & Co reiterated a 
Strong Buy rating for VRSN and issued a price target of $250! 

Let's bring the news up-to-date.  On November 11th when the 
Board of Directors announced the 2:1 stock split, the company 
also announced separately a partnership with Telia, Sweden's 
largest telecommunications company, to provide digital 
certificate and public key infrastructure (PKI) services in 
the Nordic and Baltic regions.  Also that day and along with 
Intuit (INTC), Verisign reported they had completed the first 
round of private financing for ezlogin.com, a Web organizing 
company, totaling more than $4.3 mln.  Recently pertinent to the 
e-commerce industry, the US Senate past legislation allowing 
digital signatures to have the same legal standing as those 
written on paper.  

BUY CALL DEC-185 XVR-LQ OI= 60 at $18.13 SL=14.25
BUY CALL DEC-190*XVR-LR OI=120 at $15.63 SL=12.25
BUY CALL DEC-195 XVR-LS OI= 72 at $13.50 SL=11.00

Picked on Nov 23 at     $187.00    P/E = N/A
Change since picked       +0.00    52-week high=$194.75
Analysts Ratings     5-13-3-0-0    52-week low =$  9.69
Last earnings 09/99   est= 0.02    actual= 0.03 surprise +50.0% 
Next earnings 01-25   est= 0.05    versus=-0.06
Average Daily Volume = 1.34 mln
Chart = http://quote.yahoo.com/q?s=VRSN&d=3m


*************
NEW PUT PLAYS 
*************

RFMD - RF Micro Devices $63.50 -4.19 (-7.50 this week)

RF Micro Devices Inc, an ISO 9001 certified manufacturer, 
designs, develops, manufactures and markets proprietary RFICs 
for wireless communications applications such as cellular 
and PCS phones, cordless phones, wireless LANs, wireless local 
loop handsets, industrial radios, wireless security systems 
and remote meter readers.  The Company offers a broad array 
of products - including amplifiers, modulators/demodulators, 
mixers and single-chip receivers, transmitters and transceivers 
that represent a substantial majority of the RFICs required 
in wireless subscriber equipment. 

If Telecom has been the hot sector right now, then what is going 
on at RF Micro Devices?  That is a question that shareholders 
probably want an answer to.  We are doing our due diligence 
on RFMD and don't find much of anything.  The company and 
analysts have been relatively quiet but there is no debating 
the trend which has been lower, on good volume, with little 
or no bounces.  This signifies selling and lots of it.  The 
institutions have, in fact, been selling on a regular basis 
and there is no sign that is ending.  RFMD made a great run 
when it broke out above $55 in early November, climbing as 
high as $80.  Once the momentum ended though, the sellers came 
out in full force.  The main concern seems to be competition 
which is fierce in the component business.  It is easy to go 
from the leader of the pack to bringing up the rear.  Whether 
or not that is the only reason or if there is some lingering 
bad news, we like the technical play here.  The return to $55 
where the breakout occurred seems likely, it just may not 
come tomorrow.  That is because RFMD is already down $7.50 
on the week.  Logic says it must be due for a bounce but, at 
the same time, if you had said that a week ago you would have 
missed a major move.  Therefore, we are listing it as a put 
play for higher risk players.  If the momentum continues (and 
to this point the volume is signaling that it will) then $55 
is the next support level and it should be ample.  Otherwise, 
in a Nasdaq rebound, resistance at $70 would be a tempting 
entry point.  So go with the momentum but use your stops too.

BUY PUT DEC-70 RFZ-XN OI= 401 at $9.38 SL=7.00
BUY PUT*DEC-65 RFZ-XM OI=1161 at $6.00 SL=4.25
BUY PUT DEC-60 RFZ-XL OI=  50 at $3.50 SL=1.75 low OI

Average Daily Volume = 1.75 mln
Chart = http://quote.yahoo.com/q?s=RFMD&d=3m 

****

ALTR - Altera Corp. $54.88 -2.13 (-4.75 this week)  

Altera Corporation was founded in 1983 and is a leader in 
high performance, high-density programmable logic devices and 
associated computer-aided engineering (CAE) logic development 
tools.  Programmable logic devices are semiconductor chips 
that offer on-site programmability to customers.  The chips 
are programmed with tools that run on personal computers 
or engineering workstations. Altera products serve a broad 
range of market areas including telecommunications and 
data communications, as well as computers and industrial 
applications.  Altera sells its chips worldwide, with 
approximately one-half of its business in geographic areas 
outside the United States. 

Life was good for Altera heading into November as ALTR managed 
to gain $20 from Nov 1st to the 11th.  ALTR was trading well 
above it's 10-dma and was in a sector that as a whole was 
performing very well.  Then the Semi's began to lose their 
footing and the decline began.  ALTR began to pull back and 
the big volume that had accompanied ALTR on the rise began to 
dwindle.  We saw a brief rally thanks to a healthy price target 
increase from Credit Suisse First Boston last Thursday, but 
ALTR seemed all to eager to settle back into it's downward 
trend and has worked its way down to take back another $8 since.  
ALTR violated its 10-dma mid-month and is trading over $6 below 
that level.  ALTR looks to have its eyes on the 50-dma, which is 
all the way down at $50.50 and there is no formidable support
blocking the way.  ALTR hit its head on $55 in trading today,
which could hold as resistance heading into tomorrow's session.  
We see more formidable resistance at $60. Lower-lows, lower- 
highs, struggling sector, a good divergence from support, 
dwindling volume...ALTR seems to have put play written all 
over it.  

BUY PUT DEC-55*LTQ-XK OI=850 at $3.38 SL=1.75
BUY PUT DEC-50 LTQ-XJ OI=863 at $1.50 SL=0.75

Average Daily Volume = 4.13 mln
Chart = http://quote.yahoo.com/q?s=ALTR&d=3m



**********
PLAY OF THE DAY
**********

GMST - Gemstar International $112.19 +3.06 (+7.56 this week)

Gemstar International Group makes videorecording systems.
They develop, market and license proprietary technologies 
and systems under the "VCR Plus+" name.  Their VCR Plus+
system lets users program VCR's simply with one-to eight-digit
codes published in TV listings worldwide.  Gemstar's primary
source of revenues are from licensing fees paid by consumer
electronics manufacturers and publications for the licensing of
the VCR Plus+ technology and the right to print the PlusCode 
Numbers.  Gemstar has signed long-term renewals of license 
agreements with Sony Corp, and Thomson Consumer Electronics.
Recently they launched the system in Mexico, the 40th country 
in which VCR Plus+ programming is offered.

Sunday's Write Up

Our Split run play in GMST is beginning to set up nicely.  Now 
if it will just continue with the momentum we saw early last week
we will all be happy campers.  Thursday GMST announced its second
2:1 split of the year.  The first came back in May.  GMST dropped 
back to the $101 area Thursday, but recovered into the close.  
Friday shares of GMST started out a bit weak again however the 
$102 area provided support.  GMST has began to consolidate from 
the last week's run up from the $90 area.  The primary challenge 
for our split play is to see if the $100 holds and if the stock 
can continue to move up and take out the previous high of $110.63
with conviction.  If you are considering a position in GMST, we 
would view a move through the $106 level with solid volume 
as a potential area to buy calls.  We would like to see the 
major indices leading the way as well, which could be a problem.
With the Nasdaq continuing to head into uncharted territory
the potential for a retracement or at least a consolidation
grows by the day.  The strength exhibited after the early
declines in each of the last two sessions is promising.  GMST
closed right on its 5-dma at $104.63.  Several other technical
indicators have come off the ceiling as well.  Volume on the 
pullback has been light indicating there aren't a lot of people
ready to jump ship just yet either.  Notice the high Open Interest
in the December 115 Calls at 2692.  This can be a good indication
of where traders expect GMST to run into solid resistance.   In 
considering a new play assess your risk profile and check the 
direction of the broader markets prior to entering you order.

Last week analyst Michael E. Stanek of Lehman Brothers reiterated
his Buy rating for GMST and set a twelve month price target of 
$150.  Analysts at Hambrecht & Quist and at Gerard Klauer also
reiterated Buy ratings for GMST late last week.

Tuesday's Write Up

We mentioned Sunday that our split run play was beginning to set 
up nicely.  Since being selected last Thursday, GMST has given 
us a couple of good entry points into our play.  On Friday GMST
pullback to $101 and bounced back into the close at $104.63.  
Monday shares of GMST continued the move and started the week off 
in positive territory, closing up $4.50 at $109.13.  This morning 
GMST gapped up to $110.75 at the open and sold off.  The 
impressive part of the day is two-fold.  First, after the sellers
stepped in and drove the price of GMST down late this morning, 
the $106 level of support held just like clockwork.  The second
impressive part of the trade today was the buyers that stepped up 
to the plate and drove GMST to a new high at $114.  GMST finished 
the day with solid gains at $112.19 up $3.06 for session.  The 
stock was a bit volatile this morning but at this point couldn't 
be working out better, had we scripted the moves of the last 
three days.  The open interest in the December 115 Calls 
increased by about 2000 yesterday.  The volume behind today's 
move was rather light at 745 K.  For the rest of the week if you 
entered a position, in GMST assess your risk profile and adjust 
your stops accordingly.  If we get a pullback we would look for 
a bounce off the intraday support areas of $110, $108, and $106 
respectively as a possible entry point to a new play.

BUY CALL DEC-105 GST-LA OI= 891 at $12.63 SL=10.00
BUY CALL DEC-110 GST-LB OI= 635 at $ 9.88 SL= 7.25
BUY CALL DEC-115 GST-LC OI=4507 at $ 7.25 SL= 5.50

SELL PUT DEC-105 GST-XA OI= 124 at $ 2.75 SL= 4.50
(See risks of selling puts in the play legend)

Picked on Nov 18th at   $104.88    P/E = N/A
Change since picked       +7.31    52 week high=$114.00
Analysts Ratings      6-0-0-0-0    52 week low =$ 25.31
Last earnings 09/99   est= 0.18    actual= 0.19 surprise +2.5%
Next earnings 02-10   est= 0.21    versus= 0.17
Average daily volume = 1.23 mln
Chart = http://quote.yahoo.com/q?s=GMST&d=3m



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

Markets Tumble As Turkey Day Approaches..

Monday, November 22

U.S. markets climbed higher Monday as blue chips and technology
issues ignored fears of inflation and higher interest rates. The
Dow Jones Industrials rose 85 points to 11,089 while the Nasdaq
composite moved up 23 points to 3,392, the 14th record close in
17 sessions. The S&P 500 index showed some weakness in the broad
market performance, down slightly to 1,420, after setting a new
all-time-high last week. There were 256 stocks at new lows and
only 65 at new highs and declining stocks beat advances 2,190 to
908 on 866 million shares traded on the NYSE. The 30-year U.S.
Treasury bond dropped 13/32, driving the yield up to 6.19%.

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

Excite@Home   ATHM   JAN37C/DEC55C   $13.25  debit   diagonal 
Excite@Home   ATHM   DEC35C/DEC45C   $9.12   debit   bull-call 
Unisys        UIS    APR22C/DEC30C   $7.12   debit   diagonal  
InterVu       ITVU   DEC40P/DEC45P   $0.62   credit  bull-put
AutoWeb       AWEB   MAY10C/DEC12C   $2.38   debit   calendar

Excite@Home opened up $2.75 at $54 after the company said that
it would establish a tracking stock for the media assets of its
business. The stock will track the economic performance of its 
narrowband portal, broadband portal, advertising and targeting
services. Near 10:00 AM, the stock fell to $52.50, offering the
first of very few entry opportunities in our bullish positions.
Those of you that legged into each spread achieved much better
prices as the stock closed up $5.68 at $57. Unisys moved higher
in early trading but fell near mid-morning. Our target was not
available (on a simultaneous order basis) but a favorable debit
was offered during the session. InterVu was the only issue that
started lower and by 10:15 AM, it was down $0.88 at $63.62. The
observed credit was $0.62. AutoWeb moved in a small range until
10:00 AM, but the quoted option prices were not as favorable as
Friday's closing numbers. The best observed entry was $2.38, a
position with almost no upside potential. The sold option will
need to be closed in the event of any large short-term rally.

Portfolio plays:

Market-leading stocks rallied to open the Thanksgiving Day week
and a new index of investor optimism showed a growing number of
traders are turning bullish on stocks. The survey reported that
73% of investors say now is a good time to invest in the market.
A public majority of bullish sentiment is usually not good news
and another problem is that indices are moving higher on narrow
leadership. Strong performances from a few key issues have drove
the Dow higher and many of the top-tier technology issues are now
falling from recent lofty prices. The lack of conviction in many
of the current rallies will eventually set the stage for a major
correction.

Most of our portfolio reflected the recent profit-taking among
high flying technology stocks but there were some lower-priced
issues that performed well. Echelon (ELON) moved $2.12 higher to
$13.25, offering the first early exit of the expiration period.
The position credit traded as high as $2.18 during the session,
a profit of $0.88 on $1.25 invested for three weeks. We plan to
track the position for a (bullish) move to a diagonal spread in
the next few days. Micron Electronics (MUEI) rallied $1.12 to a
recent high near $12. The move provided another early exit with
a profit of $0.62 (100% return in two months). Peoplesoft (PSFT)
recovered some of Friday's losses, rebounding $1.38 to close at
$21.50. Our bullish diagonal spread achieves the maximum profit
above $20 thus, it's encouraging to see the stock successfully
test support near that price. MessageMedia (MESG) rose $1 after
falling significantly on Friday. The stock appears comfortable
in the $17-$18 range and the (bullish) December position will
return a profit of 66% above $15. Talk.com (TALK) and Zoltek
(ZOLT) also made positive moves, both climbing to recent highs
after consolidating during the last week. A few mid-cap stocks 
participated in the rally. Pixar Animation (PIXR) climbed $2.50
higher (to $50) on bullish anticipation of the upcoming release
of Toy Story II. The stock is now $15 above the sold options in
our combination (Covered-Call/Naked Put) position.

In our long-term portfolio, market bellwethers were the leaders
as Proctor & Gamble (PG) and General Motors (GM) moved to recent
highs during the session. Both of these issues are now trading
above the current sold (short) options so we must monitor the
technical indicators for signs of further upside movement and
make the necessary adjustments. Cabletron Systems (CS) rallied
to a recent high near $24 and this position is a candidate for
roll-up to the next strike at $20.00. Our current spread has no
upside risk but we can increase the profit potential with a move
to the higher strike. Most of the other issues consolidated on
profit-taking and the worst of the bunch, Polaroid (PRD), began
a secondary downtrend from a short-term range near $20. If the
stock price falls through this support, the long-term position
will be closed to limit future losses.

We were disappointed in the performance of a few issues but one
of the most obvious short-term losers appears to be Mellon Bank
(MEL). The stock price has failed to hold above the recent range
on last week's breakout and now the issue is plunging back to a
short-term support level near $36. There should be a successful
test at that price but it's doubtful that the issue will rebound
through the new resistance at $39. The original play was offered
as a short-term momentum position but the up-trend is faltering.
Conservative investors should close the spread position at $1.00
credit to preserve capital. Aggressive traders should consider
leaving the short-term option open with a buy-to-close stop for
protection. This method offers a better than break-even exit for
the play with limited upside risk.

Tuesday, November 23

Stocks were battered across the board as investors gave thanks
for the recent rally by reaping profits in a massive sell-off.  
The Dow dropped 93 points to 10,995 and the Nasdaq tumbled 49
points to 3,342. The S&P 500 index slipped 16 points to 1,404.
In the broader market, decliners outpaced advancers by a more
than 2 to 1 margin on 920 million shares traded on the NYSE.
Leadership was horrid with 317 stocks at new lows and only 43
at new highs. The long bond fell 1/32 while the yield remained
at 6.19%.

Portfolio plays:

There was little to be thankful for in today's market-wide melee.
The majority of our portfolio stocks suffered losses as traders
sold shares to capture profits from the market's recent strength. 
The market overlooked the Commerce Department's bullish report on
durable goods. The report suggested the economy has begun to slow
with orders for long-term items declining by 1.3% last month to a 
seasonally adjusted $200 billion. Analysts had expected orders to
rise by 1% and this change in pace may subdue the Federal Reserve
in its current inflation-limiting stance. Even with the favorable
news, technology issues suffered the first major decline in three
weeks with big losses from a handful of lesser-known companies as
investors exited positions ahead of the Thanksgiving holiday. The
markets will close on Thursday and operate for half a session on
Friday and analysts expect volume to taper off during the week.

The leaders were few and far between and the color crimson filled
the quote page at the end of the session. Rather than focus on the
long list of losers, we decided to look upon the session as simply
a consequence of the recent incredible rally and move on to the
monthly summary and research for new plays.


Summary Of Monthly Positions:

*********************
CREDIT SPREAD SUMMARY
*********************

Stock  Pick     Last      Position   Credit  Cost    G/L    Status

CHA   $61.38   $59.88    NOV50P/55P  $0.68  $0.00   $0.68   Closed
CHA   $60.12   $59.88    NOV50P/55P  $0.38  $0.00   $0.38   Closed
EDS   $50.18   $63.19    NOV65C/60C  $1.00  $1.12  ($0.12)  Closed
QLTI  $34.80   $44.00    NOV47C/45C  $0.31  $0.25   $0.06   Closed
VISX  $70.00   $79.06    NOV95C/90C  $0.62  $0.00   $0.62   Closed

* QLTI and EDS were closed early to limit potential losses.

Credit spreads are profitable if both positions remain OTM until
expiration. The cost-to-close price can be used to compare the
initial opening credit to the current spread value.

***********************
CALENDAR SPREAD SUMMARY
***********************

Stock  Pick    Last      Position    Debit  Value    G/L    Status

ABTE  $10.81  $10.19  MAR10C/DEC10C  $1.00  $0.88  ($0.12)   Open
AW    $11.38  $8.31   MAR12C/NOV12C  $1.12  $0.75  ($0.38)  Closed
BCR   $51.25  $56.50  JAN55C/NOV55C  $1.43  $1.75   $0.31   Closed
BCR   $56.25  $56.50  DEC60C/NOV60C  $1.88  $2.25   $0.38   Closed
BEL   $64.13  $64.81  APR65C/DEC65C  $0.75  $3.12   $2.38    Open
CYCH  $11.88  $11.81  MAR15C/DEC15C  $1.12  $0.88   $0.25    Open
ELON  $9.00   $11.00  MAY10C/DEC10C  $1.25  $2.12   $0.88    Open
GTS   $23.00  $33.56  DEC27C/NOV27C  $0.62  $1.25   $0.62   Closed
LGE   $22.69  $20.38  MAR22C/DEC22C  $0.88  $0.50  ($0.38)   Open
LGTO  $45.44  $73.00  DEC50C/NOV50C  $0.75  $1.62   $0.88   Closed
LOR   $18.00  $18.69  APR20C/DEC20C  $1.81  $1.88   $0.06    Open
MLTX  $17.81  $28.13  MAY17C/DEC20C  $3.00  $4.00   $1.00   Closed
MUEI  $10.50  $10.94  APR10C/DEC10C  $0.62  $1.00   $0.38    Open
MTC   $44.38  $47.19  JAN50C/NOV50C  $1.93  $2.75   $0.81   Closed
NSTA  $8.94   $15.38  JAN12C/DEC12C  $0.31  $0.62   $0.31   Closed
OXY   $21.69  $23.44  JAN22C/DEC22C ($0.50) $0.12   $0.62    Open
PILL  $13.62  $11.00  APR15C/DEC15C  $1.31  $1.00  ($0.31)   Open
PR    $26.25  $25.13  FEB30C/NOV30C  $1.38  $0.75  ($0.62)  Closed
PSFT  $16.19  $20.38  JAN17C/DEC20C  $0.38  $2.00   $1.62    Open
SATH  $13.00  $12.38  FEB15C/DEC15C  $1.12   New     Play    Open
TALK  $13.75  $18.38  JAN15C/DEC17C  $1.38  $2.12   $1.00    Open
TDFX  $8.50   $9.06   MAR10C/DEC10C  $0.75  $0.88   $0.12    Open
TOY   $16.62  $17.19  JAN17C/DEC17C  $0.12  $0.50   $0.38    Open
WFC   $41.69  $47.50  JAN42P/NOV40P  $2.00  $1.75  ($0.25)  Closed
ZOLT  $7.68   $11.44   APR7C/DEC10C  $2.62  $2.38  ($0.25)   Open

The calendar (or time spread) is profitable if the value of the
position exceeds the initial debit (or cost-basis) at the end of
the expiration period for the long position. However, because we
track the plays based on the current closing cost/value, the gains
for time spreads will rarely be reflected until the play closes.
Each month, as we sell a new option against the long position, the
net cost should decline or the position value should increase.


************************
COVERED-CALLS WITH LEAPS
************************

Stock  Pick    Last     Position    Debit   Value    G/L    Status

ADBE  $76.13  $75.63  JAN80/DEC85C  $14.50   New     Play    Open
BGEN  $83.81  $75.94  JAN90/NOV90C  $13.38  $8.50  ($4.88)  Closed
CA    $53.56  $66.75  JAN60/DEC65C  $7.62   $14.00  $6.38    Open
CS    $16.80  $23.00  JAN15/DEC17C  $2.38   $4.12   $1.75    Open
GM    $71.68  $69.75  JAN75/DEC70C  $8.25   $7.00  ($1.25)   Open
GM    $71.68  $69.75  JAN75/DEC70C  $5.50   $7.00   $1.50    Open
JNJ   $95.68  $105.19 JAN100/D100C  $4.62   $11.00  $6.38    Open
LTD   $45.68  $39.00  JAN50/NOV45C  $5.50   $3.00  ($2.50)  Closed
MDT   $39.38  $38.69  JAN37/DEC40C  $4.75   $6.50   $1.75    Open
MO    $38.68  $25.63  JAN35/NOV37C  $5.38   $3.00  ($2.38)  Closed
MOT  $100.00  $125.38 JAN105/D110C  $18.38  $19.00  $0.38    Open
PG   $109.50  $110.50 JAN100/D110C  $18.00   New     Play    Open
PRD   $25.38  $20.00  JAN25/NOV25C  $4.88   $2.88  ($2.00)   Open
SLR   $71.25  $86.13  JAN70/DEC80C  $13.12  $18.50  $5.38    Open
SUNW  $71.75  $129.56 JAN75/DE115C  $36.75  $45.25  $8.50    Open
XON   $81.94  $79.69  JAN85/NOV80C  $5.38   $5.50   $0.12    Open


***********************
DIAGONAL SPREAD SUMMARY
***********************

Stock  Pick    Last      Position    Debit   Value    G/L   Status

ATHM  $48.06  $51.31  JAN40C/DEC50C  $5.50   $7.88   $2.38   Open 
AMTD  $21.93  $28.13  JAN21C/DEC25C  $2.88   $3.00   $0.12   Open
AWRE  $31.00  $49.00  JAN30C/NOV35C  $4.25   $6.00   $1.75  Closed
COMS  $25.31  $43.31  JAN27C/DEC30C  $0.38   $2.38   $2.00   Open
CSCO  $73.50  $88.13  DEC65C/NOV75C  $8.25  $10.00   $1.75  Closed
CYOE  $6.38   $5.19    DEC5C/NOV7C   $1.50   $1.75   $0.25  Closed
DBCC  $11.50  $10.75  DEC10C/NOV12C  $1.88   $2.25   $0.38  Closed
EGRP  $24.94  $35.69  APR25C/JAN30C  $3.75   $5.12   $1.38   Open
NETS  $25.06  $23.25  FEB22C/DEC25C  $2.88   $2.75  ($0.12)  Open
NTBK  $21.75  30.13   JAN22C/DEC25C  $2.00   $2.25   $0.25   Open
PGEX  $24.38  $19.25  JAN15C/NOV22C  $6.75   $4.75  ($2.00) Closed

The diagonal spread is profitable if the value of the position
exceeds the initial debit (or cost-basis) at the expiration of
the long position. However, because we track the plays based on
the current closing cost/value, the gains for diagonal spreads
will rarely be reflected until the play closes. Each month, as
we sell a new option against the long position, the net cost
should decline or the position value should increase.


*************
DEBIT SPREADS
*************

Stock  Pick     Last     Position    Debit   Value   G/L    Status

APOL  $24.00   $25.06   NOV20C/22C   $2.12   $2.25  $0.12   Closed
ATHM  $48.06   $51.31   NOV45C/50C   $2.62   $3.50  $1.38   Closed
COMS  $31.50   $43.31   JAN30C/32C   $1.31   $2.31  $1.00    Open
CMGI  $97.93  $124.88   NOV85C/95C   $6.50   $9.62  $3.12   Closed
DELL  $42.50   $41.31   NOV55P/45P   $8.00   $9.62  $1.62   Closed
FON   $51.12   $74.81  NOV40CC/40NP $39.12  $40.00  $0.88   Closed
GBLX  $25.19   $45.44   JAN17C/22C   $4.75   $5.00  $0.25   Closed
GMST  $83.63  $104.63   NOV62C/70C   $6.00   $7.25  $1.25   Closed
IDTC  $22.62   $23.69  DEC17C/DE25C  $3.38   $4.50  $1.12   Closed
JDSU  $129.38  $213.81 NOV100C/110C  $8.93   $9.88  $0.93   Closed
LTD   $41.81   $39.00   NOV50P/45P   $4.00   $4.88  $0.88   Closed
MEL   $39.19   $38.19   DEC37C/40C   $1.38   $1.12 ($0.25)   Open
MESG  $13.38   $17.50   DEC10C/12C   $1.50   $1.75  $0.25    Open
NETA  $19.80   $28.00   DEC12C/17C   $3.62   $4.50  $0.88    Open
NVDA  $28.25   $42.88   DEC20C/25C   $3.50   $4.50  $1.00    Open
PIXR  $40.50   $47.50  DEC35CC/35NP $32.62  $35.00  $2.38    Open
PSFT  $17.81   $20.38    JAN15CC    $14.12  $15.00  $0.88    Open
QCOM  $183.75  $367.06 JAN140C/150C  $7.25   $9.75  $2.50   Closed
TWE   $16.63   $19.13   DEC12C/15C   $2.12   $2.00 ($0.12)   Open
TWLB   $9.72   $9.69    FEB10C/12C   $0.75   $0.62 ($0.12)   Open

* The majority of these positions finished at maximum profit but
  many were closed early to protect profits or prevent losses.

A debit-spread is profitable if the value of the position exceeds
the initial cost of the spread when the play is closed. However,
because we track plays based on the current cost/value, potential
gains may not be reflected until both positions are closed.


***************
DEBIT STRADDLES
***************

Stock  Pick    Last     Position     Debit    M/V     C/V   Status

ALL   $24.50  $28.06    APR25C/25P   $5.50   $7.25   $6.62   Open
ALT   $16.44  $14.94    APR17C/15P   $2.50   $2.25   $2.25   Open
AMES  $31.63  $25.88    JAN30C/30P   $8.88   $9.62   $7.00   Open
AOL  $120.38  $158.63  DEC120C/120P $18.75  $41.00  $40.50  Closed
AVI   $22.81  $20.19    DEC22C/22P   $4.38   $4.88   $3.00  Closed   
CAL   $36.43  $37.44    MAR35C/35P   $8.62   $9.00   $6.75   Open
CFR   $29.69  $28.81    MAR30C/30P   $3.06   $3.50   $3.38   Open
DJX  $102.79  $109.98  NOV102C/102P  $8.12   $8.25   $7.88  Closed
DLJ   $50.13  $52.88    JAN50C/50P  $13.25  $14.00  $10.50   Open
FDX   $35.19  $42.19    APR35C/35P   $9.75  $13.12  $11.00   Open
HIG   $41.13  $48.81    MAR40C/40P   $7.31  $11.50  $10.00  Closed
MYL   $18.63  $22.56    APR17C/17P   $4.56   $6.12   $6.00   Open
STN   $25.25  $23.50    JAN25C/25P   $3.75   $3.88   $2.62   Open
U     $25.62  $28.31    MAY25C25P    $8.00  $10.75   $7.50   Open
UVN   $85.75  $87.81    MAR85C/85P  $14.75  $14.00  $13.50   Open
WMB   $40.75  $35.94    JAN40C/40P   $8.12   $8.00   $6.50   Open

SHORT-TERM PLAYS

EBAY $142.62  $145.94  JAN145C/145P $41.00  $38.00  $32.00  Closed
GNET  $55.88  $80.56    JAN55C/55P  $17.88  $28.25  $28.00  Closed
GM    $65.06  $69.75    JAN65C/65P  $10.00   $9.00   $8.75  Closed
LCOS  $58.94  $55.00    JAN70C/70P  $14.62  $14.00  $13.88   Open
UK    $52.69  $62.13    JAN50C/55P  $10.50  $12.25   $9.00  Closed
XON   $74.81  $79.69    JAN75C/75P   $9.25   $8.00   $7.88  Closed

              M/V = Maximum Value  C/V = Current Value

A debit-straddle is profitable when the value of the position
exceeds the initial cost of the spread.


****************
CREDIT STRANGLES
****************

Stock  Pick     Last     Position    Credit  Cost     G/L   Status

BRCM  $118.63 $196.50  NOV150C/140C  $0.88   $1.50  ($0.62) Closed
BRCM  $118.63 $196.50   NOV85P/95P   $1.25   $0.12   $1.12  Closed

* BRCM was closed early to protect profits and limit losses.

A credit-strangle is profitable if the cost to close the position
is less than the initial credit from the spread.

Note: We trade the Spreads portfolio just as we would trade our
personal account and the ongoing narrative is a service we provide
to help novice traders understand how various positions might be
opened and closed. It is not intended as a substitute for your own
trading techniques nor does it replace your duty to manage the
positions in your portfolio. We post a list of the current plays
once a month (after expiration) and the summary is a reasonable
representation of the positions and prices that were available.

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


*********
NEW PLAYS
*********

T - AT&T  $50.81     *** A New Look? ***

AT&T is a premier voice and data communications company, serving
more than 90 million customers, including consumers, businesses
and government. AT&T has the world's largest, most powerful long
distance network and a giant digital wireless network in North
America. The company is a leading supplier of data and Internet
services for businesses and the nation's largest direct Internet
service provider to consumers.

This week, T announced plans to create a tracking stock for its
wireless unit. The issue would give T a new currency to pursue
wireless acquisitions and expand its network without affecting
the parent company's earnings. The wireless subsidiary would be
a solid competitor with a national network, strong brand name,
excellent revenues and improving profitability over the course
of the next few years. The issue might be worth as much as $75
billion and the minimum value is estimated at $20 a share.
 
The share value of AT&T has fallen on hard times recently but
the company is soon to be the largest cable television operator
and expects to gain momentum from an optimistic outlook during
the annual meeting with industry analysts in early December. The
company is prepared to reassure investors that its plans remain
on track to improve revenues with lower costs and provide phone
service over cable television lines. The buyout of MediaOne has
been a major concern to core shareholders and AT&T will focus on
convincing analysts the eventual structure will be a success. T
is also expected to provide new plans for its slumping Internet
business. AT&T's WorldNet remains a minor player in the industry
and only a significant change in the subscriber strategy will
produce a favorable, long-term outcome.

The new technical character of this issue combined with a demand
for call options has provided us with two excellent opportunities
to participate in the current recovery.

PLAY (aggressive - bullish/debit spread):

BUY  CALL JAN-46.62 TZ-AV OI=5854  A=$5.62
SELL CALL JAN-50.00  T-AJ OI=30184 B=$3.50
INITIAL NET DEBIT TARGET=$2.00 ROI(max)=62%

 - or -

PLAY (conservative - bullish/diagonal spread):

BUY  CALL JAN-46.62 TZ-AV OI=5854  A=$5.62
SELL CALL DEC-50.00 T-LJ  OI=18475 B=$2.38
INITIAL NET DEBIT TARGET=$3.00 TARGET ROI=25%

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


     - TECHNICALS ONLY -
These plays are based on the current price or trading range of
the underlying issue and the recent technical history or trend.
Current news and market sentiment will have an effect on these
positions so review each play individually and make your own
decision about the future outcome of the stock price.

****

ETEK - E-Tek Dynamics  $73.12   *** On The Move! ***

E-TEK Dynamics is a leader in the design and manufacturing of
high quality passive components and modules for fiber optic
networks. E-TEK offers a broad product line in many markets
for several key passive components required by manufacturers
of telecommunications equipment.

E-Tek Dynamics is in a strong stage II climb. Today's bounce off
the 30 dma (exp) was supported by heavy volume. BOP is reflecting
strong buying pressure (since the start of November). The stock
is coming off the bottom of its regression channel (6 month daily)
and several short-term oscillators are indicating an oversold
condition.

PLAY (conservative - bullish/credit spread):

BUY  PUT DEC-55 EVU-XK OI=49 A=$0.62
SELL PUT DEC-60 EVU-XL OI=71 B=$1.18
INITIAL NET CREDIT TARGET-$0.68 ROI=15%

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

****

KNT - Kent Electronics  $23.75   *** A New 52-Week High ***

Kent Electronics is a leading national specialty distributor of 
electronic products and a manufacturer of custom-made electronic 
assemblies. The company distributes electronic connectors, wire
and cable, and other passive and electromechanical products and
interconnect assemblies used in assembling and manufacturing
electronic products.

Today an analyst from Merrill Lynch raised his short-term rating
on the stock after issuing a report saying that Kent's components 
distribution business is benefiting from an improving unit demand
for passive electronics, which has reduced pricing pressures. The
analyst said that the company's contract manufacturing business,
K-Tec, moved above the break-even point in the second quarter of
fiscal 2000 and he expects improvement in the coming months. His
report added that Kent has completed several niche acquisitions
in recent months that will have a positive effect on the future 
financials of the parent company.

The break-out of the recent trading range was preceded by strong
indications of new interest as volume and accumulation had moved
higher over the past few weeks. There is a fair possibility that
the issue will "fill the gap" before moving significantly higher
but support should exist near the $21 range, offering fair risk
for a favorable reward.

PLAY (very aggressive - bullish/debit spread):

BUY  CALL DEC-20.00 KNT-LD OI=412 A=$4.00
SELL CALL DEC-22.50 KNT-LX OI=86  B=$2.18
INITIAL NET DEBIT TARGET=$1.62 ROI(max)=54%

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


********************
INDEX OPTION SPREADS
********************

As a trader, you may be familiar with options on individual stocks
where you have the right to buy (call option) or the right to sell
(put option) a particular stock at some predetermined price within
some predetermined time. The buyer has the rights and the seller
the obligations. With index options the basic ideas are the same.
Index options allow you to make investment decisions on a specific
market industry or on the market as a whole. Spread strategies can
be made with index options similar to those made with individual
stock options. Many professional traders employ index spreads as a
hedge strategy. We favor debit positions on the SPX for momentum
and hedge or longer-term plays and OTM credit spreads on the OEX
when the risk/reward is favorable. Low ROI disparity spreads will
be listed (when available) for the conservative index trader.

****

OEX - S&P 100 Index  $746.95     OTM Credit-Spreads

The Standard & Poor's 100 Index is a capitalization-weighted index
of 100 stocks from a broad range of industries. The component
stocks are weighted according to the total market value of their
outstanding shares. The impact of a component's price change is
proportional to the issue's total market value, which is the share
price times the number of shares outstanding. 

OBSERVATIONS:

For OTM credit spread trades, we like to use the actively-traded
S&P 100 Index options because they contain much more premium than
options on individual stocks and provide an underlying instrument
less prone to huge, gapping moves. Review the 'Market Sentiment'
section for specific technical information on the S&P 100 Index.
 
Conservative...

PLAY (bullish/low ROI):
BUY  PUT DEC-690 OEY-XR OI=2909 A=$2.38
SELL PUT DEC-700 OEY-XT OI=5976 B=$3.00
NET CREDIT TARGET=$0.62 ROI=6% (3 weeks)

Aggressive...

PLAY (Bearish):
BUY  CALL DEC-790 OEZ-LR OI=3544 A=$1.43
SELL CALL DEC-780 OEZ-LP OI=5594 B=$2.62
NET CREDIT TARGET=$1.18 ROI=13% (3 weeks)

By combining the two credit spread positions, you can participate
in a popular (neutral) strategy known as the Long Iron Condor. It
is often used with the S&P 100 options and offers a limited risk,
limited profit strategy that gives you a wide range for success.
The probability of the OEX remaining in the maximum profit range
(700-780) is slightly better than 70% and in this case, the play
is weighted heavily to the upside in regard to the recent rally.
The play is based solely on the current price and trading range
of the OEX and the recent technical trend. Market sentiment will
have an effect on this position so review the overall outlook in
main section of the newsletter and make your own decision about
the future outcome of the index.

CHART= http://quote.yahoo.com/q?s=^oex&d=b



************
See Disclaimer in section one
************

DISCLAIMER

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

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