Option Investor
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Daily Newsletter, Sunday, 12/05/1999

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The Option Investor Newsletter            Sunday  12-5-99  1 of 5
Copyright 1999, All rights reserved. 
Redistribution in any form strictly prohibited.

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

Entire newsletter best viewed in COURIER 10 font for alignment
******************************************************************
MARKET STATS FOR LAST WEEK AND PRIOR WEEKS
******************************************************************
        WE 12-03         WE 11-26         WE 11-19        WE 11-12
DOW     11286.18 +297.27 10988.91 - 14.98 11003.89 +234.57 + 64.84
Nasdaq   3520.63 + 72.82  3447.81 + 78.56  3369.25 +148.10 +119.95
S&P-100   767.48 + 13.91   753.57 +  4.27   749.30 + 18.21 + 12.29
S&P-500  1433.30 + 16.68  1416.62 -  5.38  1422.00 + 25.96 + 25.84
RUT       464.58 +  5.64   458.94 -  2.33   461.27 + 11.58 +  7.28
TRAN     2928.80 + 19.64  2909.16 - 67.34  2976.50 -113.07 + 85.58
VIX        20.82 -  2.13    22.95 +  3.32    19.63 -  2.05 -   .38
Put/Call     .49              .42              .47             .51
******************************************************************

Irrational Exuberance

The market rallied strongly on the employment numbers on Friday 
and the Nasdaq and S&P-500 both closed at new record highs. The 
Dow came within only a few points of the previous closing high of 
11326. After actually trading as high as 11341 intraday the Dow 
retreated to a still respectable 11286 at the close. Most of the 
movement for all the averages came before their 11:00 highs and 
then faded going into the close. The relief rally, yes I said 
relief, came after the Nov employment numbers were announced. 
Unemployment remained at 4.1% and average hourly wages clocked in 
with only a +$.02 increase. New jobs were created at a +234,000 
pace. Not too hot, not too cold. The reason I used the term 
"relief rally" was simply because there was no bad news in the 
numbers and the worry about the report and possible Fed reaction 
is over. The numbers were not good, they just were not bad and the 
Fed is truly in hibernation until next year. 


 


 

The Nasdaq volume was the fifth heaviest on record again at
1.54 bln and the NYSE was also strong at over 1 bln. With the
close at 3520 we are now half way to the next thousand mark
of 4000 after only breaking above 3000 twenty trading days ago.
Don't worry markets go up forever, right?  

While you are still unwrapping your early Christmas present
from the Goldilocks Economy, you are probably already counting 
your expected profits from the continuation of this rally. 
Things could not be better. A true Nirvana exists in the markets.
20 million new jobs have been created since Clinton took
office. This is now the longest economic expansion in history.
Wages are stagnant. There are no current wars. The Fed has
gone into hibernation until spring in fear of Y2K. A recent
survey shows they may be the only ones still concerned about
a possible Y2K economic event with only 3% of the public
expecting any kind of disruptions. With no rate hikes in our
near future and the consumer spending money like there was 
no tomorrow, what could possibly hurt us now? Third quarter 
earnings came in at a record +22.7%. Fourth quarter earnings
are expected to be strong with no Y2K slow downs in sight.

Don't get me wrong. I am as optimistic as anyone that the 
market will continue to go up into the first quarter of next
year. BUT, when everything is too good too be true it is 
usually a sign that trouble is about to blind side us from
somewhere. The Nasdaq is on track to post the biggest year
on record with a 61% YTD gain. The previous highs were in 1991
for 56.8% (the biotech boom) and 1995/98 both posting 39%
gains. Fund managers are buying champagne by the truckload
with many funds gaining over 50% for the year and some with
over 100% gains. They go to sleep at night with visions of
dollar signs dancing in their heads from the expected year
end bonuses. Do you think they may be worried a little by
the ARMS index showing the Nasdaq is the most overbought 
since 1982. Do you think they might be ready to take some
cash off the table the instant any Y2K weakness develops?
Do you think they want to risk millions of dollars in personal
bonuses because they hung on a week too long just trying for 
another couple of percentage points? When is enough, enough?
Could the rally on Friday simply have been shorts covering
in light of no bad news? 

I am not saying the market will tank on Monday although some
profit taking may appear on Monday or Tuesday after such a
tremendous recovery from the lows last Wednesday. What I am 
saying is that we should not be expecting another +500 points
in the last four weeks of 1999. It is entirely possible that
we are setting up for a failed rally on the Dow. This is
not what we expect but the Dow needs to close above 11326
to confirm this upward move. Lets look at some interesting
signals on the Nasdaq using candlestick charts. 


 

As you can see from this chart we have received about eleven
strong buy signals on the Nasdaq since June 1st. Each is
represented by the Hammer indicator. Almost every bottom for 
the last six months has been represented by this indicator. 
The reverse of this very bullish indicator is the Star 
formation. If you look at the chart you will only see a 
couple star formations. To be a true star the body of the 
star must not overlap with the body of the day before.
The shadows (tails, sticks) may overlap but not the bodies.
The distance from the previous day and the length of the stick
is important to the strength of the signal. As you can see, 
the strongest moves are when the shadows on the hammers were
longest and protruded into uncharted territory. The closest
star to our current position was Friday the 28th, the day
before the Nasdaq started its three day decline last week.
The Key - if Monday is a down day for the Nasdaq the 
formation will become an evening star and very bearish. 
(see the definitions below for a better description)

If you only look at the headlines, "Dow up +247 points!
Nasdaq sets another record high", you will miss the warnings
that technical analysis will give you. How important are
these warnings? When you consider that there are over 20
important economic reports due out in just the next two
weeks it could be crucial. We have the Productivity report
and Unit Labor Costs on Tuesday, Import/Export Prices, 
and Wholesale Inventories on Thursday and the big one
for the week, the PPI on Friday. The very next week we
have the CPI, Real Earnings, Retail Sales and Atlanta
Fed index on Tuesday, Business Inventories, Capacity
Utilization and Industrial Production on Wednesday. In
just the next eight days we have a serious minefield to
cross. I would be real surprised if the markets just kept
setting new highs during this period. However, as long as Ma 
and Pa investor continue to Christmas shop for stocks, any 
pull back will be brief.

The wild card here is the shorts. I suspect that much of the
buying on Friday was based on short covering after the bad
numbers did not appear. There are rumors of large hedge funds
that are extremely over extended after establishing short
positions on every unstoppable wave of record Nasdaq highs.
If the market does not relax in the next couple days these 
funds will be forced to start covering or face margin calls. 
This forced buying would again fuel the Nasdaq for another 
round of gains. How long can they hold out? Who knows but 
every day the Nasdaq stocks gain ground they get closer to 
their pain threshold. The lack of a Y2K sell off has 
prompted cautious buyers to come off the sidelines and
add their cash to the already incredible fund inflows. The
funds received about $34 bln in cash in November although
the numbers did slow somewhat last week. A normal month is
about $20 bln. 

My educational article this week is called "Exact Instructions"
This is the fifth in the series. Look for it on the website.

Have a safe week in the market. Watch for buying opportunities,
pick your entry points VERY CAREFULLY and sell too soon.

Jim Brown
Editor



***********************
Candlestick Definitions
*********************** 

Hammer

This is a bullish signal if it occurs after a significant 
downtrend. A Hammer is identified by a small real body 
(i.e., a small range between the open and closing prices) 
and a long lower shadow (i.e., the low is significantly 
lower than the open, high, and close). 



****

Star
 
Stars indicate reversals. A star is a line with a small real 
body that occurs after a line with a much larger real body, 
where the real bodies do not overlap. The shadows may overlap.



****

Evening star
 
This is a bearish pattern signifying a potential top. The star 
indicates a possible reversal and the bearish (filled-in) line 
confirms this. 



****

Definitions are from Technical Analysis from A to Z, By Steven B. 
Achelis, and it is available in the bookstore for $20.95.

http://www.OptionInvestor.com/bookstore/index.asp
  


********************
Y2K Renewal Offer!!!
********************

Announcing the cheapest renewal rate available! $24.91 mo*

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subscribers an extra value package as a thank you for their 
support. The package this year contains (2) of our Y2K Option 
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the Stock Traders Almanac, a $50 value.  You will receive two 
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thousands of facts, tips and hard information that a trader 
cannot live without. Just one of these facts can pay for the 
newsletter subscription for the entire year and there are 
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***********
JIM'S PLAYS
***********


QCOM - Dec-400 Naked Puts
 


I am still holding the short position on the Dec-400 naked 
puts that I sold the previous week for $54. The last trade on 
Friday was $25. QCOM is having some trouble breaking through
the resistance at the previous highs around $392 but I have
two weeks left until expiration. I only need a close over
$400 to capture the full $55 profit. 


SUNW - $120 calls
 


SUNW died on Tuesday and I bailed on my $120 calls for a $4.00
profit and was glad I did until the bounce on Thr/Fri. Still
a profit is a profit and I can't complain.

BVSN - $100 calls
 



Like I said last Sunday, I wish I had sold at the close on
Friday the 26th after the big gains. When BVSN started rolling
over on Monday I wasted no time in closing the position for a
$6.00 profit. Thank goodness. At $90+ on Tue/Wed I would have
been toast. Yes, it came back but they don't always do that!

Current plays:

This is the embarrassing part. After getting out of the market
early in the week, I was planning to wait for a confirmation
of a bottom before opening new positions. On Wednesday night
after the Nasdaq had bounced off 3325 three times I decided
that Thursday would be the day. I started to buy at the close
on Wednesday but decided against it at the last minute.


  

These were the stocks I had decided to play;

NOK  @ $142 - NOV-130 call NAY-LF @ $15.00
JDSU @ $230 - NOV-230 call UQD-LJ @ $10.00
CMGI @ $150 - NOV-160 call GCD-LL @ $ 8.63
BEAS @ $ 87 - NOV-85  call BRQ-LQ @ $ 9.13
IMCL @ $ 37 - NOV-37  call QCI-LF @ $ 7.75

I got to bed around 2:AM, tossed and turned, got to sleep
around 4:AM. When the alarm went off at 7:00 (30 min before
the market opens) I turned off the alarm, turned on CNBC
and the next thing I new it was 9:00 and my wife is waking
me up with "I thought you were going to trade today". That
was a very expensive two hours of sleep. I jumped up and
went to the PC to see that everything had jumped considerably
at the open but CMGI, JDSU and NOK were off their highs and
what would have been good entry points in retrospect looked
like weakness at the time. I decided to wait. I convinced
myself that with the employment report on Friday that the
market would probably pull back in the afternoon. By the
time I got to work, handled some problems and looked at
the stocks again, it was all over but the crying. Four of 
the five went on to be strong winners. Only IMCL floundered.

This proves a very important point. All the planning and 
research in the world is worthless if you don't execute 
your plan at the correct time. I waited three days for the
rebound I knew was coming but failed to execute. I can 
always console myself with the "missed money is better than
lost money" axiom but if you are like me, that is a slim
consolation. The normal reaction would have been to chase
the plays but I have also found that in most cases chasing
a missed opportunity is a good way to throw money away. 

The market will come to me. There will be better entry points.
There will be new plays. There is no time decay on cash.
I am not mad at myself. I am not mad at myself. I am not
mad at myself. Hopefully if I keep repeating that all weekend
I will NOT be mad at myself by Monday morning. 

Be very careful on Monday. Look for buying opportunities during 
the week instead of rushing into plays just because the market 
is open. 

Remember, my trading plan is to trade "only when profitable"
and yours should be also.

Jim


***********
OPTIONS 101
***********

Exact instructions
By Jim Brown

Hi Jim, You wrote: "I estimate that a trader who will follow 
instructions EXACTLY can net $50,000 on a $10,000 account every 
year without fail. Notice I said follows instructions EXACTLY. "

If you give me your exact instructions I would follow them. I seem 
to be floundering in the wind with the worst picks, worst entries, 
and worst exits. I actually do worse now that I think I know 
something. So what are those Exact instructions?

(sentiments sent by dozens of different readers last week) 

Now before you read this article, remember I said EXACTLY.

To read the rest of this article please visit:

http://www.OptionInvestor.com/options101/120599_2.asp



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

Meeting the Need for Speed
By  S.P. Brown

Unless you've been stranded on a Russian space station for the
past year, you know that the Internet is expanding nearly as
rapidly as the universe itself.  Cyberspace is expanding so
fast in fact that Internet Protocol (IP) data traffic is
doubling every 100 days.

/members/stocknews/120599_1.asp



*******
ASK OIN
*******

A handful of technology goes a long way.

Welcome back to the "Ask the Analyst" column.  I'm back and
we've got some great charts to look at today.

After the incredible run up in the Nasdaq over the last several
weeks, you can imagine that the majority of questions I get
are on technology stocks.  We've got a few to look at today,
but there were a few questions on a bank stock or two as well.

/members/ask/120599_1.asp



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

As of Market Close - Friday, December 3, 1999 

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

DOW Industrials   10,750  11,320  11,286    Neutral  11.12
SPX S&P 500        1,340   1,425   1,433    BULLISH  12.03 *
OEX S&P 100          700     755     767    BULLISH  12.03 *
RUT Russell 2000     440     460     465    BULLISH  11.12 *

NDX NASD 100       2,680   3,150   3,172    BULLISH  12.03 *
MSH High Tech      1,340   1,630   1,677    BULLISH  12.03 *

XCI Hardware       1,100   1,160   1,244    BULLISH  11.11
CWX Software       1,000   1,160   1,245    BULLISH  09.03
SOX Semiconductor    570     660     658    Neutral  11.30
NWX Networking       670     800     806    BULLISH  12.03 *
INX Internet         550     675     567    Neutral  11.30

BIX Banking          645     690     632    BEARISH  11.30
XBD Brokerage        395     450     440    Neutral  11.30
IUX Insurance        625     650     607    BEARISH  11.30

RLX Retail           875     920     937    BULLISH  11.23
DRG Drug             375     395     382    Neutral  11.30
HCX Healthcare       750     790     759    Neutral  11.09
XAL Airline          180     190     149    BEARISH  05.21
OIX Oil & Gas        285     315     299    Neutral  11.23


Posture Alert

Favorable employment report has the equity markets surging with 
several indices reaching new 52-week high. As such, we have turned 
Bullish across several broad market indices and industry sectors.



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

Buying Climax? 

After surging close to 250 points, did Friday's (12/3)
favorable employment report trigger a classic buying climax that 
some technicians look for to signal an end of the market rally 
that began on October 18th? 

Summarized below are the gains of the respective market indices 
since October 15th.  This seven-week period includes just 34 
trading days.

Market/Sector      Close   Close             Percent
Index             Oct 15   Dec 3   Change     Change 

DOW Industrials   10,020  11,286   1,266+    +12.6%
SPX S&P 500        1,247   1,433     186+    +14.9%
OEX S&P 100          652     767     115+    +17.6%
RUT Russell 2000     415     465      50+    +12.0%

NDX NASD 100       2,404   3,172     768+    +31.9%  Wow!
MSH High Tech      1,209   1,677     468+    +38.7%  Wow!

XCI Hardware       1,017   1,244     227+    +22.3%
CWX Software         851   1,245     394+    +46.2%  Wow!
SOX Semiconductor    513     658     145+    +28.3%
NWX Networking       596     806     210+    +35.2%
INX Internet         484     567      83+    +17.1%

BIX Banking          550     632      82+    +14.9%         
XBD Brokerage        354     440      86+    +24.3% 
IUX Insurance        512     607      95+    +18.6%

RLX Retail           834     937     103+    +12.4% 
DRG Drug             358     382      24+     +6.7%
HCX Healthcare       699     759      60+     +8.6%
XAL Airline          141     149       8+     +5.7%  
OIX Oil & Gas        288     299      11+     +3.8&      


These market gains, together with the most recent market 
sentiment developments, has Pinnacle Capital Advisors on the 
defensive and we encourage investors to tightly protect their 
portfolio.   

First, despite the fact that we are close to the Y2K event, 
Bullish sentiment, as measured by Investors Intelligence has 
spiked to 53%.  This contrarian indicator is reaching the same 
levels that presaged market sell-offs in the summer of '98 and 
'99.

Next, our Pinnacle Index is reaching extremely levels again as 
option speculators buy OTM an deep OTM calls on the S&P 100
calls.

Most buying and selling climaxes occur on days with major news 
events such as Fed meetings, earnings warnings and employment 
reports, Make careful note at market's activity on Monday (12/6) 
and Tuesday (12/7).  If we see a DECLINE that causes the major 
indices to close BELOW their recent breakout levels, WATCH OUT.  
This will confirm that Friday's (12/3) action represented a 
classic climax and create a powerful reversal signal.   


Street Signs

This section summarizes some of the key street signs that can 
help track the market's action and likely direction over the 
near-term. 


BULLISH Signs:  


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

Short Interest:
Short interest for the Nasdaq is at an all-time high, and 
increased another 1.4% from October.  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. 


Mixed Signs: 

Volatility Index (20.82):

The VIX is trading once again near its previous lows. Another 
quick reversal at this benchmark will likely presage an 
intermediate top.


BEARISH Signs: 

Pinnacle Index
After Friday's (12/3) favorable employment report, OTM call 
option activity jumped, creating potentially excessive overhead 
resistance.

Interest Rates (6.257%):
The yield on the 30-yr Treasury broke support, and may soon hit 
52-week highs. 

Advance/Decline Line:
The A/D line's continual break does not serve the best interests 
of the overall market. 

Investor Intelligence: 
The rapid change from bearish to bullish sentiment has been 
significant, 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.  Higher costs
could put pressure on profit margins. 


OTM Call Analysis 
As we move closer to the December 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          -
Friday, November 26       55,598       +53.7%
Friday, December 3        66,323       +83.4%


The Power of Sentiment Analysis

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

 
Pinnacle Index OEX              Friday
Benchmark                       (12/3)

Overhead Resistance (770-800)    35.3

OEX Close                      767.48

Underlying Support (730-745)     1.65


What the Pinnacle Index is telling us:
After Friday's (12/3) favorable employment report, OTM call 
option activity jumped, creating potentially excessive overhead 
resistance.  


Put/Call Ratio                  Friday
Strike/Contracts                (12/3)

CBOE Total P/C Ratio             .52
CBOE Equity P/C Ratio            .38
OEX P/C Ratio                   1.67


Peak Open Interest (OEX)
                     Friday
Strike/Contracts     (12/3)

Puts                 750 / 9,697
Calls                750 / 8,315
Put/Call Ratio       1.16


Volatility Index    Major
Date                Turning Point       VIX

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

July 16, 1999       Top                 18.13 
August  5, 1999     Bottom              32.12 
October 15, 1999    Bottom              32.06

December 3, 1999                        20.82


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
July 14, 1999	  Top               55.2        26.7
Oct. 13, 1999       Bottom            39.2        37.5

November 18, 1999                     52.1        29.9
November 26, 1999                     53.0        28.7



*************
COMING EVENTS
*************

For the week of December 6, 1999

Monday

None Scheduled

Tuesday

Non-Farm productivity    Q3-Rev Forecast: 4.8%   Previous:      
Unit Labor Costs         Q3-Rev Forecast: 0.2%   Previous: 4.2% 
Consumer Credit          Oct    Forecast: --     Previous: $5.9B

Wednesday

None Scheduled

Thursday

Jobless Claims           12/04  Forecast: 291K   Previous: 291K 
Import Prices            Nov    Forecast: --     Previous: 0.5% 
Export Prices            Nov    Forecast: --     Previous: 0.3% 
Wholesale Inventories    Oct    Forecast: --     Previous: 0.7% 
Chicago Fed Index        Oct    Forecast: --     Previous: $25.7B

Friday

Producer Price Index     Nov    Forecast: 0.3%   Previous: -0.1%
PPI ex. food & energy    Nov    Forecast: 0.1%   Previous: 0.3% 


Week of 11/29

12/14 Consumer Price Index - nov
12/14 Real Earnings - Nov
12/14 Retail Sales - Nov
12/14 Atlanta Fed Index - Nov
12/14 Current Account Gap - Q3 
12/15 Business Inventories - Oct
12/15 Capacity Utilization - Nov
12/15 Industrial Production - Nov
12/16 International Trade - Oct
12/16 Phil Fed Index - Dec
12/17 Building Permits - Nov
12/17 Housing Starts



*************************************************************
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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 
options. It is possible at this or some subsequent date, the 
editor and staff of The Option Investor Newsletter may own, 
buy or sell securities presented. All investors should consult 
a qualified professional before trading in any security. The 
information provided has been obtained from sources deemed 
reliable but is not guaranteed as to accuracy or completeness.
The newsletter staff makes every effort to provide timely 
information to its subscribers but cannot guarantee specific 
delivery times due to factors beyond our control.



The Option Investor Newsletter              12-5-99
Sunday                        2 of 5


Research Analyst Wanted
***********************

You can be located anywhere in the world and still work for the successful
OIN team. This opening requires a proven track record of successful trading. If
you have the ability to screen stocks and not look just at the technicals but
actually look behind the news for the real story, then we want you. We need
people that can see through the forest of confusion and hype and know when
a stock is a play and more important when to pass. Anybody can pick stocks
but it takes a pro to pick winning option plays consistently. Compensation is
based on many factors and you can telecommute to work via email. If you
want to be part of our winning research team then send us your qualifications.
You will undergo a trial period where we ask you to recommend plays in real
time and the results will speak for themselves. Serious applicants only need
apply! 

Send an email to: research@OptionInvestor.com



*************
WOMAN'S WORLD
*************

Tweaking for Profits in Dangerous Waters

Did you notice the VIX is back down into dangerous territory? 
We've come too far, too fast....again! My eyes glazed over when I 
saw the Dow up 300 points Friday!!!! My plays are already in 
motion for January with good entry points and most of my December 
calls have been rolled out. Hopefully, most of you know, not to 
buy on a day like this, at these highs. Usually, I only sell on 
days like this and wait for the profit taking that tends to follow, 
before I go shopping. But I am in a buying mood today. I want to 
tweak my YHOO Blow & Go and evaluate my final position for QCOM 
as well. I think I have room for a tweak. So, time is of the 
essence and on a high day like this, I better be right!!! 

I have held VRSN and it is splitting at the close of Monday. I 
decided to exit my play on a clear, up market and not risk holding 
for more gain on Monday, when the market as a whole may be weaker. 
Last year, when AOL was added to the S & P, it made a dramatic 
change in my account. With YHOO's history of blow out earnings, I 
expect the same, plus perhaps a split announcement. I may be wrong, 
but I feel like I have been here before and know the end of the 
story. All my other entry points have been good. This one though, 
is high risk and probably against all rules.

After channeling most of the day, I tried to catch YHOO in the 
afternoon dip, but my limit on VRSN had not been hit. I changed 
my limit several times, but they would never take it, even though 
I was between the spread & at times, on the Bid. GRRRRR!!! After 
a frustrating hour, I realized there was low volume on that option. 
I'm sure someone was humored playing a game of "tag" with me. It's 
hard for a seller, when buyers aren't around. It cost me 2 1/2 
points on VRSN and the YHOO afternoon dip! I may be wrong, but I 
think YHOO could gap open on Monday and have further gains. I 
bounced to my daily YHOO chart, to see how risky this play really 
is. Wow, it is sitting on its upper Bollinger band, well above its 
5 and 10 dma. In other words, it's very high and technically, 
overbought. Normally, this is NOT the time to buy. This is opposite 
of what they call a good entry!! This is now a high risk news play.

But, my thoughts are this. I had identified it as a play I wanted 
to use the Blow & Go strategy on. Remember, I want to be "given" 
free shares of YHOO plus make money. On November 10th, I started 
buying YHOO for an earnings play. My first purchases were Jan 270s 
at 3 1/4. These reached a high on Friday of 21 1/2. Every nice dip, 
I bought more, either ATM or slightly OTM, (230, 260, 270s) Januarys 
- for the earnings run, and April, in order to catch a potential 
split. YHOO continued to move, well into its split range and I felt 
the play working. I knew I still had the December & January rally 
to go. YHOO reports early in January, so it should be a good 
December play also.
 
I was caught for a moment, like a deer in the headlights, when 
they announced YHOO was to be added to the S & P after the close 
this Tuesday! That means all fund/pension managers who track the 
S & P must buy it, to balance their portfolios. This was the exact 
same thing that happened to me last year with AOL!! How could I 
be this lucky twice?? I then bought December calls too, for a 
straight momentum play. All three months, will have their own 
momentum. Based on AOL's experience, YHOO should continue to run 
up. I was lucky to already be in position, but still wanted more. 
The best I can hope for was to grab it on any further dip and 
luckily, it sold off a little into the close on Friday.  I bought 
more January 270s, realizing it was a risk, since profit taking 
is clearly in the air. 

Normally, on an up day like this, your risks are much higher 
entering a successful play. I have narrowed my major plays down 
to QCOM, YAHOO, AOL. With all the choices out there to choose 
from, I have narrowed my vision on these 3 heavy hitters, till 
either they prove me wrong, or something bigger shows up. No 
more playing 20 companies at once, like I am in a candy store. 
I've learned from past mistakes. This will help me to focus on 
these big movers, for maximum gain, with minimum distractions. 
I can play the rolling movement much more successfully. On an 
expected pull back this week, from last weeks gains, I will enter 
more January QCOM, in order to be positioned after its split date 
is announced and for the run up into the December 20th meeting. 

A little more about YHOO. Being added to the S & P can add a lot 
of momentum to an already hot stock. I looked at the outstanding 
shares in October and realized there were enough for a 2:1 split. 
But, what if....what if, the inclusion in the S & P ran the price 
way up, by a greater percentage than normal and they announced a 
3:1 split?????? Gee Whiz!! There are enough shares! That has been 
in the back of my mind and when I saw it mentioned by someone 
else Friday, I realized I wasn't alone. If they don't announce a 
3:1 split, I'll take the 2:1, say Thank  You, and take my free 
shares. But if they do......what a sweet homerun play, on a great 
stock!!!!

So, now I am positioned. I will ride YHOO until it takes a dip 
into earnings. On signs of weakness (or before), I will take 
profits and roll out. I am hoping to buy February calls when 
they open up, because these should capture the split with more 
momentum. I will hold my April 230 for free shares, for then 100 
shares will either cost $11,500 or $7,666 which will be paid for 
by other YHOO profits.  We will see if this works as planned.

Keep in mind, joining the S & P is not a panacea for everything. 
AOL surged from December 1998, into April 1999, then sold off a 
week or so before earnings in April, only to hiccup, then nose 
dive into the August lows. Yes, the recovery has been nice. But, 
I've learned not to be too patient, after it cost me a bundle. I 
will not be that understanding with this play. If YHOO continues 
to dip Monday morning, I will exit this play, buy more on the 
bounce. By mid to late January, if a split is not announced or 
has already occurred, I will have exited all plays, except the 
ones I will exercise for shares. If the split is still pending, 
I will exit most of my remaining shares by split day.  

I know the company. I understand their business and their position 
in their sector. I know why I bought the options. I have a plan. I 
chose my entries carefully, planning ahead. I have planned my exits 
in the future. I know what my play is and I have narrowed my focus. 
I have removed all other unnecessary distractions and I will Sell 
Too Soon! Now, let's just hope it works! Plan your strategy, 
execute your plan!

Renee
renee@OptionInvestor.com

****

LAST WEEK TURKEY, THIS WEEK BEEF (BULL)

Trying to find the perfect circumstance to share this week is 
like delivering a baby without anesthesia, (hard laborious work 
for the estrogen impaired).  Sorry Janar, I couldn't resist that 
barb.  

The strategy I'd like to share this week is what is sometimes 
called a "bull put spread".  This strategy is a conservative, 
low risk, no think, money in the bank, strategy if you have the 
patience to let it ride out.  It is a bullish strategy and should 
be used on stocks that you believe are going up.  It also provides 
predictable monthly cash flow for people who need to generate 
enough cash to buy the groceries and pay the mortgage.  

One of the reasons I selected this strategy to share, is 
because many of the readers are new to options investing and 
might not be able to sell naked puts.  While selling naked 
puts is a favorite strategy of mine, most brokers won't let 
you do it, or if they do, they have ridiculously high margin 
limits.  The spread strategy can even be done in an IRA account, 
although the majority of brokerages won't let you.  

Rules for Conservative Bull Put Spreads
*	Buy a put far out of the money and sell a put the next strike 
	price up, both in the current month, on the same stock.  
*	Pick a stock that has upward momentum but has dropped down for 
	a dip and just turned back up.
*	Make sure there is at least 1-2 points to be made on the spread
*	Make sure your highest strike price is below a strong support 
	level.
*	Put on both legs of the trade at the same time.
*	Execute this strategy no longer than 2 to 3 weeks before 
   expiration.
*	Unwind the spread if the stock goes below your support level

I usually trade 10 or 20 contracts using this strategy. It puts 
cash into my account immediately.  On December 1, I was watching 
one of my favorite stocks QCOM.  The stock had put in a bottom 
above support at 350 and had turned back around.  I called my 
broker and told her to buy the December 330 puts and sell the 
December 340 puts for a net credit of $2.  QCOM was trading at 
360 and I got filled at 11.75 on the Dec 340 puts (cash in) and 
9.75 on the December 330 puts (cash out).  The difference is a 
positive $2 per contract into my account.  

Since I entered 20 contracts, $4000 was put into my account ($2 
times 20 contracts).  The amount of money I had to tie up was 
$20,000 or the difference between the two strike prices times 
20 contracts.  In this case, 340 minus 330.  Now I don't know 
about you but $4000 today on $20,000 for 2 weeks is a pretty 
good return.  You may say, gee that's only a 20% return, but 
we're talking 2 weeks!  The annualized return is over 500%.  
Tell your fund manager to put that in his pipe and smoke it.  

QCOM has to stay above 340 to keep the entire $4000.  The actual 
break even is 338, the 340 strike price less the $2 premium you 
took in.    Remember it is very important to have your higher 
strike price below a strong support level.  In the case of QCOM, 
there is very strong support at 350, and I still have another 10 
points of cushion down to 340!   Believe me, if QCOM closes below 
350 I would unwind this position fast.  Now you may say, "how do 
I do that?"  

UNWINDING THE SPREAD:
If QCOM goes down to 340, the cost of the puts would go up.   
While that sounds bad, you have to remember that you SOLD one 
strike and BOUGHT the other.  Remember that time value is melting 
away each day, so the value of the options become more a function 
of the intrinsic value (the difference between the strike price 
and the stock price) and implied volatility.   Even though the 
cost of the puts has increased significantly in price, you will 
not lose your shirt if the worst happens.   

As the stock drops the puts increase in value.  Put spreads are 
larger when the option is at or in the money.  While my spread 
was only $2 it was far out of the money by 20 points.   If QCOM 
drops to 340 the spread would now be at the money and would 
probably be 3 to 3 1/2 points.  You can calculate this by looking 
at the bid and ask on the "at the money" spreads when are looking 
to enter the trade.  That way you can see your risk exposure.  

To unwind the spread, you would tell your broker you want to close 
the credit spread with a debit spread of 3 or 3 ½ points.  Don't 
push it at this point.  Remember you are buying at the ask and 
selling at the bid.  In my case, I would be buying back the 340's 
and selling the 330's.  My out of pocket cost would be about 3.50
points times 20 contracts or $7000, but I took in $4000 to begin 
with so my maximum loss is realistically $3000.  How many of you 
would like to put $3000 at risk for a highly probable $4000 gain 
in 2 weeks?  

The actually maximum loss you could incur is 8 points, 340 minus 
330 plus the $2 premium you took in.  QCOM would have to fall out
 of the sky to somewhere around 280 to 300 in the next two weeks 
and someone would have to put the stock to you at the same time 
before you could unwind your position, which is very unlikely.  
I have been trading options for years and never have had the 
stock put to me.  

I hope this strategy becomes part of your trading portfolio.  
I know it is not easy to understand, but I have broken it down 
to bite size pieces and told you my entry and exit strategy.  
Before you attempt to bring home the bacon on this one, have 
some patience and paper trade this strategy.  Learn what stocks 
have nice premiums and learn which stocks have good solid support, 
that way you can derive some nice steady monthly income.  
Good luck in your options trading.

Lynda Schuepp
lynda@OptionInvestor.com

****

Follow the Funds  

A lot of people are not fully aware of the extent to which mutual 
funds influence stock prices. The heavy volume and strong upward 
momentum in the Nasdaq has been attributed to on line traders, but 
its actually propelled in part by the huge cash flows into the 
stock market by mutual funds. Americans have a love affair with 
funds, and the baby boomers continue to pour cash into funds at 
a phenomenal rate, which has been one of the key drivers fueling 
this long bull market. The huge population bubble born after World 
War 2 are now in their peak earning and investing years, and you 
can see this when you look at money flows. The Investment Company 
Institute tracks weekly flows to stock and bond funds, and on an 
average month in 1999 U.S.  stock funds took in approximately 10 
to 20  billion dollars in cash. For an individual fund at a large 
well known fund family such as Fidelity this works out to as much 
as 25 - 50 million dollars a day in cash during peak periods.  
Imagine yourself as a fund manager receiving 25 million dollars a 
day in cash into your fund. What would you buy? The choices may 
actually be more limited than you might think. There are thousands 
of publicly traded stocks out there, but how many large 
capitalization, liquid stocks with consistent earnings increases 
are there? Are you going to be able to buy and sell huge amounts 
of stock, for example 10 million dollars at a time without 
affecting the stock price? If you were to buy 10 million dollars 
of a 200 million market capitalization stock in the open market 
this would have a phenomenal effect on the price. You probably 
wouldn't be able to fill the order in one block unless you knew 
an institutional block trader who had that much to sell, so as 
your order was filled the price would be pushed up. A lot of funds 
which buy smaller stocks do so in secondary offerings so they can 
get large blocks at a time. Similarly, as you sell, the last block 
you sell will be executed at a significantly lower price than the 
first. A 10 million-dollar order for Cisco or Intel could be easily 
absorbed. Smaller cap companies are also more vulnerable to 
downgrades and market swings. For example, there are analysts who 
will take a short in a stock, then issue a sell recommendation in 
order to get the price down. This could hurt a micro cap company.   
The average daily trading volume of a stock can be indicative of 
the liquidity. A stock with an average daily volume of 10 million 
shares a day is an example of a highly liquid stock. This means 
stocks like Microsoft, Cisco, Intel, Dell, GE, and many of the 
other big stocks you see recommended on the newsletter or discussed 
frequently on the television. The same big companies seem to be 
favorites among many of the big funds. 

This phenomenon is what John Bogle identifies in his most recent 
book as reversion to the mean. The bigger the fund the more likely 
it is to mimic the various major averages. It's a mathematical 
certainty. A 100 billion-dollar fund is in fact less likely to 
have performance, which differs from the major averages than a 
smaller, more, specialized one. There are just not that many mega-
capitalization liquid stocks to buy so many funds end up buying 
the same stocks. This is one of the reasons why the Nasdaq is up 
over 50% and the Nasdaq 100 is up over 60%. The funds keep buying, 
and the big stocks just keep getting bigger. When you look at 
options on a particular stock, look at the market capitalization 
as one of the primary institutional criteria. Nowadays anything 
under one billion is considered small cap, and even 10 billion at 
some funds. Once a company reaches 10 billion market cap the funds 
can buy and sell more readily, and its really the very big companies, 
100 billion or more which attract the largest institutional holdings. 
The options on these stocks are usually more liquid, and a large 
institutional holding can provide a lot of support.

There is a consistent pattern of investing among individuals who 
buy funds which is important to watch since it can give you an 
idea of the best time to buy options. The ICI did a study of a 
50 year pattern of investments in mutual funds, and, surprisingly 
enough, people don't redeem their funds en masse when the market 
goes down, even during periods of severe market downturns the likes 
of which most traders of our generation have never experienced. 
Even after the crash of 1987, there was no large-scale redemption 
of stock funds. More recently, in the summer of 1998 when the Dow 
hit 7500 there was only a small percentage redemption. People did 
not sell, they just didn't buy any more shares. Generally speaking, 
net inflows will increase during periods of expansion and decrease 
during periods of economic contraction. People are scared to buy 
when the market is bad, and feel compelled to buy when things are 
good.

Now for this week's trading. In last Sunday's NY Times there was 
an article about CMGI, Softbank and ICGE as stocks for people who 
want a safe way to invest in the emerging Internet market. Monday 
started out with a bang. The stock was up a few points in the 
mornings, nothing spectacular, then I almost fell out of my chair 
when it popped up over 12 points in the first half-hour of trading. 
The 160 call purchased last week at 38 I closed at 49. I immediately 
bought a 180 leap at 44, sold it later in the day at 48 when the 
stock hit a high of 170 and   bought it back at 46 at the end of 
the day for a total one day  17 point profit. On Tuesday the stock 
dropped to 145 in the morning,  rebounded up to 158 and spent the 
rest of the day flip flopping around looking for a place to settle. 
It bounced off 148 five or six times and the new daily trading 
range seems to be 148-152.On Wednesday the NAPM report and the 
fact that Yahoo was added to the S&P 500 helped the internet stocks.  
I closed the 180 call at 40 and bought a 190 call at 37. The total 
profit for the week on this position was 14 points, or approximately 
35%. I plan to hold on to the 190 call as the employment report is 
due out tomorrow and could cause a wide swing in the market one way 
or the other. The 190 call is a deep out of the money leap, which 
means it has a very low delta, or percentage change in the option 
price compared to percentage change in the stock price.  CMGI is 
scheduled to report earnings on December 13, and I think there is 
still strong upward momentum for this stock. However, I don't want 
to buy an in the money option right before the employment report 
and risk losing the weekly gains, as the stock may drop to 137 if 
the report is particularly bad. 

Mary Redmond
mary@OptionInvestor.com



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

Exploitation & Pursuit Phase of the Attack

In the exploitation & pursuit phase of the attack, Marines 
continue pursuing the enemy units with fire, but begin to set 
up a hasty defense to prevent being thrown off their gains by 
a quick counterattack. That's what I am doing on Friday morning. 
I am closing out positions when they hit my limit sells, or when 
they trigger my trailing stops:

NOK Dec 140. Bought at 6.5 when NOK dipped to the newsletter 
support target of 136. Sold at 16 1/8, the high of the day on 
a strong open. Still long half of this play, which I am trailing 
with a stop order.

NT Dec 80. Bought at 1 3/4 when NT sold off with the rest of 
the tech sector earlier in the week, and the newsletter said the 
fundamentals of the play were still intact. Sold at 3 3/4 and 
4 3/4 on a strong open. 

VRSN Dec 190. Bought at 13.5 when VRSN dipped to the newsletter 
indicated support target of 180 - 185 (could have got it at 177 
if I was really patient). Sold half of position at a limit sell 
of 17.75 yesterday; sold rest of position at 27 today with a 
trailing stop which I converted into a limit sell when I saw 
VRSN hit 215, then start coming back down. Great company, great 
market, good LT hold, by the way. I bought the stock in my core 
LT Stock portfolio and IRA in Oct at 116.5. Here, I echo Renee's
comments about trading companies you know.

YHOO Dec 230. Bought at 7 1/8 when YHOO dipped to the newsletter 
indicated support target of 218 on Tuesday. Sold today at 27. 
Planning on buying January Calls on mid week weakness next week. 
Earnings, split expectations supported by S&P 500 hype? What 
could be better?

Currently long Jan Calls in JDSU (bought on newsletter indicated 
support Wed morning when stock was at 225), QCOM (bought at 
newsletter indicated support Wed morning when stock was at 365); 
Dec Calls in MACR (bought on newsletter indicated support Tues 
at 64... glad for the comeback after dipping as low as 61... 
trailing with a stop order). 

Despite the huge up move today, I also decided to open new 
positions in the following:

SNE. Both December and January Calls. Jim pointed out an interesting
trading pattern in SNE in one of his weekly trading recaps a week 
or two ago -- the stock lags moves in the American market since the 
Japanese market moves in reaction to the SP 500 a day AFTER big 
moves. Therefore, I expect that SNE will follow the rest of the 
liquidity driven rally higher on Monday & Tuesday. 

AOL. I opened a new position on AOL on Wednesday when it looked 
like the post split depression was over. I got confirmation of 
my decision with last night's news letter. I opened more January 
contracts today since I think that this stock has room to run even 
higher. The holidays are upon us and the cyber shopping season will 
be big. Bigger than we expect, I think. Jan Calls will give me 
coverage for a large part of a January earnings run, though I 
might trade in and out of AOL contracts several times between now
an then. At least buying Jan calls gives me the potential of 
maintaining a smaller longer term position for this run. 

Overall, I have far less "Value at Risk" (a common term which wall 
street firms use to evaluate open positions, including derivatives) 
than I did yesterday. I am more "dug in" with defenses like stop 
loss orders. As money continues to flow in, I have shot a couple 
of deeper targets (AOL & SNE Jan plays), but not with anything 
like the same scale of capital which I had at risk even yesterday. 
I expect a pullback next week, maybe on Tuesday, Wednesday, or 
Thursday. Jim writes about normal market cycles in a trending
market -- up 3 or 4 days, down 2 or 3 days. When that pullback 
occurs, I will be buying January Calls at the support levels which 
the newsletter recommends. I have made a 70% gain so far in my ST 
Options Portfolio in December. I need to be very cautious about 
not getting overconfident and making stupid plays. I need to gather 
my strength, humility, and judgment to just barely drop a few more 
balls in the corner pockets in the upcoming weeks.

Janar Joseph Wasito
janar@OptionInvestor.com




*****************
READERS WRITE
*****************

Hi Janar,

A short note to say i really enjoy your writings complete with 
macho Marine metaphors. Trading IS a battle and anyone who 
thinks different will sooner or later discover that truth.

I spent over a year on a border kibbutz in Israel, where people 
still respect strong masculinity.

Wonder who they will be wanting to lead should we ever need to 
defend our soil.

I have read somewhere that the best option traders are Marines. 
I'll look for the article and send it to you if possible.

Brilliant writing the past few days! Keep up the good work.

David

****

Dear Skybox,

I have been trading on the Skybox since August. I allocated 
$10,000 which has grown to $35,000. I have had 25 total trades 
with 8 losses for a total of -$17,500 and 17 gains for a total 
of +$42,400. about 3 of the losses have been total goofs on my 
part - where I have misinterpreted the Skybox triggers - 
particularly in the beginning. Unfortunately, I missed the Oct 
19th 662 trigger and missed a great play - 

I have to say with affirmation that I have been greatly rewarded 
by following your plays and am extremely pleased and grateful! 
One of the most difficult parts of option trading for me has 
been knowing which option to buy, based on the volatility and 
based on price. Your direction and analysis, done by obviously 
talented and knowledgeable people, has greatly simplified this 
process for me.

Thanks again for your timely and profitable advice - looking 
forward to more successful trading with the OEX Skybox in the 
future!

Sincerely,

Rob C.


************************
TRADING CLUB UPDATE
************************

Sunday, December 5, 1999

OPTION INVESTOR TRADING CLUBS - THEY ARE FOR EVERYONE!!! 

It has been a positive week for the Option Investor Trading Clubs.  
In speaking with several club organizers, I had one organizer tell 
me that she wouldn't be trading if she did not have the club to 
discuss her ideas and strategies.  It made me wonder, how many 
people out there don't trade simply because they don't have the 
support and encouragement of other investors.  I began posing this 
question to some of our organizers and found that indeed, this is 
not only a common feeling among club attendees but this is obviously 
the main reason for the overwhelming interest and success of the 
OIN Trading Clubs.  There are, of course, very experienced and 
confident investors involved with the clubs also.  It seems to be 
a fulfilling and beneficial avenue for all investors to relate, 
discuss, strategize and ponder the current market and its climate.  

Whether a novice or experienced investor, if you are looking for 
a way to increase your potential as an option investor, a trading 
club may be just what you need.   Contact us today to find a club 
near you. 

Leslie Hamilton
Trading Club Coordinator
Option Investor Newsletter


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

	http://boards.OptionInvestor.com/tradersclubs/


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




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

Index      Last   Week
Dow     11286.18 297.27
Nasdaq   3553.56  72.82
$OEX      773.86  13.91
$SPX     1447.42  16.68
$RUT      467.70   5.64
$TRAN    2937.92  19.64
$VIX       21.29  -2.13

Calls             Week

YHOO      258.75  26.13  Split candidate rewards handsomely
HGSI      133.00  13.81  One cannot deny the phenomenal momentum
CMGI      165.03  13.44  Shareholders meeting Dec 17th.  Split?
VISX       87.75  12.25  New, their vision looks to improve
STM       133.63  11.31  Things are looking good for the Semis
ANSR       33.50  10.63  New, strong moves light the fire!
NOK       156.00   9.31  Talk about a recovery! +11.44 on Fri!
MXIM       93.31   7.94  New, looking like filet mignon!
MACR       77.50   7.38  MACR has definitely been one to watch
MSFT       97.13   5.00  MSFT is a news driven momentum play
EMC        95.25   4.94  A nice five day gain from EMC!
TIF        80.69   3.56  Tiffany gets the stamp of approval
IBI        43.75   1.88  Dropped, IBI sees a mild sell off
MEDI      131.50   0.75  New, a star of the Biotech community
VOD        49.44   0.69  New, has some catching up to do
BRCM      207.75   0.63  BRCM didn't even bother with $200
QCOM      384.44  -0.31  We couldn't have scripted this better
GMST      118.50  -1.38  Gemstar splits December 13th!
NT         80.19  -1.50  Nortel makes a very nice recovery
VVTV       46.06  -1.75  Upbeat with positive technical picture
SNE       184.75  -2.81  See? There was no reason to worry!
SDLI      184.38  -3.75  Setting a nice ascending triangle
IMCL       38.13  -4.63  Dropped, IMCL gets left behind
AOL        78.13  -5.25  In the midst of e-holiday excitement!
QLGC      121.13  -7.94  Dropped, loses some of its luster
JDSU      257.13 -14.81  Splitting in 4 weeks

Puts

KIDE       49.44 -13.69  New, the gift that keeps on giving
RMBS       74.25  -5.38  Dropped, participates in Semi rally
EK         60.13  -4.38  Could this be the picture perfect put?
JCI        53.19  -3.25  JCI maintains its ever steady decline
GT         33.50  -1.31  We don't think GT has bottomed just yet
BOW        49.13   1.13  BOW tries to get its head above water
WLP        60.63   1.25  Dropped, color returns to WLP's cheeks



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

Calls

VISX - Visx Inc
ANSR - AnswerThink Consulting Group
MEDI - MedImmune 
MXIM - Maxim Integrated Products
VOD  - Vodafone Group  

Puts

KIDE - 4Kids Entertainment 



***************************
PICKS WE DROPPED THIS WEEK
***************************

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


CALLS

IMCL $36.56 (-4.63) Biotechnology stocks had a very good week.
Unfortunately ImClone was left behind.  At times, IMCL seemed
like it could not even get out of its own way.  In hindsight (we
wish we could trade in the past!) a good indicator that IMCL
might struggle was the less than ringing endorsement by Merrill
Lynch.  The brokerage giant started coverage of IMCL on Monday
with an Accumulate rating.  Considering that Merrill had 
participated in the recent secondary offering of IMCL, the
market probably would have liked to have seen at least a Buy
rating from them.  If IMCL trades down to its secondary offering
price of $32, it might be time to take a look at the stock 
again.  Offering prices tend to provide excellent support.

QLGC $116.19 (-7.94) The major indices got a boost Friday
by the tame jobs report.  The Dow and Nasdaq surged and the 
Semiconductor index showed gains of over 2 percent.  So what 
happened to QLGC?  We aren't exactly sure, however the chip 
maker seems to be loosing some of its luster.  QLGC gapped up 
over $4 at the open, made a high of $121.13 and drifted lower 
for the balance of the day, closing down $0.44 for the session.  
There was no major news dragging the stock down, just a lack 
of buyers.  The $115 level we mentioned Thursday did provide 
support, but on a day when there was a huge influx of money 
entering the markets, we feel QLGC should have been able to 
attract its share and move higher.  QLGC could find its footing 
again and move higher but for now we will stand aside.

IBI $42.25 (+1.88) Rumors have been circulating this week that 
IBI is considering jumping into a pool of advertisers that will 
spend approximately $3 mln for a 30 second ad, during this 
year's Super Bowl.  Perhaps investors consider spending money 
this way is foolish, and have decided to pull some money out 
of the IBI's stock.  Actually we think its probably just profit-
taking as IBI lost $0.25 Friday to close at $42.25.  The retail 
sector managed to gain 1.25 percent after then the release of 
a benign jobs report.  Several national retailers this week 
reported increases in same store sales, but came in under analysts 
expectations and we've seen a mild sell off in the shares of 
their stock.  At this point IBI seems to be losing its momentum.  
For now we will step back and look for stocks moving more 
quickly.  IBI does have support at $42 for those remaining 
in the play.  The break below this support would be bearish.


PUTS

RMBS $71.50 (-5.38) It looks as though investors are feeling 
a bit better about Rambus as of late.  This could be because 
Intel has finally managed to locate the chip bug that has been 
plaguing Rambus' memory enhancing technology, and therefore can 
now deal with the problem.  The Semis in general had a good 
week and Rambus seems to be participating in the sector rally.  
New all time highs set last week by AAPL, EMC and LSCC helped 
to recharge the group.  Rambus has once again begun to flirt 
with its 10-dma and did actually manage a breakthrough of the 
50-dma in Friday's session.  We had a good run with RMBS, but 
believe the momentum may be turning and therefore are bidding 
RMBS farewell.

WLP $60.31 (+1.25) Whatever the doctor prescribed seems to be 
working!  The color has returned to the cheeks of Wellpoint and 
WLP looks to be on the road to recovery.  WLP began to make a 
move up on Tuesday and continued to maintain positive momentum 
for the remainder of the week.  WLP managed to find higher 
support each day and closed Friday smack dab on it's 10-dma. 
We mentioned in last Thursday's write up that the continuing 
lack of substantial volume was a good indication in favor of 
our put play.  We have seen the volume picking up ever so 
slightly, indicating that investors are timidly stepping 
back into the ring.  Therefore, we are stepping out.  



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

Current Split Candidates:
 
HGSI - Human Genome Sciences
SDLI - SDL Incorporated
BRCM - Broadcom
SNE  - Sony Corp
CMGI - CMG Information Services
NOK  - Nokia
YHOO - Yahoo
MEDI - MedImmune
STM  - STMicroElectronics

Split Candidates that are not current plays
 
QLGC - Q-Logic
DCLK - DoubleClick
CMVT - Comverse Tech.
CHKP - Check Point 


STOCKS WITH UPCOMING SPLITS 
****************************

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

Symbol - Stock          Splits/Date  
VRSN - Verisign         2:1 12-06-99 ex-date 12-07
SUNW - SunMicro         2:1 12-07-99 ex-date 12-08
AGN  - Allergan         2:1 12-09-99 ex-date 12-10
CMTN - CopperMountain   2:1 12-09-99 ex-date 12-10 (KUA)
NTRS - Northern Trust   2:1 12-09-99 ex-date 12-10
GDW  - Golden West      3:1 12-10-99 ex-date 12-13
GMST - Gemstar Intl     2:1 12-13-99 ex-date 12-14
EXDS - Exodus Comm      2:1 12-14-99 ex-date 12-15
EMLX - Emulex Corp      2:1 12-15-99 ex-date 12-16
DTM  - Dataram          3:2 12-15-99 ex-date 12-16 no optn
BWE  - BancWest         2:1 12-15-99 ex-date 12-16
ATML - Atmel            2:1 12-17-99 ex-date 12-20
ARBA - Ariba            2:1 12-17-99 ex-date 12-20
TVGIA- TV Guide         2:1 12-17-99 ex-date 12-20
IDPH - IDEC Pharma      2:1 12-20-99 ex-date 12-21
BEAS - BEA Systems      2:1 12-20-99 ex-date 12-21
NTAP - Network Appliance2:1 12-20-99 ex-date 12-21
MRCY - Mercury Computer 2:1 12-20-99 ex-date 12-21
PPRO - PurchasePro.com  3:2 12-20-99 ex-date 12-21
MXIM - Maxim Integrated 2:1 12-21-99 ex-date 12-22
UNFY - Unify Corp       2:1 12-21-99 ex-date 12-22
CMRC - Commerce One     3:1 12-23-99 ex-date 12-27
XLNX - Xilinx           2:1 12-27-99 ex-date 12-28
ICGE - Internet Capital 2:1 12-27-99 ex-date 12-28
JDSU - JDS Uniphase     2:1 12-29-99 ex-date 12-30
HD   - Home Depot       3:2 12-30-99 ex-date 12-31
WCOM - MCIWorldcom      3:2 12-30-99 ex-date 12-31
INSP - Infospace        2:1 01-04-00 ex-date 01-05
JNPR - Juniper Netwk    3:1 01-14-00 ex-date 01-18

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



********************
THE PLAYS OF THE DAY 
********************

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


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

MEDI - MedImmune $131.50 (+0.75)

See sector list for details

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

****

TIF - Tiffany & Co. $79.69 (+3.56)

See sector list for details

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


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

EK - Eastman Kodak Company $60.13 (-4.38)

See put list for details

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



********************
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********************

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





The Option Investor Newsletter          12-05-99  
Sunday                        3 of 5


*************
DEFINITIONS
*************

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

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

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

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

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

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

RISKS of SELLING PUTS:
The risk of selling naked puts is always the possibility
of a catastrophic event that drops the stock below the 
strike price and could result in the stock being PUT to you.
Always protect yourself with a "buy to cover" limit order
to take you out before this can happen.



***********
CALLS PLAYS
***********
Hardware
***********

EMC - EMC Corporation $95.25 (+4.94)(+0.93)(+6.69)(+8.93)

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

Shareholders of EMC stock enjoyed a nice gain the last five days.
EMC won a permanent injunction against Hewlett-Packard (HWP), 
barring HP from infringing on trademarks registered to the 
storage maker.  In a lawsuit filed this summer, HP released the 
SureStore E Disk Array MC256 to compete against similar products
from EMC but referred to it as the "E MC256".  On July 8th 
a preliminary injunction was issued, and Thursday it became 
permanent.  That announcement drove the price of EMC shares
over $5 higher.  Friday EMC tacked on another $1.88 with the 
release of the government's November jobs report.  We could 
see traders take some money off the table early next week.  
EMC did make a new high at $96.81 but pulled back to close at 
$95.25, near its low of the session.  From the low of the week
made on Tuesday at $82.50, EMC has gained $12.75.  If you 
re-entered a play in EMC Wednesday or Thursday, we would suggest 
assessing your profit objectives and moving your stops close.  
Remember if you get stopped out, you can always buy it back.
As for entering a new play in EMC, we would do so cautiously, 
as EMC has surged higher for the last three days.  A retracement
to the $90 support level, which is near its 10-dma at $89.54, 
followed by a bounce with solid volume would be viewed as a 
good buying opportunity.

In other news the volume and volatility in the options pits
in Chicago dropped back to near average Friday with a turnover
over just 9800 contracts.  The volatility for the December 95
Calls was roughly 46 percent which was little changed from 
Thursday, when over when over 20,000 contracts exchanged hands. 

***December contracts expire in two weeks***

BUY CALL DEC- 90*EMB-LR OI=4354 at $ 7.13 SL= 5.25
BUY CALL DEC- 95 EMB-LS OI=2831 at $ 4.00 SL= 2.50
BUY CALL DEC-100 EMB-LT OI=1288 at $ 1.81 SL= 1.00
BUY CALL JAN- 95 EMB-AS OI=1054 at $ 7.38 SL= 5.75
BUY CALL JAN-100 EMB-AT OI= 896 at $ 5.25 SL= 3.50
  
Picked on Nov 14th at    $82.69    P/E = 95
Change since picked      +12.56    52-week high=$96.81
Analysts Ratings     15-8-3-0-0    52-week low =$33.00
Last earnings 10/99   est= 0.27    actual= 0.29 surprise=+7.4%
Next earnings 01-25   est= 0.31    versus= 0.24
Average daily volume = 5.75 mln
Chart = http://quote.yahoo.com/q?s=EMC&d=3m

****

GMST - Gemstar International $117.13 (-1.38)(+13.88)(+4.25)

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.

Our focus in Gemstar is a 2:1 split on December 13th.  After 
making a high at $122, shares of Gemstar fell victim to profit-
taking until late Wednesday afternoon.  Buyers stepped in near
the $110 level of support and began to bid shares of GMST higher.
Selling was orderly on the way down with the volume on the 
average to light side.  Friday with the broader markets exploding 
after the release of the employment report, GMST joined in.  
Volume on Friday was still less than average at 1.01 mln.  
GMST ran into overhead resistance at $118.50, closing in the 
middle of its range for the session.  The next challenge for 
our play is to continue the upward momentum.  Traders will have 
basically just the next five trading days to kick this split 
run back into high gear.  We are not giving up on this play as 
many times the week prior to a split is when the excitement 
begins to boil and the stock runs to new highs.  Should we see 
a pullback in the broader markets, GMST could retreat to the 
area of $112-$113.  Should you want to consider a new play
or adding to existing positions, enter only on continued moves
higher supported by better than average volume, or a bounce 
off the previously mentioned support levels, again supported
by strong volume.  

***December contracts expire in two weeks***

BUY CALL DEC-110 GST-LB OI= 477 at $10.88 SL=8.75
BUY CALL DEC-115*GST-LC OI=3884 at $ 8.13 SL=6.25
BUY CALL DEC-120 GST-LD OI=1043 at $ 5.00 SL=3.25
BUY CALL JAN-120 GST-AD OI=3491 at $ 9.13 SL=6.75
BUY CALL JAN-125 GST-AE OI=1523 at $ 7.38 SL=5.50

SELL PUT DEC-105 GST-XA OI= 828 at $ 1.81 SL=3.50
(See risks of selling puts in the play legend) 

Picked on Nov 18th at   $104.88    P/E = 157
Change since picked      +12.25    52-week high=$122.00
Analysts Ratings      7-0-0-0-0    52-week low =$ 25.31
Last earnings 10/99   est= 0.18    actual= 0.19 surprise +2.5%
Next earnings 02-10   est= 0.21    versus= 0.17
Average daily volume = 1.22 mln
Chart = http://quote.yahoo.com/q?s=GMST&d=3m

****

BRCM - Broadcom, Corp. $207.75 (+0.63)(+10.63)

Broadcom Corporation is a leading provider of highly integrated, 
silicon solutions that enable broadband digital transmission 
of voice, data and video content to and throughout the home and 
within the business enterprise over existing communications 
infrastructures, most of which were not originally intended for 
digital transmission. Using proprietary technologies and advanced 
design methodologies, Broadcom designs, develops and supplies 
integrated circuits for some of the most significant broadband 
communications markets, including the markets for cable set-top 
boxes, cable modems, high-speed office networks, home networking, 
direct broadcast satellite and terrestrial digital broadcast, and 
digital subscriber line ("DSL"). 

BRCM decided not to even bother with the $200 resistance level 
but rather gapped up to open at $205 on Friday.  $200 is now 
serving as support and BRCM has further support at its 10-dma,
currently at $198.50.  Though BRCM did manage to trade above 
$210 early on, it did struggle late day.  This looks to be our 
next level of resistance and we will want to see a breakthrough 
of this level to confirm continuing momentum (with the new 
price target of $250 from Dean Witter on Thursday, this may  
not be too hard!).  BRCM set a new 52-week high in November 
of $215.25 and this will serve as resistance once we make it 
through $210.  Again, as far as making a new entry, waiting 
for pullbacks will be your best bet.  BRCM does a nice job 
of providing these on a regular basis so just keep an eye out.  
BRCM has strong momentum and consistently good volume, just 
the kind of indications we like to see for a solid call play.

BRCM received the Fabless Semiconductor Association's top award 
for the 2nd year in a row.  Analyst Alvin Kressler of Kauffman
Brothers noted BRCM's intimate knowledge of the system along 
with the ability to anticipate emerging market needs and 
therefore, deliver before competitors.  The report went on to 
note that BRCM is moving towards doubling it's net sales from 
1998, one of the fastest moves in history for of the chip 
industry.  Another report out last week cited BRCM as being 
the leader in the Home Networking Chip arena.  Jeff Thermond, 
Vice President and General Manager of BRCM's Home Network Unit, 
stated that BRCM cannot keep up with demand.  Hopefully, shares 
of BRCM will encounter the same dilemma!  There seems to be 
plenty of optimism out there to fuel our run.

***December contracts expire in two weeks***

BUY CALL DEC-200*RDZ-LT OI=1311 at $17.88 SL=14.00
BUY CALL DEC-210 RDZ-LB OI= 438 at $12.88 SL=10.25
BUY CALL DEC-220 RDZ-LD OI= 485 at $ 8.88 SL= 6.50
BUY CALL JAN-210 RDZ-AB OI= 400 at $25.38 SL=20.00

SELL PUT DEC-180 RDZ-XP OI= 964 at $ 3.00 SL= 5.00
(See risks of selling puts in play legend)

Picked on Nov 28th at   $207.13     P/E = 258
Change since picked       +0.63     52-week high=$215.25             
Analysts Ratings     6-13-1-0-0     52-week low =$ 42.50                 
Last earning 10/99    est= 0.21     actual= 0.26                            
Next earning 01-26    est= 0.27     versus= 0.13                            
Average Daily Volume = 2.06 mln 
Chart = http://quote.yahoo.com/q?s=BRCM&d=3m

****

SNE - Sony Corp $183.13 (-2.81)(+9.31)(+0.13)(+11.81)(+4.94)

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

See?  No reason to worry! Admittedly, I did a bit of head 
scratching on Friday morning as I watched Sony pullback while 
the market soared up over 200 points.  Apparently, there were 
a few investors out there that needed a little extra holiday 
shopping money.  Once profit-takers were satisfied, Sony made 
a good move up, taking a little time to dance along $180 before 
closing up nearly $2.50.  Sony posted strong volume, a good 
indication of rejuvenated investor interest.  Sony broke 
above it's 10-dma of $182.75, which is now serving as support. 
Sony has further support at the ever present $180 (if you have 
been playing Sony, I am sure you understand why I refer to 
this level in this fashion).  Sony has some resistance to 
conquer right around its 5-dma of $184.50 however, we do 
not see this as being much of an obstacle, being that SNE has 
had no real trouble trading consistently above this level in 
the past.  The big hurdles in the road look to be at $185 and 
$190.  Hopefully, everyone who wanted in was able to make an 
entry last week, since we had some good points of entry 
offered.  If you are still looking to hop on the Sony train, 
your best bet is to wait for intraday dips on any profit-taking
pullbacks, but be sure to look for support levels to hold 
before entering.

An article released on Friday noted the amazing and enduring 
success of the Sony PlayStation, which may very well be on 
track to sales in the neighborhood of 1 million.  Sony plans 
to allocate nearly one quarter of its 2000 capital budget to 
the development of the PlayStation 2.  The article went on to 
say that Sony's game operations are most likely the leading 
factor in the more than doubled stock price for the last year. 

***December contracts expire in two weeks***

BUY CALL DEC-175 SNE-LO OI=212 at $14.00 SL=11.25
BUY CALL DEC-180*SNE-LP OI=379 at $10.25 SL= 7.50
BUY CALL DEC-185 SNE-LQ OI= 47 at $ 7.25 SL= 5.25
BUY CALL JAN-180 SNE-AP OI=193 at $15.00 SL=11.75 

SELL PUT DEC-175 SNE-XN OI= 53 at $ 1.25 SL= 2.50
(See risks of selling puts in the play legend) 

Picked on Nov 7th at  $164.69   P/E = 55
Change since picked    +18.44   52-week high=$192.00 
Analysts Ratings    0-1-0-0-0   52-week low =$ 65.50 
Last earnings 10/99  est= N/A   actual= N/A 
Next earnings 01-00  est= N/A   versus= N/A 
Average Daily Volume =  176 K 
Chart = http://quote.yahoo.com/q?s=SNE&d=3m

****

STM - Stmicroelectronics $131.38 (+11.31)

STMicroelectronics is a global independent semiconductor
company, that designs, develops, manufactures and markets
a broad range of semiconductor integrated circuits and 
discrete devices used in a wide variety of microelectronics
applications, including telecommunications systems, computer
systems, consumer products, automotive products and industrial
automation and control systems.

STM gapped higher today at the open on what has been a theme
of sorts for the stock this week.  Tuesday shares were halted
after the announcement of being added to MSCI France index, 
when they reopened the price had gapped up sharply from $122
to $127.  The shares then consolidated for a couple days after 
the healthy spike, but did not sell-off.  That is always a 
bullish sign.  Well, on Friday traders seemed refocused and
ready for action, after a favorable economic report sparked a 
rally in all markets.  The SOX Semiconductor Index gained 8.28 
points, but closed off the highs of the day.  Looking at the
chart for STM, it is almost a mirror of the SOX.  A good help
for tracking direction of the sector on a daily basis.  STM
hit a new 52-week high today at $133.63, only to give back some
of the gains late in the trading day to close at $131.38.  The
recent consolidation was definitely settled to the upside as
both of our resistance points were taken out nicely $127.50 and 
$130.  With the bright outlook for the Semiconductor stocks, we 
look to see higher prices in the short-term.  Keep in mind the 
volatility, keep stops tight, and take profits accordingly.  
Volume is going to have to increase for us to see a major break 
above current highs, it seems to be lagging slightly.  A move 
above the old high of $133.63 would be a nice confirmation of 
Friday's breakout. 

Economics for the so-called "system on a chip" (SOC) players is 
looking brighter each day.  We are hearing rumors that STM's 
flash chips will soon replace DRAM.  We don't know how true that 
is.  One thing that is true, the move towards SOC is allowing 
the silicon suppliers to capture more of the value and better 
profits. 

***December contracts expire in two weeks***

BUY CALL DEC-125*STM-LE OI=67 at $ 9.75 SL= 7.25 
BUY CALL DEC-130 STM-LF OI= 9 at $ 6.75 SL= 5.00 low OI
BUY CALL JAN-125 STM-AE OI=85 at $15.00 SL=11.75 
BUY CALL JAN-135 STM-AG OI= 0 at $ 9.75 SL= 7.25 just opened!

Picked on Nov 30th at   $125.06    P/E = 76
Change since picked       +6.31    52-week high=$133.63
Analyst Ratings      12-2-2-0-0    52-week low =$ 31.88
Last earnings 10/99   est= 0.43    actual= 0.46
Next earnings 01-25   est= 0.56    versus= 0.42
Average daily volume = 1.02 mln 
Chart = http://quote.yahoo.com/q?s=STM&d=3m



***********
BIOTECH
***********

VISX - Visx Inc $87.75 (+12.25) 

Visx is engaged in the design, marketing, and sales of its 
Star S2 excimer laser correction unit.  This was the first 
FDA approved laser eye surgery machine that is used to correct 
near-sightedness, astigmatism, and far-sightedness.  Surgeons 
to correct other defects and diseases of the cornea in an 
outpatient procedure also use this machine.  

Their vision for the future looks to be improving!  VISX seems 
to be embarking on a positive momentum run, fueled by overall 
investor and analyst confidence in the company.  VISX hit the 
bottom of a rather lengthy downward trend at $57.25 on Nov 1st.  
Since then VISX has been moving up steadily, in a nearly picture 
perfect upward trend, gaining nearly $27 so far while posting 
good volume all the way.  VISX experienced what looks to be a 
brief period of profit-taking and consolidation mid-month.  A 
new FDA approval (see below) helped VISX to regain it's momentum.  
VISX has solid support right around $80 with the 10-dma poised 
to catch at $79.50.  Though VISX may encounter some resistance 
at $90, we see the formidable resistance being $100, which did 
manage to hold VISX back in September.  Obviously, we have some 
room here, but make note to tighten your stops as we approach 
this level.  VISX does a nice job of providing some room for 
entry with regular intraday dips, so keep an eye out for these.

VISX was plagued for some time by a lawsuit filed by NIDEK, 
which appears to be nearing resolution.  Many are expecting 
a ruling in favor of VISX based on previous rulings in similar 
cases.  Admittedly, news is somewhat difficult to dig up at 
this point, but we will certainly keep you posted as it becomes
available.  On the Nov 21st, VISX announced that the FDA had 
approved their laser used for the treatment of nearsightedness, 
which helped the shares to make a healthy climb and reclaim 
positive momentum.  

***December contracts expire in two weeks***

BUY CALL DEC-80 VFS-LP OI=2010 at $12.63 SL=10.00
BUY CALL DEC-85*VFS-LQ OI=2579 at $ 9.75 SL= 7.25
BUY CALL DEC-90 VFS-LR OI=2945 at $ 7.25 SL= 5.50
BUY CALL DEC-95 VFS-LS OI= 948 at $ 5.38 SL= 3.50

Picked on Dec 5th at     $87.75     P/E = 70
Change since picked       +0.00     52-week high=$103.88        
Analysts Ratings      7-4-3-0-0     52-week low =$ 17.13     
Last earning 10/99    est= 0.34     actual= 0.36                       
Next earning 01-20    est= 0.38     versus= 0.18                            
Average Daily Volume = 1.92 mln 
Chart = http://quote.yahoo.com/q?s=VISX&d=3m

****

HGSI - Human Genome Sciences, Inc. $129.31 (+13.81)(+16.13)

Human Genome Sciences develops drugs and diagnostic products based 
on human genes. The company also researches non-human genes, 
including those of bacteria, fungi, and viruses, which could prove
useful in the creation of vaccines and antibiotics. Although HGS 
has no marketable products, it has several in clinical testing. HGS 
has formed collaborations with SmithKline Beecham, Takeda Chemical 
Industries, Merck and The Institute of Genomic Research. these 
firms pay HGS to develop products for cancer, heart disease, 
arthritis and Lou Gehrig's disease. HGS has one-third of a joint 
venture developing gene therapy for vascular diseases, and has 
discovered a protein that could treat AIDS and other immune 
disorders. As of mid June 1999, HGS had filed patent applications 
that describe the medical uses of more than 6,450 newly discovered 
human genes. 

What is driving up the price of HGSI?  Good question.  One 
cannot deny the phenomenal momentum of this stock.  The most 
significant news item occurred on October 27th.  The Board of 
Directors called for a special shareholders meeting seeking 
the authorization to increase the number of common shares from 
50 mln to 250 mln.  The meeting is scheduled for Dec 16th.  
The implication of such a large increase in common stock is 
probably a stock split.  Visions of sugar plums are dancing in 
the heads of investors.  Even though, as we all know, a stock 
split changes absolutely nothing about the fundamentals and 
prospects of a company.  With potential for more than a 2:1 split, 
investors are lining up for all of that potential holiday cheer.  
Who are we to fight them?  After all, emotions drive markets 
and with potential blockbuster discoveries and a pending split, 
HGSI is creating a lot of warm fuzzies.  Last week HGSI was the 
recipient of a lot of good press.  CNBC focused on HGSI when it
talked about the potential blockbuster drugs that may come out
of the NIH's human genome project.  HGSI founder, Dr. William
Hazeltine was quoted, "One or two drugs can drive the success 
of a pharmaceutical company."  The bet on Wall Street is that 
HGSI has a better chance than most to capture the prize of a 
blockbuster new drug.  The Biotechnology Index has doubled in 
the last year and HGSI has been leading the way.  Last week was 
no exception.  We had a scare on Tuesday when short-term profit-
taking drove HGSI's shares down to support at $110 but it made 
a nice bounce.  The rest of the week was much better for those 
long HGSI, with the stock closing on Friday up nearly $14 for 
the week.  New positions can be placed for aggressive investors 
when HGSI takes out its high of $133.

***December contracts expire in two weeks***

BUY CALL DEC-125 HQI-LE OI=12 at $10.25 SL= 7.25 low OI
BUY CALL DEC-130*HQI-LX OI=72 at $ 7.25 SL= 5.25
BUY CALL JAN-130 HQI-AX OI= 8 at $14.13 SL=11.25 low OI
BUY CALL JAN-135 HQI-AW OI=26 at $11.75 SL= 9.25

Picked on Nov 28th at $115.50     P/E = N/A
Change since picked    +13.71     52-week high=$133.00             
Analysts Ratings    1-4-2-0-0     52-week low =$ 28.75                 
Last earning 10/25  est=-0.42     actual=-0.42                            
Next earning 02-11  est=-0.68     versus=-0.55                            
Average Daily Volume =  403 K 
Chart = http://quote.yahoo.com/q?s=HGSI&d=3m

****

MEDI - MedImmune $131.50 (+0.75)

MedImmune, located in Gaithersburg, Maryland, is a biotech 
company focused on developing and marketing products that 
address medical needs in areas such as infectious disease, 
transplantation medicine, autoimmune disorders and cancer.  
MEDI markets three products through its hospital-based sales 
force and has five new product candidates in clinical trials.

MedImmune's stock has been one of the stars of the Biotech
community.  Synagis, their major drug, is a humanized monoclonal
antibody marketed for the prevention of serious lower respiratory
tracy disease.  Sales for all of their products for the nine 
months ended 10/99 increased a whopping 74% and get this, they
actually showed a profit of $23.6 million versus a loss of 
$16.4 mln (Profits can to be a rarity in this market for stocks 
that have quadrupled from their lows).  Take a look at the 
Biotechnology Index (BTK).  It is clearly one of the strongest 
industries technically in the market.  The index took out its
September high last week to form a very bullish cup-and-handle
pattern.  MedImmune has been trading right along with the index.
The excitement for MEDI may lie more in their pipeline than in
their current products.  Including a possible treatment for 
graft-versus-host disease, vaccines for human papillomavirus 
(HPV), an anti-cancer compound, and a drug for urinary tract 
infections.  MEDI has had a nice run, but the shares still offer 
appeal for the speculative trader.  MEDI's share price is very 
volatile.  The last time it traded in the low $130's it pulled 
back to $116, forming a nice bottoming pattern.  The pullback 
was healthy and probably shook out some of the short-term 
speculators.  It is possible that a break to new highs could 
result in several days of advancing stock prices.  Therefore, 
a good entry point would be to buy if MEDI trades above $132.  
$120 has proven to be pretty decent short-term support, so 
less aggressive investors may want to wait for a test of that 
support before initiating a bullish position.  

***December contracts expire in two weeks***

BUY CALL DEC-125 MEQ-LE OI= 312 at $10.25 SL=7.50
BUY CALL DEC-130*MEQ-LF OI=1251 at $ 7.38 SL=5.75
BUY CALL DEC-135 MEQ-LG OI=  77 at $ 4.88 SL=2.75
BUY CALL JAN-135 MEQ-AG OI= 149 at $10.88 SL=8.75

Picked on Dec 4th at  $131.50     P/E = 80
Change since picked     +0.00     52-week high=$132.00             
Analysts Ratings   10-3-0-0-0     52-week low =$ 33.25                 
Last earning 10/20  est= 0.10     actual= 0.10                            
Next earning 01-27  est= 0.69     versus= 0.59                           
Average Daily Volume =  951 K 
Chart = http://quote.yahoo.com/q?s=MEDI&d=3m



*************** 
Internet
***************

ANSR - AnswerThink Consulting Group $33.50 (+10.63)

AnswerThink Consulting Group is a leading integrated e-business 
solutions provider.  With its recent merger with THINK New 
Ideas, the company now helps design, build, market, and support 
the e-business efforts of a growing list of FORTUNE 1000 and 
dot-com clients.  AnswerThink offers a wide range of integrated 
solutions including e-business consulting, marketing, branding 
and creative content development, benchmarking, best practices, 
web-design, e-business transformation, custom application 
development, software package implementation, e-commerce and 
decision support technology.

The strong moves in the Internet sector lit a fire under ANSR 
this week.  The sheer momentum propelled the stock through 
strong resistance at $28 and $30 by Thursday.  The powerful 
rally on Friday added icing to the cake as ANSR advanced above 
the 5-dma ($28.60) for the second consecutive day.  Support is 
firmly established much lower at $23 and $24 with the 10-dma 
($25.94) trailing slightly above this level.  After five 
straight days of whopping gains - and I mean whopping at 46.5% - 
beware of traders taking some cash off the table.  If ANSR can 
handle any backlash without falling apart (that is holding a 
price level around $28), then consider overhead resistance a 
mere hop away at $36.62.  However take note, the last time ANSR 
traded at these levels was in May of 1998 when it set this 
52-week high.  It's very important to confirm stock direction 
and have a bullish market sentiment intact before you open a 
new position on this technical play.  This is after all a 
HIGH-RISK INTERNET PLAY!

Last month CSFB started coverage for ANSR with a Buy rating 
and issued a target price of $40.  Just this week AnswerThink 
Consulting announced it was chosen by eBricks.com, an e-commerce 
solution company exclusively for the procurement of construction 
materials and equipment, to further develop their network.

***December contracts expire in two weeks***

BUY CALL DEC-25*QRA-LE OI=297 at $8.75 SL=6.75
BUY CALL DEC-30 QRA-LF OI=513 at $4.25 SL=2.75
BUY CALL JAN-25 QRA-AE OI=397 at $9.38 SL=7.25
BUY CALL JAN-30 QRA-AF OI=338 at $5.88 SL=4.25
BUY CALL JAN-35 QRA-AG OI=  0 at $3.13 SL=1.50 New Strike

Picked on Dec 5th at    $33.50    P/E = 82
Change since picked      +0.00    52-week high=$36.62
Analysts Ratings     2-4-1-1-0    52-week low =$ 9.25
Last earnings 10/99  est= 0.10    actual= 0.10
Next earnings 02-02  est= 0.10    versus= 0.08
Average Daily Volume =   588 K
Chart = http://quote.yahoo.com/q?s=ANSR&d=3m

****

CMGI - CMGI Inc. $160.06 (+13.44)(+21.75)(+23.38)

They invest in the future of the Internet.  CMGI develops and
operates Internet and direct marketing companies as well as 
venture funds focused on the Internet.  They assist in the 
internal development and the operation of their majority owned
subsidiaries within the CMGI Internet Group.  CMGI has a stake
in more than 40 Internet Companies including Lycos and Raging 
Bull.  They also own 83% of search engine AltaVista.  They have
a majority interest in Engage Technologies, ADSmart, NaviSite 
and MyWay.com.  Services include Web Hosting, ad serving, and 
traffic analysis.  Located in Andover, MA, CMGI competes in the
marketplace with Safeguard Scientifics, SOFTBANK, and ideally. 

A gain of over $13.00; just another week in the life of a CMGI
stockholder.  Don't we wish it were that easy.  CMGI had quite
a volatile week after exploding to a new high Monday, offering
a nice return since being selected to our play list.  What was 
behind the move this week?  On Monday, AltaVista announced it
was acquiring the remaining shares, that it doesn't already own,
in online investor site Raging Bull.  CMGI is the majority stock-
holder in AltaVisa.  Then the bears stepped in on Tuesday after 
CMGI hit $170.75, stuffing money in their pockets, and headed 
to the bank since CMGI was trading under $120 two weeks earlier.  
On Wednesday afternoon the investors came back in force once 
CMGI hit just below $145 and began to buy.  Thursday CMGI 
received support from an analyst at Wit Capital, when he revised 
his operating estimates and price target for the CMGI.  On 
Thursday afternoon, Navisite, another Web hosting Company, 
which is a majority-owned company of CMGI, reported a 252% 
quarterly increase in revenues over the prior year, but a $10.6
million loss or $3.49 per share compared to $0.56 a year earlier.  
This may have held shares of CMGI back a bit on Friday, when 
the November jobs report was released.  CMGI added $8.90 before 
falling back to close at $160.06, up $3.94 for the session.  
As for our play in CMGI, technically, major support is seen 
at $145, followed by intraday levels at $151 and $157.  CMGI 
reports earnings December 15th and we could see an earnings 
run begin to kick in.  The annual CMGI stockholders meeting 
is scheduled for December 17th, which could be a good time to 
announce a split as well.  For next week would look for any 
dips to the support levels as a chance to enter or add to 
existing positions.  If we see continued upward momentum, we 
would also look to buy, but would suggest setting your stops 
according to your own risk profile.  We will be closing out 
positions ahead of earnings despite a possible split being 
announced at the shareholder meeting.  We can always play 
it again once we know how soon the ex-date will be.  

In other news Wednesday, CMGI announced it has acquired the 
instant messaging system Tribal Voice Inc.  Financial terms of
the deal were undisclosed.  Company officials said they plan
to merge previously acquired Activerse into Tribal Voice to 
form a single corporation offering real-time communications 
software and instant messaging.

***December contracts expire in two weeks***

BUY CALL DEC-150*GCB-LJ OI=4035 at $16.13 SL=12.50
BUY CALL DEC-155 GCD-LK	OI= 585 at $13.25 SL=10.75
BUY CALL DEC-160 GCD-LL	OI=2918 at $10.63 SL= 8.25
BUY CALL DEC-165 GCD-LM	OI= 163 at $ 8.63 SL= 6.50
BUY CALL DEC-170 GCD-LN	OI=1651 at $ 7.00 SL= 5.25

Picked on Nov 21st at   $124.88    P/E = 39
Change since picked      +35.19    52-week high=$170.75
Analysts Ratings      4-6-0-0-0    52-week low =$ 16.34
Last earnings 09/99   est= 4.08    actual= 4.24 surprise=+3.9%
Next earnings 12-15   est=-0.16    versus= 0.38
Average daily volume = 4.28 mln
Chart = http://quote.yahoo.com/q?s=CMGI&d=3m

****

SDLI - SDL, Inc. $183.00 (-3.75)(+19.25)

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 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.

A little bit like QCOM, SDLI is setting up a nice ascending 
triangle or pennant on lower volume (at least compared to 
November) portending a breakout.  While support still seems 
strong at the $165 level, the best buying opportunity it could 
muster Friday was $169.  As the lows move higher, look for $171-
$173 to provide support.  Resistance is $185 with blue sky 
available for your investing pleasure over $190.  Target shooting 
at support (pick your level according to your tolerance for risk) 
should give you a good entry.  A note of caution - we are not 
likely to see a sustained breakout without first seeing volume.  
It is highly likely that we will see a pullback from the current 
level before it moves any higher - SDLI simply needs to 
consolidate its three-week move from $120.  Again, SDLI is deep 
into split territory, with the previous (and only) 2:1 announced 
in March at just $75.  We are way over that now, and management 
seems to currently lack the desire to announce a split.  Though 
anything is possible, the most likely scenario would be to 
simultaneously announce with earnings in February.  Why the big 
moves in the first place?  SDLI is emerging as a strong and able 
(but still smaller) competitor to JDSU and is rumored to be a 
buyout target of CSCO.  They also are rumored to be considering 
an acquisition of their own in this currently hot industry.

As mentioned in previous write-ups, news is sparse.  However, 
CSFB came to the party on Wednesday with a new price target of 
$210 and a Buy rating, while Dain Rauscher Wessels initiated 
coverage with a Strong Buy rating and price target of $200.  

Like QCOM, time decay will really eat up your capital here.  
Don't just buy and sit on these.  This play may fit your profile 
for covered calls too.  Selling the DEC-180 (ITM) produces 
an 8% return through December 17 if called.  Just watch the 
downside if the speculative frenzy ends.

***High time value risk***
***December strikes expire in 2 weeks***

BUY CALL DEC-175 YSL-LO OI= 85 at $20.63 SL=16.00
BUY CALL DEC-180 YSL-LP OI= 92 at $18.25 SL=14.25
BUY CALL DEC-185*YSL-LQ OI= 99 at $16.00 SL=12.50

Picked on Nov 23rd at $167.50    P/E = 249
Change since picked    +15.50    52-week high=$189.63
Analysts Ratings    8-9-0-0-0    52-week low =$ 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 =  777 K
Chart = http://quote.yahoo.com/q?s=SDLI&d=3m

****

VVTV - Value Vision International $46.06 (-1.75)(+4.31)

Value Vision International, Inc. owns and operates the third
largest and fastest growing home shopping network and a 
companion Internet shopping website, both which are being
re-branded as SnapTV and SnapTV.com, respectively, as part 
of a wide-ranging direct e-commerce strategy the Company is
pursuing with NBC Internet (NBCi).  The moves are expected
to position SnapTV and NBCi as the leaders in the ongoing
convergence of television and the Internet, combining the
promotional and selling power of television with the purely
digital world of e-commerce.  Value Vision, which is 
approximately 40% owned by GE Equity and NBC, offers live
programming 24 hours per day, 7 days a week.

VVTV and Wine.com announced plans for a series of new shows 
during the year 2000 after Friday's record success during a
two hour, prime time premier simulcast in which live TV
programming was converged with Internet technology in the
sale of wine.  With the Nasdaq surging once again after
favorable economic data the shares of VVTV pushed higher
as well, to a high of $47.63, but ended the day only up 
fractionally ($0.56) to close at $46.06, down $1.75 points 
for the week.  VVTV looks upbeat as we look to next week, as 
the technical picture remains positive, each pullback has been 
met with higher-lows, especially after the Wednesday drop. It 
has been a good stock to buy on the dips and is now back above 
the 10-dma at $45.13.  The trading pattern is volatile, but 
that can provide good entry and exit points for quick profits.    
Resistance remains at $50-$51.  A breakout above this level 
on good volume would be bullish.

Media stocks could attract extra attention this week as 
Paine Webber opens its 27th Annual Media Conference.  The 
major players are scheduled to be there.  The conference
runs Monday through Friday.  These conferences usually turn 
new investors on to the stocks in the sector.

***December strikes expire in 2 weeks***

BUY CALL DEC-45*UVR-LI OI=747 at $3.50 SL=1.75
BUY CALL DEC-50 UVR-LJ OI=228 at $1.50 SL=0.75
BUY CALL JAN-45 UVR-AI OI=146 at $5.88 SL=4.00
BUY CALL JAN-50 UVR-AJ OI=491 at $3.88 SL=2.25

Picked on Nov 28th at  $47.81    P/E = 68
Change since picked     -1.75    52-week high=$51.00
Analyst Ratings     1-0-0-0-0    52-week low =$ 4.75
Last earnings 11/23 est= 0.02    actual= 0.06
Next earnings 01-00 est= 0.06    versus= 0.06
Average daily volume =  441 K
Chart = http://quote.yahoo.com/q?s=VVTV&d=3m

****

AOL - America Online Inc $78.13 (-5.25)

AOL is the world's #1 provider of online services with over 
21 mln subscribers.  It's acquisitions in 1998 and 1999 
have given the company a 60% market share and diversity.  
CompuServe, an online service geared more to professionals, 
added its 2 million users to the AOL portfolio in 1998.  
This year AOL brought the Web navigator, Netscape, to 
its organization and is also using DIRECTV to launch an 
interactive TV service.    

The decline was typical following AOL's 2:1 stock split on 
November 22nd.  Share prices dipped over $10, surfing levels near 
the 30-dma indicator before starting to recover on Wednesday and 
Thursday.  The strong two-day rebound combined with a powerful 
show of volume signals a much anticipated momentum run in the 
midst of e-holiday excitement although AOL did receive an added 
boost on Thursday.  Traders were pleased with the company's 
announcement of a 4-year, $100 mln agreement with Monster.com, 
a career Web site, making the company the exclusive job search 
provider on AOL sites  pumping up the stock 4.4%.   Friday 
the stock showed promise and opened higher at $83.50, but 
immediately became a victim of profit-takers.  The volume was 
strong throughout the day and this usually indicates a bearish 
sentiment, although AOL is holding at support and did make a 
valiant effort to climb back above $80 just before the bell.  
We are looking for support at $75 to hold and would be a good 
point to target shoot.  Technically, if you're a little more 
conservative, you'll look for a confirming bounce on volume 
before beginning a play.  Overhead opposition is just a stone's 
throw away at $85, just under the new 52-week high, but still 
be prepared for resistance.

In other news this week, AOL formed a 3-year pact with Net2Phone 
enabling user's Instant Messages to be placed and received via 
PCs, fax machines, or telephones.  And surprisingly, AOL 
announced it's paying for user referrals.  It will pay Web 
site operators a minimum of $15 for each new subscriber they 
recruit, increasing the amount paid based on the total number 
of referrals.  The catch?  A new user must stay on AOL for at 
least 90 days.

***December strikes expire in 2 weeks***

BUY CALL DEC-75*AOO-LO OI=33063 at $6.13 SL=4.25
BUY CALL DEC-80 AOO-LP OI=32218 at $3.25 SL=1.75
BUY CALL DEC-85 AOO-LQ OI=23951 at $1.63 SL=0.75
BUY CALL JAN-80 AOO-AP OI=45539 at $7.38 SL=5.75
BUY CALL JAN-85 AOO-AQ OI=28703 at $5.38 SL=3.75

SELL PUT DEC-75 AOO-XN OI=18965 at $1.13 SL=2.50
(See risks of selling puts in the play legend)

Picked on Dec 2nd at     $79.88    P/E = 232
Change since picked       -1.75    52-week high=$87.75
Analysts Ratings    24-15-3-0-0    52-week low =$20.38
Last earnings 10/99   est= 0.13    actual= 0.15 surprise=+15.4%
Next earnings 01-27   est= 0.14    versus= 0.08
Average Daily Volume = 17.3 mln
Chart = http://quote.yahoo.com/q?s=AOL&d=3m

****

YHOO - Yahoo! Inc $253.00 (+26.13)(+8.13)(+21.81)   

Yahoo! Inc is a global Internet media company that offers an 
online guide to web navigation, plus a branded network of 
comprehensive information, communication services, and 
shopping access to millions of users daily.  Over 32 mln 
users visit the Web site each month.  Yahoo! operates in the 
black with the bulk of its revenues derived from advertisements 
commissioned by its list of about 3800 clients.

YHOO is a split-candidate play powered by investor enthusiasm 
which typically surrounds this high-flying Internet.  In the 
past, the company has announced stock splits when the share price 
reaches $200 to $220.  Obviously YHOO is now trading way above 
these levels.  It was previously thought that YHOO did not have 
enough shares to authorize another split.  We have found new 
data that contradicts that viewpoint.  It appears that YHOO 
has 900 mln shares authorized and only 263 mln outstanding.  
Therefore, this Internet blue chip could announce a split if 
it wants to.  If Yahoo decides to announce at the 4th Annual 
Shareholders' Meeting then we'll be waiting around until May 
12th.  However, the next earnings' report is coming up next 
month confirmed for January 11th, after the bell.  Besides the 
stock split anticipation, the arrival of the holiday season 
and 'tis the season to buy online can only help to boost 
YHOO's share price.

The very gutsy who bought on the plunge, or for that matter even 
the more conservative at near-term support ($225 to $235), were 
handsomely rewarded the past three days.  On Wednesday YHOO 
prices surged $16.94 (7.6%) on news YHOO was added to the S&P 
500 Index replacing Laidlaw Inc (LDW) and comparable gains 
extended into Thursday's session ahead of the Jobs Report.  
Thursday was its own special day.  YHOO "unequivocally squashed" 
April's record high of $244 when it peaked at $250 and closed 
strong at $245.81!  After this paramount achievement and not 
knowing the outcome Friday's economic data we recommended 
caution.  All was for naught - YHOO raged on to hit $258.75 
and set another 52-week high!  Also on a positive note, CSFB 
reiterated its Buy rating on Friday.  Unless the market rolls 
over in the next couple weeks, YHOO is poised to go the extra 
mile.  Again support is around $225 to $235 with the 10-dma 
($229.12) smack in its midst.  However, beware of a return 
to this level.  If YHOO is going to make a solid run in new 
territory then near-term support should begin to evolve around 
$240.  Of course however, this is a suggestion and the ultimate 
decision is yours.  Only you know your pocketbook and stomach's 
tolerance for risk.  

***December strikes expire in 2 weeks***

BUY CALL DEC-250*YMM-LJ OI=3561 at $14.75 SL=11.75
BUY CALL DEC-260 YMM-LL OI=2868 at $10.00 SL= 7.50
BUY CALL DEC-270 YMM-LN OI=2803 at $ 6.50 SL= 4.75
BUY CALL JAN-250 YMM-AJ OI=7041 at $27.38 SL=21.50
BUY CALL JAN-260 YMM-AL OI=1037 at $22.88 SL=18.00
BUY CALL JAN-270 YMM-AN OI=3853 at $18.88 SL=14.75

Picked on Nov 18th at   $212.56    P/E = 1188
Change since picked      +40.44    52-week high=$258.75
Analysts Ratings    13-16-4-0-0    52-week low =$  9.69
Last earnings 10/99   est= 0.09    actual= 0.14 surprise=+55.6%
Next earnings 01-11   est= 0.15    versus= 0.07
Average Daily Volume = 7.54 mln
Chart = http://quote.yahoo.com/q?s=YHOO&d=3m


***************************************
PLAYS CONTINUED IN SECTION FOUR
***************************************


********************
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********************

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





The Option Investor Newsletter             12-5-99
Sunday                        4 of 5


***************
PLAYS CONTINUED
***************
SOFTWARE
***************

MSFT - Microsoft Corp $96.13 (+5.00)(+5.13)(-3.19)

Microsoft is the #1 software company in the world.  They 
develop, manufacture, license, and support a broad range of 
software products including Windows operating systems, server 
applications, the popular MS Office suite, and a Web Browser.  
The company is presently involved in anti-trust issues with the 
government.  CEO and co-founder, Bill Gates still owns 15% of 
Microsoft.

There's no doubt about it, MSFT is a news-driven momentum play.  
We added it to our call list on November 21st after it showed 
signs of a resurrection following its painful demise to the 
200-dma (then at $85-86) as a result of the monopoly and bully 
lashing it took from US District Judge Thomas Penfield Jackson.  
The eventual appointment of a mediator, Richard A. Posner, Chief 
Judge of the 7th US Circuit Court of Appeals, to negotiate an 
out-of-court settlement in the governments antitrust case 
against Microsoft was the stock's saving grace.  This catalyst 
led to lots of intraday activity and entry points while MSFT 
traded primarily between $89 and $92.

The awaited breakout began on Wednesday and since, MSFT has 
made over $5, or 5.6% in gains.  Now the real battle emerges. 
MSFT faces strong resistance at $95 and $96.  Looking at a six-
month chart you can find the peaks in this range.  Therefore 
it's reasonable to assume that an earth-shattering event like 
an out-of-court settlement with the government, for example, 
coupled with a bullish market may be necessary for a run to 
$100.75, the 52-week high.  Events surrounding this news-driven 
momentum play were mixed this week.  On Tuesday MSFT and its 
government opponents met for the first time in Chicago with 
mediator, Judge Posner.  Negotiations were hush-hush and no 
comments were released.  Although there was a new twist.   The 
Justice Department recruited veteran investment banker, Robert 
Greenhill, to its team.  Some say this is a signal the 
government is campaigning for a breakup of Microsoft.  Product 
news was also on the agenda.  Microsoft announced its Windows 
2000 operating system would be released by the end of the year 
and the official worldwide launch is scheduled for February 7th.  
Also, they are releasing a trial version of Internet Explorer 
5.5 creating more competition for Netscape's slower 5.0 browser.  
In the international arena, Microsoft "formally announced" to 
the Japanese government its intention to buy the 60% stake in 
Titus Communications which is now held by MediaOne Group.  

***December contracts expire in two weeks***

BUY CALL DEC- 90*MSQ-LR OI=28024 at $7.00 SL=5.25
BUY CALL DEC- 95 MSQ-LS OI=34594 at $3.50 SL=1.75
BUY CALL DEC-100 MSQ-LT OI=28002 at $1.19 SL=0.50 High Risk!
BUY CALL JAN- 95 MSQ-AS OI=25225 at $6.38 SL=4.75
BUY CALL JAN-100 MSQ-AT OI=30579 at $3.88 SL=2.50
BUY CALL JAN-105 MSQ-AA OI=22572 at $2.38 SL=1.25

Picked on Nov 21st at    $86.00    P/E = 62
Change since picked      +10.13    52-week high=$100.75
Analysts Ratings    14-18-3-0-0    52-week low =$ 54.62
Last earnings 10/99   est= 0.34    actual= 0.38 surprise=+11.8%
Next earnings 01-19   est= 0.42    versus= 0.36
Average Daily Volume = 25.5 mln
Chart = http://quote.yahoo.com/q?s=MSFT&d=3m

****

MACR - Macromedia Inc. $76.63 (+7.38)(+6.63)

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 Infrastructure, which will 
provide developers and companies with the first comprehensive,
integrated solution for creating, managing, personalizing and
analyzing Web content.

MACR was definitely a stock to watch this past week, and 
especially on Friday.  The internet software developer
continued to fly high on the back of the $44 million dollar
investment from Sequoia Capital and Internet heavyweight 
Jim Clark, co-founder of Netscape.  This investment will be
used to develop shockwave.com, MACR's Web based animation 
viewer that is now a premier destination for Net surfers. 
They already claim over six million registered members and
a registration rate of 50,000 per day.  That is not hits to
the site, that is registrants...WOW!.  With this kind of 
news saturating the street on Friday, as well as a favorable 
economic report that evaporated fears of rising interest 
rates, it is no wonder MACR soared to a new 52-week high of 
$77.50.  The momentum continued to build as the trading day 
progressed before the stock settled in to close just off of 
the highs at $76.63.  Earlier in the week the stock pulled 
back nicely to fill the gap, and wipe out the remaining profit-
takers, as support held up strong at the $63 level.  Support 
now sits way down at the $67.50 level so keep trailing stops 
tight to protect current gains.  We had been waiting for all 
of the technicals to hit on all cylinders, and with the volume 
now picking up, and converging with the prices and moneystream,
we could see higher-highs.  Looking to enter the stock going
forward, target shoot your way in around $72-74 with protective 
stops behind any new positions.

MACR has now successfully transformed into one of the most 
visible Internet applications participants in the market.
The core business of building software has redefined Internet
content and driven the company to a 28% annual growth over
the past five years. 

***December strikes expire in 2 weeks***

BUY CALL DEC-70*MRQ-LN OI= 539 at $ 9.25 SL= 7.00
BUY CALL DEC-75 MRQ-LO OI=  12 at $ 6.00 SL= 4.25 low OI
BUY CALL JAN-70 MRQ-AN OI=  56 at $13.63 SL=10.75 low OI
BUY CALL JAN-75 MRQ-AO OI=   0 at $11.38 SL= 9.25 just opened!

Picked on Nov 23rd  at  $67.56    P/E = 114
Change since picked      +9.06    52-week high=$77.50
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 =   895 K 
Chart = http://quote.yahoo.com/q?s=MACR&d=3m



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

VOD - Vodafone Group $49.44 (+0.69) 

Formed earlier this year, when the UK's Vodaphone group bought
AirTouch Comm, Vodafone AirTouch provides international
mobile telecommunications services.  VOD operates analog 
and digital cellular network services including voice 
communications, messaging, paging, and mobile data services.  
They serve over 31 million mobile phone customers in 23 
countries, with over nine million subscribers in the United 
States and more than seven million in the UK.  They take on 
the best, competing with AT&T, BT, and Cable & Wireless.  
VOD recently announced a bid for Germany's Mannesmann.

You've seen the name in the headlines almost on a daily basis.
Vodafone AirTouch has been in the process of attempting to buy
Germany's Mannesmann for some time now and it has turned ugly, 
well maybe just uglier.  In what started out as a friendly
takeover gesture has now evolved into almost a soap opera type
climate.  Early last month VOD offered $106 billion for the 
German telecom company.  Although VOD made it clear it wouldn't
be defeated easily, shares of the company's stock dropped from 
just above $52 to $43 as investors became uncertain whether
VOD could pull the deal off or not.  Well, this week with the 
current bid by Vodafone approaching $147 billion it appeared as
though the odds of a takeover are improving.  Investors in 
Mannesmann will have about 2 months to consider the after VOD
publishes the offer documents later this month.  During that 
time VOD could raise its offer or Mannesmann could find a partner
to ward off VOD's approach.  If Vodafone's shares keep rising,
investors say they probably would support the takeover, as the 
decision for Mannesman shareholders rests partly on what VOD's
share price is the day they have to decide.  Shares of VOD have
began to climb along with the volume.  Friday VOD gained $1.44
on better than average volume of 4.97 mln shares.  So how do we 
play this new addition to our call list?  VERY CAREFULLY.  This 
on-again, off-again hostile takeover bid for Mannesmann could
cause shares of VOD to skyrocket or fall out of bed.  It would
appear as though all the fuss coming from Mannesmann executives
is an attempt to drive the takeover bid higher.  It does appear 
at this time that the deal will probably happen.  In considering 
a position in VOD, remember this could be an extremely volatile 
play but once the merger news is finalized, VOD has a lot of 
make up ground to cover in this hot sector. 

Saturday morning several Hamburg-based shareholders in Mannesmann
filed a suit against the company's CEO for trying to woo selected 
investors in his favor to help fight the takeover.  The attorney
filing the suit says the company's lobbying isn't in the best
interest of shareholders and wants to prevent the German Company 
from spending money on advertising to promote its defense 
against Vodafone.  (Stay Tuned)

***December contracts expire in two weeks***

BUY CALL DEC-45*VOD-LI OI=5802 at $5.13 SL=3.25
BUY CALL DEC-50 VOD-LJ OI=4602 at $1.69 SL=0.75
BUY CALL JAN-45 VOD-AI OI=3045 at $6.50 SL=4.75
BUY CALL JAN-50 VOD-AJ OI=5826 at $3.38 SL=1.75
BUY CALL JAN-55 VOD-AK OI=1638 at $1.75 SL=0.75

Picked on Dec 5th at     $49.44    P/E = 93
Change since picked       +0.00    52-week high=$53.63
Analysts Ratings      6-3-3-0-0    52-week low =$27.73
Last earnings 10/99    est= N/A    actual= N/A 
Next earnings 01-00    est= N/A    versus= N/A
Average daily volume = 3.55 mln
Chart = http://quote.yahoo.com/q?s=VOD&d=3m

****

NT - Nortel Networks $80.19 (-1.50)(+0.44)(+8.69)(+3.75)(+6.88)

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

Ol' Flat Top got a haircut this week - fortunately, just a little 
trim around the edges when all was said and done, despite a low 
of $73.38 on Wednesday.  All we can say is "nice recovery".  The 
fact is, the recovery wasn't as strong as we would like to have 
seen.  Note that volume has pulled back to roughly the ADV on 
Thursday and Friday's market-wide recovery.  That tells us that 
the funds or institutional investors are not as interested in the 
issue as they use to be, and are looking elsewhere at the moment 
for something more reasonably priced.  At least there was enough 
interest to recover the gap down loss - a positive technical 
indicator.  Support remains fairly solid at $75...a bit less 
solid at $79.50.  If you made money on this play over the last 2 
days and still hold a position, you may want to consider setting 
a trailing stop at the $79 level, then a buy limit at $75 (the 
old sell it and buy it back cheaper theory).  Otherwise, consider 
target shooting at your comfort level somewhere in between.  Be 
sure to keep an eye on the volume.  Without it, we won't see the 
kind of gains we've become accustomed to in the past.  Despite 
its #1 optical equipment sales volume ranking ahead of Lucent, NT 
may need some rest following a 60% gain since mid-October.  NT 
gaps up and down a bit more too, making it tough to chase.  The 
point is, be satisfied with some smaller profits right now until 
the volume returns.  As a reminder, $88 price tag puts NT into 
split range.  Remember too since NT is buying CLFY, it's possible 
to earn a 30% greater return playing CLFY options in buyout 
sympathy.

Soundview still has a target price of $110; CSFB reiterated a 
Strong Buy rating; ABN AMRO also upped their earnings outlook 
along with a target price, now $100.  Early in the week, NT 
announced a sale of $200 mln of GSM (wireless) equipment to a 
French firm, and announced the purchase of a Spanish design, 
engineering and maintenance firm, Radiotronica.

***December strikes expire in 2 weeks***

NORTEL STRIKES:

BUY CALL DEC-75*NT-LO OI=2072 at $6.75 SL=5.50
BUY CALL DEC-80 NT-LP OI=3450 at $3.50 SL=1.75
BUY CALL DEC-85 NT-LQ OI=2509 at $1.50 SL=0.75 High Risk
BUY CALL JAN-80 NT-AP OI=1350 at $6.75 SL=5.00
BUY CALL JAN-85 NT-AQ OI= 664 at $4.75 SL=3.00

CLARIFY STRIKES: (CLFY = $101.38)

BUY CALL DEC- 95 QCY-LS OI= 20 at $ 7.88 SL= 6.25 $6.38 ITM
BUY CALL DEC-100 QCY-LT OI= 39 at $ 5.63 SL= 3.75
BUY CALL DEC-105 QCY-LA OI= 15 at $ 5.00 SL= 3.25 
BUY CALL JAN-100 QCY-AT OI= 16 at $11.88 SL= 9.50
BUY CALL JAN-105 QCY-AA OI= 22 at $ 9.38 SL= 7.00

Picked on Nov 7th at    $68.81     P/E = 481
Change since picked     +11.38     52-week high=$82.19
Analysts Ratings   12-12-3-0-0     52-week low =$22.06
Last earnings 10/99  est= 0.26     actual= 0.28 surprise=7.7%
Next earnings 01-26  est= 0.44     versus= 0.36
Average Daily Volume = 4.0 mln
Chart = http://quote.yahoo.com/q?s=NT&d=3m

****
 
NOK - Nokia $156.06 (+9.31)(+13.25)(+11.25)(+6.38)

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

Wow!  Talk about a recovery...+$11.44 on Friday!  As we suspected 
could happen, NOK had a great Friday thanks to renewed buying 
interest - more than twice the ADV.  A ton of buy orders at 
the open caused a big gap open to a new high, and NOK never 
looked back.  What caused the buy orders in the first place?  
Multiple analysts' upgrades.  The Chairman of NOK said that 
revenues would grow from 30-40% through 2002, whereas the 
previous estimates were an already lofty 25-35%.  Chairmen don't 
just let out every last foot of their line in the same cast 
either.  You can bet he's being conservative and will now likely 
surprise the Street with earnings too.  To up the revenue 
projection only to meet the revised earnings expectation looks 
bad.  As goes the cockroach theory (where there is one, there 
are many), so goes analyst upgrades and thus stock prices.  The 
long-term looks really great for them.  NOK now expects 1 bln 
worldwide subscribers by the end of 2002, a year ahead of schedule 
- that's like cramming an extra year of revenue into the 2 years 
you've already been given.  Need evidence?  Smith Barney raised 
earnings estimates by a modest 8%, but the price target by 63%, 
from $135 to $220 (they had to just to stay ahead of the game).  
On the old resistance equals new support theory, $150 could be 
the target; in the channel - $145.  Pick your mark according to 
your risk profile, but realize you may not get filled thanks to 
these earnings/price revisions, so long as demand (volume) 
remains high.  In after-hours trading on Friday, NOK was already 
up another $6 to $162 so we may have to resort to intraday dips 
for entrance for a quick momentum play. 

The big news is contained above.  Just note that CSFB also 
raised their target price and earnings estimates following the 
Chairman's comments too.  This puts NOK on the fast track for 
another split now that the price is back over $150, and more 
likely to remain there.

***December strikes expire in 2 weeks***

BUY CALL DEC-150 NAY-LJ OI=872 at $9.25 SL=7.00
BUY CALL DEC-155 NAY-LK OI=471 at $6.75 SL=5.00
BUY CALL DEC-160 NAY-LL OI=926 at $4.00 SL=2.50
BUY CALL DEC-165*NZY-LM OI=212 at $2.56 SL=1.25
BUY CALL JAN-160 NAY-AL OI=848 at $9.00 SL=6.75
BUY CALL JAN-165 NZY-AM OI= 77 at $7.25 SL=5.50

Picked on Nov 14th at  $122.25     P/E = 125
Change since picked     +33.81     52-week high=$162.00
Analysts Ratings    13-8-0-0-0     52-week low =$ 47.81
Last earning 10/99   est= 0.52     actual= 0.57 surprise= 9.6%
Next earning 01-28   est= 0.66     versus= 0.58
Average Daily Volume = 2.8 mln 
Chart = http://quote.yahoo.com/q?s=NOK&d=3m

****

QCOM - Qualcomm Inc. $384.44 (-0.31)(+17.69)(-10.94)

QUALCOMM Incorporated is a leader in developing and delivering 
innovative digital wireless communications products and services 
based on the Company's CDMA digital technology.  The Company's 
major business areas include CDMA phones; integrated CDMA 
chipsets and system software; technology licensing; and 
satellite-based systems including OmniTRACS® and portions of 
the Globalstar(TM) system. Headquartered in San Diego, Calif., 
QUALCOMM is included in the S&P 500 Index and is a 1999 FORTUNE 
500 company.

We couldn't have scripted this play any better.  QCOM behaved 
exactly as expected finding support at higher-lows on low 
consolidating volume.  If the channel holds, $368 +/- will be 
the new support.  Also textbook-like, resistance came at $390 
(actually $392) before heading down again.  In Friday's euphoria, 
QCOM found support at $383, but we think there will be dips to 
buy along the way to a probable breakout.  Remember, QCOM is 
forming an ascending pennant on the chart, which generally 
portends a breakout on huge volume.  What will drive the volume?  
The 4:1 split (which will be voted upon at a special shareholder 
meeting on Dec 20th - any objections?) which will likely be 
effected quickly thereafter; and then the prospect of QCOM making 
an announcement of the disposition of its handset business at the 
same time.  Barring the normal market fluctuations or a market-
wide meltdown, look for entry points on ascending support and 
sell points at $390 as long as volume remains low.  We are not 
suggesting this will be the date (it could obviously happen 
sooner or later), but December 9th or 10th is the graphical 
convergence date.  It is also well into the time period when 
a typical split run takes place.  When you see big volume move 
the price over $392 and Dec 20th hasn't happened yet, get on 
the train, but don't give up give up your judgement.  Until 
then, plan your trades using support and resistance just like 
any other.

The news is above, but some words of caution before you jump in: 
don't buy December strikes and sit on them.  The time decay will 
eat us alive with only 2 weeks to go, not to mention that they 
will be worthless 3 days before the shareholder meeting.  As we 
noted Thursday, if you can stomach the price, look at and 
consider the JAN strikes so you don't get the stuffing knocked 
out of your account from the rapid time decay.  For the 
intestinally fortified, selling ATM puts could produce a turbo-
charged return, but also carries nitroglycerin-like risk.

HIGH PREMIUM ALERT !!

Another good strategy for this play would be to go long the 
stock and write covered calls at or out of the money.  The 
premiums are so inflated that even an ATM contract with 
10 trading days remaining can yield roughly a 5% return 
until December 17th. 

***December strikes expire in 2 weeks***

BUY CALL DEC-370 AAF-LN OI=2577 at $29.25 SL=22.00
BUY CALL DEC-380 AAF-LP OI=2194 at $23.00 SL=18.00
BUY CALL DEC-390*AAF-LR OI=2188 at $18.13 SL=14.00
BUY CALL DEC-400 AAF-LY OI=3501 at $14.38 SL=11.50
BUY CALL JAN-380 AAF-AP OI=1240 at $47.88 SL=37.50
BUY CALL JAN-390 AAF-AX OI= 741 at $45.00 SL=35.00

SELL PUT DEC-360 AAF-XL OI=1108 at $ 8.00 SL=10.25
(See risks of selling puts in the play legend)

Picked on Nov 16th at  $330.00    P/E = 302
Change since picked     +54.44    52-week high=$406.13
Analysts Ratings     6-8-4-0-0    52-week low =$ 24.50
Last earnings 11/99  est= 0.88    actual= 0.91
Next earnings 01-19  est= 0.95    versus= 0.33
Average Daily Volume = 5.9 mln
Chart = http://quote.yahoo.com/q?s=QCOM&d=3m

****

JDSU - JDS Uniphase $251.19 (-14.81)(+52.19)(+13.81)

Uniphase Corporation is a fully integrated optical electronics 
company that designs, develops, manufactures and markets fiber 
optic telecommunications components and modules and laser 
subsystems. The Company's telecommunications products include 
semiconductor lasers, high-speed external modulators, 
transmitters, fiber Bragg gratings and optical modules for fiber 
optic networks in the telecommunications and cable television 
industries.  Based in the Silicon Valley, California, they 
employ approximately 6260 people worldwide.  Customers include 
Lucent, Nortel, Cisco and Ciena.  American Express owns 10% of 
the common shares.

"Dear God, please let there be one more company like Intel to 
invest in, and I promise not to mess it up this time".  Here's 
your big break.  JDSU makes the laser modules and pumps (in 
addition to other components) that split a fiber optic strand 
into many different, potentially unlimited channels.  Effectively 
they do for light what Intel does for electrons.  Their 
components are critical to the development of optical networks.  
Here's another incredibly profitable play since Wednesday's dip 
to $221 - JDSU is up 14% in 2 trading days.  Watch the downside 
with protective stops so you don't lose the profits.  Support is 
still OK at $245-$248; short-term resistance at $262 followed 
much later at $270-$273.  At current levels, we are in the middle 
of the ascending channel.  Volumes, though at or slightly above 
the ADV have fallen back from levels seen in November, which may 
indicate a slight consolidation.  That wouldn't be a surprise 
given that the 2:1 split won't occur until December 30 - it's 
a bit early for a split run and JDSU has come a long way in a 
hurry.  In short, it needs a break.  It is still tradable for 
short-term gains.  Just be sure to target shoot in your comfort 
zone

Big news has been a bit sparse with the major news of a split 
4 weeks away and earnings about 6 weeks away.  But note from 
Thursday that Dain Rauscher Wessels issued a Strong Buy rating 
with a price target of $300.  That follows Wednesday's 
reiteration by SoundView of their Buy rating.  Note too that 
JDSU has doubled analyst expectations over the last 6 quarters.  
Cockroach theory says that where there's one, there are many.  
With optical equipment so much in demand NT, LU, CSCO and TLAB 
will keep JDSU hopping.  This could also be one for the long-
term portfolio or IRA, especially with juicy premiums suitable 
for writing covered calls.

***December strikes expire in 2 weeks***

BUY CALL DEC-240 UQD-LH OI=1266 at $21.63 SL=16.75
BUY CALL DEC-250*UQD-LJ OI=2069 at $15.50 SL=12.00
BUY CALL DEC-260 UQD-LL OI=1311 at $11.63 SL= 9.25
BUY CALL JAN-250 UQD-AJ OI= 960 at $31.88 SL=25.00
BUY CALL JAN-260 UQD-AL OI= 617 at $27.75 SL=21.50

Picked on Nov 21st at  $213.81    P/E = N/A
Change since picked     +37.38    52-week high=$273.62
Analysts Ratings   13-13-0-0-0    52-week low =$ 26.31
Last earnings 10/99  est= 0.25    actual= 0.29 surprise= 16%
Next earnings 01-24  est= 0.30    versus= 0.14
Average Daily Volume = 2.7 mln
Chart = http://quote.yahoo.com/q?s=JDSU&d=3m


*************
MISCELLANEOUS
*************

MXIM - Maxim Integrated Products $92.31 (+7.94)

Established in 1983, Maxim Integrated Products is a worldwide 
leader in design, development, and manufacture of linear and 
mixed-signal integrated circuits.  Maxim circuits "connect" 
the real world and digital world by detecting, measuring, 
amplifying, and converting real world signals.  Signals such 
as temperature, pressure, or sound, into the digital signals 
necessary for computer processing.  Their products include data 
converters, interface circuits, microprocessor supervisors, 
operational amplifiers, power supplies, multiplexers, switches, 
battery chargers, and voltage references. 

They say we live in a digital world now.  True, but we still 
need someone to produce the meat and potato products of the 
world.  MXIM is one of those companies.  Sound familiar?  It 
should, because we played this stock previously, anticipating 
that they would be announcing a stock split.  We were rewarded 
with a 2:1 split announcement at the Nov 18th Annual Stockholder's 
meeting.  Since that time, much has changed.  The stock saw a 
normal post-annoucement depression that took the stock to $80 
by the last day of the November.  On Nov 30th (after the market), 
Louis P. Gerhardy at Morgan Stanley Dean Witter reiterated a 
Strong Buy recommendation.  The following day, the stock reversed 
course and headed north.  That afternoon (Dec 1st), Analog 
Devices released their earnings, indicating strong revenue 
growth and a rosy outlook for the sector.  That was all MXIM 
needed to take off.  On Dec 2nd, MXIM executed an expansion 
breakout (largest range in 7 days and highest close for at 
least 2 months) and hit a new record high, trading above $90 
for the first time ever.  The stock struggled on Friday (after 
the run-up you would expect it) but still managed another record 
close.  New month, new trend.  Thursday's breakout and the 
heavy volume over the last 3 days is a pretty good indication 
that momentum players are positioning themselves for what looks 
like a split run.  Support is looking good at $90, and again 
at $88.  The 5 and 1-0dma are not much help, sitting back at 
$86 and $85 respectively.  As far as initiating positions, look 
for a retrace to $90.  If this doesn't happen by Monday or 
Tuesday, you are probably going to have to chase it some.  
This play has a quick trigger (2 weeks) and as we're already 
in record territory now, expect a run at and possibly through 
$100.  Meat and Potatoes?  Looking more and more like Filet 
Mignon!  

Also Bloomberg News ran an article on Dec 2nd regarding Yahoo's 
addition to the S&P 500.  In the article, analysts over at Lehman 
Brothers identified MXIM as a candidate for that index since 
they are one of the largest tech companies not currently in the 
S&P 500.  Food for thought!  As far as our play, the split pays 
on Dec 21st, so we plan to exit by the 20th to avoid profit-
taking and post-split depression.

***December contracts expire in two weeks***

BUY CALL DEC- 85 XIQ-LQ OI=1509 at $8.63 SL=6.50
BUY CALL DEC- 90*XIQ-LR OI= 361 at $5.63 SL=3.75
BUY CALL DEC- 95 XIQ-LS OI=  50 at $3.13 SL=1.50
BUY CALL DEC-100 XIQ-LT OI=  10 at $1.44 SL=0.50 High Risk!

SELL PUT DEC- 85 XIQ-XQ OI= 205 at $1.19 SL=2.50
(See risks of selling puts in the play legend)

Picked on Dec 5th at     $92.31    P/E = 69
Change since picked       +0.00    52-week high=$92.56
Analysts Ratings      6-7-2-0-0    52-week low =$37.63
Last earnings 10/99   est= 0.35    actual= 0.37
Next earnings 01-27   est= 0.41    versus= 0.31
Average Daily Volume = 1.50 mln
Chart = http://quote.yahoo.com/q?s=MXIM&d=3m

****

TIF - Tiffany & Co. $79.69 (+3.56)

Tiffany & Co. sells fine jewelry, timepieces, silver, china,
Crystal, stationery, and other luxury items through about
130 Tiffany & Co. stores and boutiques worldwide.  They 
also sell via catalog.  Tiffany also sells corporate gifts
directly to businesses.  

TIF got the stamp of approval from Bob Pisani, a reporter on 
CNBC.  He came out with comments to end the week saying that 
high-end retailers/e-tailers like TIF are looking good through 
the holiday season.  Hey, is Bob an OIN subscriber, because we 
said the same thing, only a day earlier.  On the back of these 
comments, TIF continued to set a record 52-week high at $80.69, 
as the shares moved forward on strong volume.  This was after 
TIF had sold off in the morning Friday, providing an excellent 
entry point.  The shares bounced right on $77.  Rolling into 
another weekend of holiday shopping, the technical picture is 
strong on all levels: volume, moneystream, prices, and relative 
strength.  This week's favorable climb continued on Friday 
breaking above resistance levels between $79-$79.50, and 
ending the week at an all time closing high of $79.69.  There 
was more than twice the daily average volume that exchanged 
hands, which further confirms the move.  With the bulls taking 
interest in TIF, we like the stock at current levels.  The 
ascending pennant taking shape usually signals a nice move to 
the upside as long as the volume remains strong.  Support is 
strong at $76-$77 but we may need a market sell-off to dip 
down to these levels.  Resistance is at $80 for the pennant 
mentioned above.  

The robust thanksgiving weekend sales have also contributed to
help shine a brighter light on retailers like Tiffany & Co. 
Analysts are looking to even better Christmas sales as they 
have been increasing their quarterly and yearly earnings 
estimates for the company going forward.

***December contracts expire in two weeks***

BUY CALL DEC-75 TIF-LO OI=221 at $6.88 SL=5.00
BUY CALL DEC-80*TIF-LP OI=147 at $3.63 SL=1.75
BUY CALL JAN-75 TIF-AO OI= 79 at $9.88 SL=7.25
BUY CALL JAN-80 TIF-AP OI=158 at $7.13 SL=5.25

SELL PUT DEC-75 TIF-XO OI= 69 at $1.50 SL=3.00
(see risk of selling puts in the play legend)

Picked on Dec 2nd at    $78.88    P/E = 50
Change since picked      +0.81    52-week high=$80.69
Analyst Ratings     1-13-5-0-0    52-week low =$19.06
Last earnings 11/27  est= 0.24    actual= 0.29
Next earnings 03/08  est= 0.87    versus= 0.74
Average daily volume =   563 K 
Chart = http://quote.yahoo.com/q?s=TIF&d=3m



*****
LEAPS
*****

December 5th - LEAPS

The Christmas rally officially got under way this week, backed 
by a tame employment report for November.  The momentum in 
this market is unbelievable right now and we will continue to 
let this bull market run higher.  That is why there are still 
no dropped plays this week and some sizable returns mounting 
in our portfolio.  Hindsight is always 20-20, but the market 
dip on Tuesday that took the VIX over 25 briefly was a good 
entry point.  Congratulations to all who took advantage of 
this opportunity.  Right now, the smart bet still lies in a 
one or two-day pullback before entering, but intraday dips 
also appear tempting.  Just don't get impatient.  Time is on 
our side.  Y2K will likely make trading volatile for the next 
3-4 weeks and provide entry points.  Until then, full steam 
ahead Rudolph!  Our motto for the week:  LEAPs, the gift that 
keeps on giving.  

Current Plays

SYMBOL  SINCE      LEAPS         SYMBOL   CURRENT  PICKED   RETURN

EMC     11/07/99   JAN-2001 $80  ZOH-AP at $30.38   $15.38  97.53%
                   JAN-2002 $90  WUE-AR at $34.25   $19.00  80.26%
DELL    11/07/99   JAN-2001 $50  ZDE-AJ at $ 9.13   $ 7.00  30.43% 
                   JAN-2002 $50  WDQ-AJ at $13.88   $11.25  23.38%
GPS     11/07/99   JAN-2001 $40  ZGS-AH at $11.13   $ 5.75  93.57%
                   JAN-2002 $45  WGS-AI at $12.63   $ 7.88  60.28%
IBM     11/07/99   JAN-2001 $100 ZIB-AT at $27.13   $13.63  99.05%
                   JAN-2002 $110 WIB-AB at $30.38   $16.50  84.12%
WMT     11/07/99   JAN-2001 $70  ZWT-AN at $ 6.75   $ 6.50   3.85%
                   JAN-2002 $75  WWT-AO at $10.00   $ 9.75   2.56%
LU      11/14/99   JAN-2001 $80  ZEU-AP at $17.88   $12.88  38.82%
                   JAN-2002 $90  WEU-AR at $21.00   $16.13  30.19%
CSCO    11/14/99   JAN-2001 $80  ZCY-AP at $28.25   $19.13  47.67%
                   JAN-2002 $90  WIV-AR at $31.00   $22.00  40.91%
SLR     11/14/99   JAN-2001 $85  ZSR-AQ at $24.50   $21.75  12.64%
GE      11/21/99   JAN-2001 $150 ZGR-AU at $15.25   $16.25 - 6.15%
                   JAN-2002 $150 WGE-AU at $24.25   $25.50 - 4.90%
GTW     11/21/99   JAN-2001 $90  ZWB-AR at $11.63   $17.75 -34.54%
                   JAN-2002 $100 WGB-AT at $16.88   $22.50 -25.02%
NT      11/28/99   JAN-2001 $75  ZOO-AO at $22.25   $22.25   0.00%
                   JAN-2002 $75  WNT-AO at $29.38   $30.25 - 2.91%

To review the play description on any of our current plays, 
go to the LEAPS section for the date the play was added
 

New Plays

VOD - Vodafone Group $49.44

Vodafone is making a bid to become the largest cellular maker 
in the world.  In the ongoing battle to purchase German-based 
Mannsemann, VOD finally appears to be winning.  This struggle 
has put a damper on VOD's share price but as the air clears, 
it appears the VOD now has some catching up to do.  The sector 
has been red hot and VOD has lagged due to the merger struggles. 
That is why VOD is now starting to trend higher.  Investors 
are realizing that the damage may be coming to an end and 
that VOD is set to move up.  We like the fact that the options 
have not seen a dramatic rise in premiums yet.  $48 looks 
like good support to do some buying. 

BUY LEAP JAN-2001 $50.00 ZAT-AJ at $10.75 
BUY LEAP JAN-2002 $50.00 WHV-AJ at $15.00



****

KM - Kmart Corporation $9.63

This is a different play but an intriguing one as well.  Let's 
call it our speculative-value play, if there is such a thing.  
It is speculative because of the uncertainty of KM's future 
against the ever strong Wal-mart.  And it is a value play due 
to the falling stock price.  We usually prefer higher growth 
stocks for our LEAPS section but a look at the options will 
tell you what the play is all about.  The premiums are about 
as low as they go.  We haven't sat down to calculate what KM 
might be worth in a buyout or reorganization but any hint of 
decent news, not even good news, just fair news should be good 
for a quick move in the stock.  Therefore we are looking to 
take a position and play the quick spikes up.  Again, this 
isn't a stock with dynamic moves but it can be very profitable 
given the right situation.  A dip to $9 would be a good entry.

BUY LEAP JAN-2001 $10.00 ZKM-AB at $2.50
BUY LEAP JAN-2002 $15.00 WKM-AC at $1.75



****
 
AOL - America Online $78.13

Ameica Online is a company that should be on everyone's LEAPS 
list to buy on the dips.  We are watching the world's leading 
Internet Service Provider closely for an ehtry point but we 
feel it will come done a little more.  That is why there are 
no options currently listed.  Let's wait for a dip to at 
least $75 before entering.  Maybe we miss the boat, maybe we 
don't but nothing goes up in a straight line.  The reason that 
AOL is listed now is help you in target-shooting your way in 
on the dips.  It is time to put it on the radar.




Drops

Still no drops but we are ready to protect profits when the 
market looks like it is rolling over.  Set those stop orders.




*****************
PUTS, PUTS, PUTS
*****************

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

****

GT - Goodyear Tire and Rubber Co. $32.81 (-1.31)(-2.88)

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

We don't think that GT has bottomed just yet, though it did 
try and participate in the market rally last Friday.  GT 
encountered resistance at $33 for the majority of the session 
before finally making a breakthrough and trading above this 
level for a bit in the afternoon session.  GT looks to have 
bumped its head on it's 5-dma, which is currently right around 
$33.50.  We want to see this resistance hold up heading into 
this week.  GT has further resistance at it's 10-dma of $34 and 
should we see a breakthrough of this level, we will want to let 
GT go.  Being that we are seeing GT's volume pick up, we are 
proceeding with caution at this point.  You will probably want 
to hold off on entering any new plays until we see a fall below 
$31.75 (52-week low) and a drop off in volume.  We think that 
Friday was merely a market driven rally and see nothing 
substantial backing the move and therefore expect a reclamation 
of GT's downward trend.  In the news, GT has suspended output 
for it's Argentine unit and has laid-off 900 employees. 
Apparently the Argentina tire market is suffering severely 
due to a steep decline in local car demand.  Not a very positive 
sign for GT going forward.

***December contracts expire in two weeks***

BUY PUT DEC-40 GT-XH OI=481 at $7.75 SL=5.75
BUY PUT DEC-35*GT-XG OI=419 at $2.56 SL=1.25

Average Daily Volume = 925 K
Chart = http://quote.yahoo.com/q?s=GT&d=3m

****

JCI - Johnson Controls, Inc. $52.44 (-3.25)

Johnson Controls is a global market leader in automotive systems 
and facility management and control.  In the automotive market, 
it is a major supplier of seating and interior systems and 
services, and batteries.  For non-residential facilities, 
Johnson Controls provide building control systems and services, 
energy management and integrated facility management. 
 
What is wrong with Johnson Controls?  They have some solid 
fundamentals, a solid dividend record and they sport a very 
low P/E of 10.75.  Despite these positives, the stock has been 
in a steady decline ever since its August high of $73.88.  
Surely, the October comments that earnings momentum may slow 
in 2000, have hurt the stock.  Secondly, Johnson Control's 
stock is a victim of that annual event, "window dressing".  At 
the end of the year money managers purge their under-performing 
stocks and gorge on the highest flying stocks.  This behavior 
confirms trends in both directions.  Certainly value investors 
will eventually step up to the plate and start buying down-
trodden cyclicals like JCI and CAT but until then, the trend 
is your friend.  Curiously, the CEO of JCI, Mr. James Keyes was 
awarded a $1 million bonus yesterday.  The bonus, an increase 
of more than 100% over last year was awarded for shareholder 
equity performance (say what?) and operating income increases.  
With the stock trading at its lows, some 68% off of its highs, 
we think some shareholders might be a little miffed by the 
assessment that shareholder equity has been improved.  Technically 
speaking, JCI's shares had a very dismal week.  JCI has closed 
at or near its low price for the day on 4 consecutive trading 
days.  We will let the trend continue to take JCI lower.  
Resistance is just over $55. 

***December contracts expire in two weeks***

BUY PUT DEC-55 JCI-XK OI= 6 at $3.25 SL=1.50 low OI          
BUY PUT JAN-55*JCI-MK OI=38 at $4.13 SL=2.50

Average Daily Volume = 289 K
Chart = http://quote.yahoo.com/q?s=JCI&d=3m

****

EK - Eastman Kodak Company $60.13 (-4.38)

Eastman Kodak Company is engaged in developing, manufacturing,
and marketing consumer, professional, health and other imaging
products around the world.  The company has four operating 
segments: Consumer Imaging, Kodak Professional, Health Imaging,
and Other Imaging.  Primarily all of these divisions are in 
the business of selling photographic supplies and equipment.  
Their main competitor is Fuji.

Is Kodak a pioneering technology company on the cutting edge of
new product development?  Or is it the proverbial "buggy whip"
company, doomed to be left behind?  Kodak is probably neither.
However, there are serious concerns among institutional investors
about Kodak weaning itself off of a primarily commodity business.
As the price of film goes down, so go the profits.  Yesterday's
comments from Chief Marketing Officer, Mr. Carl Gustin, have 
done nothing to alleviate those concerns.  "To make a new model 
work, the old model has to be broken.  Today digital imaging 
doesn't offer anything [better] besides sharing."  Kodak's stock 
has been decimated in the past year due in part because the 
perception among investors is that the digital revolution could 
eventually inflict heavy damage on the sales of Kodak's core 
business.  The comments are particularly shocking to analysts 
because Kodak has been making good inroads into the digital 
format.  If Mr.Gustin's comments represent the corporate 
philosophy of Kodak, then there could be more trouble for the 
stock down the road.  Money is pouring into the shares of 
companies who have accepted and are creating the new technological 
paradigm.  The performance of EK is indicating a move towards 
the exits.  The share price of Kodak peaked in September at 
just over $80.  It has been in decline ever since.  EK is likely 
to be on the sell candidate list of money managers during any 
sell programs.  Resistance is sitting at $63 and that would make 
a nice entry point for less aggressive investors.  Otherwise, 
you can initiate new positions on small rallies or a break below 
the $60 support.  This is a company that has been known to warn 
of profits too.  We are now entering the warning month for Q4 
and EK is always a stock to  watch for a possible disappointment.

***December contracts expire in two weeks***

BUY PUT DEC-65*EK-XM OI= 865 at $5.00 SL=3.75
BUY PUT JAN-60 EK-ML OI=9472 at $2.38 SL=1.25

Average Daily Volume = 1.11 mln
Chart = http://quote.yahoo.com/q?s=EK&d=3m

****

BOW - Bowater, Inc. $48.00 (+1.13)(-5.50)

Bowater Inc., manufactures, sells and distributes newsprint, 
directory paper, un-coated groundwood specialties, coated 
groundwood paper, market pulp and lumber. Bowater is the #1 U.S. 
maker of newsprint and became #2 in the world after it's purchase 
of Canadian company Avenor. Bowater now has the capacity to churn 
out about 3 billion tons of newsprint a year.  The company operates 
eight pulp and paper mills and three sawmills in Canada, South 
Korea and the U.S.

Bowater is a classic cyclical stock.  Bowater is currently 
facing not only an economy with rising interest rates but also 
is facing a review of it's long-term debt ratings by Moody's 
for a possible downgrade.  A Moody's downgrade would increase 
the cost of capital for Bowater.  This would be a painful blow 
to a already unprofitable company.  Earnings estimates for 
FY 99 are -$0.30.  As always, we are much more concerned with 
the immediate outlook for OUR profit opportunities!  Moody's 
chief concerns lie in the possibility that Bowater will continue 
to remain in an aggressive acquisition mode, which could further 
stress debt protection measurements that are already significantly 
weakened from the effects of cyclically low pricing.  The recent 
bad news from Moody's and a complete disinterest in cyclical 
stocks from Wall Street, leads us to believe that the downtrend 
may continue in Bowater's shares in the near future.  On the 
cautious side, it is possible companies such as Bowater may be 
seen as a safe place to be should we experience a meltdown in 
the averages.  Indeed, this scenario occurred last week when BOW 
had a strong bounce on Tuesday when the rest of the market was 
falling apart.  It is possible that BOW is trying to build 
support down here in the low $46 range.  A close above $50 may 
indicate that support has been established and value investors 
are coming in.  Be cautious and we will be watching.  A break 
below $46 and put holders will be in business.  

***December contracts expire in two weeks***

BUY PUT DEC-50*BOW-XJ OI=124 at $2.94 SL=1.50
BUY PUT DEC-45 BOW-XI OI=200 at $0.81 SL=0.00 High Risk!
BUY PUT JAN-50 BOW-MJ OI= 10 at $4.00 SL=2.50 

Average Daily Volume = 350 K
Chart = http://quote.yahoo.com/q?s=BOW&d=3m

****

KIDE - 4Kids Entertainment $49.56 (-13.69)

4Kids Entertainment is a vertically integrated entertainment 
based company.  KIDE provides a wide range of services.  KIDE 
designs, develops, and produces toys.  It also handles 
international merchandise licensing media buying and planning,
television distribution and production.  KIDE is responsible 
for the licensing of World Championship Wrestling and the 
very popular Pokemon.

Talk about the gift that keeps on giving!  Haven't we been 
here before?  KIDE is doing its part to make sure we can all 
afford to buy Pokemon paraphernalia for everyone on our lists 
this year.  We have been profitable on both sides of KIDE's 
runs, and here we are yet again, ready for another ride.  If 
you remember, we initiated a put play on KIDE back on the 21st 
of November and had a short but sweet run down to $42, where 
KIDE made a big bounce.  Traders hopped back on board, pushing 
the KIDE swing as high as $67.50 on the 29th.  KIDE is sliding 
down once again and we think KIDE will most likely trade back 
down to $42 and possibly even go as low as $38.  As always, it 
is going to be important to exercise caution as we know from 
experience just how quickly KIDE can change direction.  KIDE 
has exhausted nearly all of the moving average support with 
the exception of the 100-dma, which is at $42 (note: this is 
where KIDE bounced before, therefore exercise caution and 
tighten stops as we approach!)  Should KIDE breakthrough here, 
we could be cleared for a healthy fall, as the only formidable 
support will be the psychological levels, i.e., $40.  KIDE's 
200-dma is all the way down at $26.

***December contracts expire in two weeks*** 

BUY PUT DEC-55*IUK-XK OI= 629 at $9.25 SL=7.00
BUY PUT DEC-50 IUK-XJ OI= 916 at $6.13 SL=4.25
BUY PUT DEC-45 IUK-XI OI=1245 at $3.50 SL=1.75
 
Average Daily Volume = 1.37 mln
Chart = http://quote.yahoo.com/q?s=KIDE&d=3m



********************
Y2K Renewal Offer!!!
********************

Announcing the cheapest renewal rate available! $24.91 mo*

Long time readers know that each December we offer our 
subscribers an extra value package as a thank you for their 
support. The package this year contains (2) of our Y2K Option 
Expiration Calendar Mousepads and the Millennium Edition of 
the Stock Traders Almanac, a $50 value.  You will receive two 
mousepads, one for home and another for the office so you have 
no excuse for not knowing those expiration dates and strike 
price codes. We are also giving away the Millennium Edition 
of the Stock Traders Almanac by Yale Hirsch. This almanac has 
thousands of facts, tips and hard information that a trader 
cannot live without. Just one of these facts can pay for the 
newsletter subscription for the entire year and there are 
thousands of them.  This is the serious stock traders bible. 

And the offer is.....Renew your subscription in December at the 
annual rate and receive (2) Y2K Option Expiration Calendar Mousepads 
and the Millennium Edition of the almanac for FREE. This package 
has a $50 value. Added to the savings you receive on an annual 
subscription over the monthly rate and it is like getting over 
four months of the newsletter for free. A $180 value. This lowers
the actual price of the newsletter to only $24.91 per month for
an annual subscription. The supply of almanacs is limited so 
don't delay. Click here for more info.

http://www.OptionInvestor.com/renewalinfo.asp



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



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


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

A Year To Remember..

Friday, December 3

Stocks soared Friday as positive news in the nation's jobs market
and growth in U.S. productivity eased fears of inflation. The Dow
Jones Industrial Average ended 247 points higher at 11,286 after
briefly surpassing its previous record close of 11,326. The Nasdaq 
Composite Index rocketed to its biggest yearly gain ever, up 60%
as it posted another record high at 3,520. The broad market S&P
500 index rose 24 points to 1,433, also a new record. Advancing
issues outnumbered declines 3 to 2 on active volume of 994 million
shares on the NYSE. The 30-year U.S. Treasury bond was up 25/32,
with the yield dropping to 6.26%.

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

Cheap Tickets   CTIX   JAN20C/DEC22C   $2.00   debit   diagonal
Cheap Tickets   CTIX   JAN22C/DEC22C   $1.12   debit   diagonal
Priceline.com   PCLN   JAN50C/DEC65C   $12.88  debit   diagonal

Our new online travel issues made headway early in the day but
both fell victim to profit-taking as investors transitioned to
market-leading stocks. Priceline.com was hit hard by a negative
article on their business model and the share value dropped over
$3 to close near recent support at $61. Cheap Tickets finished
with a smaller loss, down $0.88 at the close but near the day's
lows. Needless to say, the target prices were available on all
positions. 

Portfolio plays:

Stocks moved higher right from the open after the Labor Department 
reported that 234,000 new jobs were added to non-farm payrolls in 
November while the unemployment rate remained unchanged. News that
the average hourly wages were up only 0.1% also contributed to the
benign data. Comments by an influential voting member of the Fed's 
interest rate policy-setting group that inflation is under control
added to the optimistic outlook. Analysts noted that cash inflows
to equities continue to be positive, the U.S. economy is expanding
and the majority of earnings are favorable, three key elements of
a successful bull market.

Banks and technology shares led the Dow to record levels with
money center, computer, wireless and Internet issues dominating
the headlines. The majority of leaders in our portfolio were in
the communications sector and E-tek Dynamics (ETEK) topped that
group, up $9 to close at a new all-time-high of $93. E-tek is a
a leader in the design of key products for fiber optic networks
required by most manufacturers of telecommunications equipment
and with the current demand for infrastructure, this company is
poised for incredible growth in the coming months. InterVu (ITVU)
was another of today's best performers, climbing $4.50 to close
above a recent channel near $65. This issue also has room to run
and should test 52-week highs before years' end. Other telecom
issues participated in the rally and Bell Atlantic (BEL) made the
news with a report that the FCC made an unexpected request for
additional industry comment on the company's application to offer
long distance service in New York. The surprise move could help 
eliminate a stumbling block that has arisen in Bell's effort to
enter the $7 billion New York long distance market. The stock
closed at a recent high of $66 after the announcement. AT&T (T)
also made headway, climbing to $57 on speculation of the crucial
meeting with analysts next Monday. AT&T faces pressure to unveil
a much-anticipated wireless tracking stock and reassure investors
that its strongest growth is not in its past. Chairman C. Michael 
Armstrong is expected to deliver a few surprises on new company
initiatives to maintain shareholder enthusiasm.

Big-cap issues were the focus of most institutional investors and
our long-term portfolio benefitted from the new interest. Shares
of Sun Microsystems (SUNW) vaulted another $6 to $142 as traders
competed for the popular issue in the pre-split rally. A bullish
upgrade by Merrill Lynch analyst Steven Milunovich started the
most recent move and his target of $165 may be achieved sooner
than many expect. Motorola (MOT) rambled $5 to end at $124 thanks
in part to a positive report on its leading competitor. The world's
biggest mobile phone maker Nokia rewarded bullish investors with
higher forecasts for mobile users worldwide and painted a bright
future the company. Motorola benefits from the same type of growth
and the outlook for their wireless division is extremely favorable.
Solectron (SLR) moved up $4 to a new high near $92.25 on strength
from Merrill Lynch's recent upgrade. The stock is once again above 
technical resistance and a roll-up/out decision will have to made
in the next few days. The lack of a quick adjustment can put you
well behind the profit curve; as we have witnessed with SUNW over
the past few months, and our current spread (LJAN70C/DEC80C) will
not benefit from further upside moves. Computer Associates (CA)
also broke-out to a new range, climbing $3 to an all-time-high
near $68. In this case, our current spread (LJAN60C/DEC65C) will
permit a small amount of bullish movement before the profit falls
significantly. This downside margin will give the issue time to
consolidate above the new support at $65. General Motors (GM) was
the last of the major movers in the LEAPS/CC's portfolio and as we
said earlier in the week, it was our primary candidate for roll-up
to higher strike options. GM rallied over $3 on news the company
will consider spin-off proposals next week for Hughes Electronics
(GMH). In addition, a rumor that GM will be acquired by a large
consortium is circulating among traders. Regardless of the reason,
General Motors has moved back into its old channel near $75 and
our current positions (LJAN75C/JAN75C) have been adjusted to fit
the new outlook. The next target for GM is the 26-week high near
$77.

There were a number of disappointing issues in today's session
but after the recent success of many of our portfolio positions,
it's normal to expect some consolidation in the short-term. Tax
loss selling has begun in earnest and should continue until late
December. This type of trading negatively affects all but the top
performing stocks and creates an artificial disparity among the
lower ranks, allowing the best issues to forge higher while the
mediocre companies fall quickly into the abyss. Fortunately, the
market is a great equalizer and as investors rotate out of the
current high flying issues, new winners emerge from previously
underrated candidates and the growth cycle starts all over again.  
The majority of our group of small-cap positions will participate
in this well-known ritual and resume their bullish ways in the
weeks ahead.

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


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

UAL - United Airlines  $70.38     *** LEAPS/Covered-Calls ***

UAL is the holding company for United Airlines. UAL is a majority 
employee-owned airlines which offers 2,200 flights a day to 136 
destinations in 30 countries and territories around the world.

The airline industry is preparing for one of the best holiday
travel seasons in recent history and United will certainly be at
the top of the heap. This well-known company leads almost every
category in the group of worldwide air carriers and analysts now
consider it the leading candidate for growth in the sector. The
most recent bullish recommendations have come from Ing Baring
Furman Selz, S&P Market Scope, and Deutsche Banc Alex Brown. The
majority of ratings are very optimistic and we concur with the
outlook based on UAL's favorable technical history.

UAL's stock appears ready to exit a six-month base though more
volume support would be reassuring as it is slightly overextended
in the near-term. The long-term trend favors an eventual bullish
move out of the current lateral consolidation with strong support
above $65 and the first level of resistance starting near $75.

There are two ways to play this position, both with favorable
disparities in option pricing.

PLAY (aggressive - bullish/diagonal spread):

BUY  CALL JAN01-60 ZUA-AL OI=819  A=$18.62
SELL CALL DEC99-70 UAL-LN OI=3139 B=$2.68
INITIAL NET DEBIT TARGET=$15.75 TARGET ROI=150% (13 months)

- or -

PLAY (aggressive - bullish/calendar spread):

BUY  CALL JAN01-75 ZUA-AO OI=420 A=$11.50
SELL CALL DEC99-75 UAL-LO OI=581 B=$0.88
INITIAL NET DEBIT TARGET=$10.25 TARGET ROI=100% (13 months)

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

****

BCR - C.R. Bard  $52.43     ** An Old Favorite ***

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

Our old friend is back and open interest in the December options
has fallen slightly as speculators departed the stock on a lack
of news on the recent merger rumors. The technicals have turned
sour and now the trend is noticeably bearish. The probability of
profit in this play is excellent and the two-week (ITM) position
is based on a small premium disparity in the front-month options.

PLAY (conservative - bearish/debit spread):

BUY  PUT DEC-60 BCR-XL OI=27 A=$8.75
SELL PUT DEC-55 BCR-XK OI=22 B=$4.50
INITIAL NET DEBIT TARGET=$4.00 ROI(max)=22% B/E=$56.00

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


*****************
CHEAP SPECULATION
*****************

AG - Agco  $13.75     *** Technicals Only ***

Agco is engaged in the manufacturer and distribution of farm
equipment, machinery and replacement parts in the United States
and Canada. The company's products include tractors, combines,
hay tools and forage equipment and implements.

We found this issue while searching for Covered-call candidates
and while it didn't have the right combination of premiums for
that type of position, it does offer a great spread play for
low-cost speculation with a bullish outlook. The option prices
favor a long-term, at-the-money diagonal spread.

The stock is exiting a seven month lateral consolidation during
which systematic accumulation is evident (often called a flying
plateau), with a confirming increase in volume. The first level
of resistance is long-term at $25 and near-term support exists
near $12.50.

PLAY (conservative - bullish/diagonal spread):

BUY  CALL FEB-12.50 AG-BV OI=832 A=$2.00
SELL CALL JAN-15.00 AG-AC OI=24  B=$0.50
INITIAL NET DEBIT TARGET=$1.38 TARGET ROI=50%

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


******************************************************************
     - VOLATILITY PLAYS -

These plays are based on the current price or trading range of
the underlying issue and the recent technical history or trend.
The probability of profit from these positions is also higher
than other plays in the same strategy due to implied volatility
extremes or disparities in option pricing. Market sentiment and
upcoming events will have an effect on these positions so review
each play and make your own decision about the future outcome of
the stock price.
******************************************************************

DLP - Delta & Pine Land  $23.56     *** In A New Range? **      

Delta Pine And Land is a commercial producer of cotton planting
seed in the United States. It also breeds and distributes other
seed products; sorghum and soybean, and distributes hybrid corn
planting seed acquired from others under non-exclusive license 
agreements.

The ongoing saga of the DLP merger has option buyers in a frenzy
and implied volatility and volume moved higher last week on new
concerns about the previously agreed-upon marriage with Monsanto.
The Wall Street Journal reported recently that Monsanto has been
holding talks with several companies, including Pfizer about a
full or partial sale of the company. The WSJ also said the Swiss
drug maker Novartis AG had emerged as a serious suitor. Both of
the companies declined comment about a possible deal but Pfizer
said it may be interested in acquiring Monsanto's pharmaceutical
(Searle) unit, if it were available separately. The MTC deal has
also been mired in a lengthy antitrust review process and most
investors have long since fled the scene for greener pastures.

The incredible premium disparities in option pricing continue to
provide us with favorable positions. In this case, we are going
to participate in an aggressive, neutral-outlook position that
profits if the stock price remains between $17.88 and $32.12.

PLAY (aggressive - neutral/credit strangle):

SELL CALL DEC-30 DLP-LF OI=5119 B=$0.56
SELL PUT  DEC-20 DLP-XD OI=1346 B=$1.43
INITIAL NET CREDIT TARGET=$2.12 ROI(max)=31%

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

****

CYGN - Cygnus  $9.25     *** Speculation Only! ***

Cygnus is engaged in the development of diagnostic and drug
delivery systems, with its current efforts primarily focused
on three core areas: a painless, automatic glucose monitoring
device, transdermal drug delivery systems and mucosal drug
delivery systems. The three core areas of their business are:
painless, automatic glucose monitoring, mucosal drug delivery
and transdermal delivery systems.

The GlucoWatch, a device to painlessly record blood sugar, or
glucose levels will come under scrutiny from federal advisers
on Monday. The watch-like device is designed to help diabetics
monitor their blood sugar without the need to "fingerstick" to
draw blood several times a day. Analysts said they expect the
FDA advisory panel to conduct a thorough review of the product
because it will be the first device to provide this information
directly to patients and experts believe it may revolutionize
treatment of diabetes. 

This position is based solely on the extreme option premiums
and the recent technical history of the stock. The margin for
profit is extremely large but the post-announcement volatility
has the potential to exceed all statistic-based estimates. We
offer this play for the speculative trader only.

PLAY (very aggressive - neutral/credit strangle):

SELL CALL DEC-12.50 YNQ-LV OI=4856 B=$1.00
SELL PUT  DEC-7.50  YNQ-XU OI=2980 B=$1.38
INITIAL NET CREDIT TARGET=$2.50 ROI(max)=57%

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

****

FO - Fortune Brands  $33.38     *** Technicals Only ***    

Fortune Brands is a consumer products company with powerhouse
brands and leading market positions. They manufacture and sell
hardware and home improvement products, office products, golf
products and distilled spirits.

Not much news on the company recently but Standard & Poor's has
assigned its single-'A' rating to Fortune's $200 million 7-1/8%
senior unsecured notes. At the same time, S&P affirmed the rest
of the corporate credit, senior unsecured debt, preferred stock,
commercial paper and short-term credit ratings on the company.
The near-term outlook for the fundamentals of the business are
stable and that matches our evaluation of the chart technicals.

This position is based on the favorable disparity in front-month
option premiums. The spread will profit if the underlying issue
remains in a relatively small range for two weeks.

PLAY (conservative - neutral/calendar spread):

BUY  CALL JAN-35 FO-AG OI=0    A=$1.18
SELL CALL DEC-35 FO-LG OI=1308 B=$0.43
INITIAL NET DEBIT TARGET=$0.62 TARGET ROI=25%

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



*************
COVERED CALLS
*************

Secrets Of Stock Ownership: Exiting The Position...

One of the key portfolio-management decisions that investors must
make is "when to sell." There are a number of different techniques
that professional traders, fund managers and institutional brokers
use to determine that point in the life-span of a position. Today
we will begin a multi-part series of narratives dedicated to this
particularly complex (and often philosophical) subject.

The art of investing is not some arcane science that requires
a knowledge of mysterious algorithms but it does require a very
disciplined approach to be successful on a consistent basis. One
of the most important skills an investor must master is timing
the entry and exit points. New investors frequently use a method
known simply as the common-sense approach: Sell a stock when you
have a better stock to buy. The problem is, a successful position
in a good company is hard to give-up, especially when the market
is positive and you have made a profit with the issue. It is very
important NOT to sell stocks just because they have increased in
value; capitalizing on lucrative positions (letting your profits
run) is a basic strategy for consistent, long-term performance.

Proponents of this common technique recommend that when you find
another quality issue at a favorable price with a promising rate
(expected) of share value growth, then you should exchange that
stock with one of the less attractive positions in your portfolio.
In reality, selling one to buy the other will not always improve
the returns and in most cases, a novice trader will exit the issue
because of anxiety, selling far too soon and missing the lion's
share of future gains. There are times when a stock needs to be
sold, even when one does not have another candidate in mind. If
everyone who wants to own the stock already owns it, then there is
no one left to support the price and the selling will soon begin.

The common-sense approach lacks two primary qualities that are
absolutely necessary in any successful trading system; precision
and consistency. Without these characteristics, the method will
ultimately falter, regardless of the skill and tenacity with
which it is applied. The flaws are obvious; winners will be sold
long before their full potential is realized and at other times,
one will overstay the trend and donate most or all of the profit
as the stock plunges into a full-scale correction. With this type
of trading, the exit strategy is never clearly defined and after
the issue passes the critical break-even point (on the way down),
the position is usually held all the way to the bottom. Comments
like "I can't afford to take the loss" or "I can average-down to
improve my cost basis," are heard along the way. By the time the
investor realizes the futility of this practice, their equity
has all but evaporated.

The important lesson to learn from this type of trading is that
each position should be constantly evaluated both fundamentally
and technically to determine if it merits your investment capital.
You have to ask, "If I were considering this stock for the first
time today, would I buy it?" If not, sell it and move your assets
to a more favorable investment. Any loss you incur can easily be
converted to a tax savings at the end of the year. Learning to
manage the situation (keeping the losses to a minimum) is one of
the most important aspects of successful investing and that's a
subject we'll discuss further in next week's edition.


SUMMARY OF PREVIOUS PICKS

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

EMIS   16.88  19.38   DEC  15.00  3.38  *$  1.50  11.1%  16.1%
FSII   10.44  10.69   DEC  10.00  1.81  *$  1.37  15.9%  13.8%
VUSA   14.38  12.50   DEC  12.50  2.63   $  0.75   6.4%   9.2%
ITIG   10.00  15.38   DEC  10.00  1.25  *$  1.25  14.3%   8.9%
MESG   17.63  16.56   DEC  15.00  3.63  *$  1.00   7.1%   7.8%
ALGO   15.25  13.69   DEC  12.50  3.75  *$  1.00   8.7%   7.6%
ONEM   19.94  18.44   DEC  17.50  3.25  *$  0.81   4.9%   7.0%
WSTL    8.00   9.94   DEC   7.50  1.06  *$  0.56   8.1%   7.0%
BTOB   18.38  22.00   DEC  15.00  4.63  *$  1.25   9.1%   6.6%
SATH   12.44  11.63   DEC  10.00  3.00  *$  0.56   5.9%   6.4%
MOGN   13.44  12.63   DEC  12.50  1.63  *$  0.69   5.8%   6.3%
MESG   17.88  16.56   DEC  15.00  3.50  *$  0.62   4.3%   6.2%
AND     8.38   7.56   DEC   7.50  1.38  *$  0.50   7.1%   6.2%
CYCH    8.38   9.94   DEC   7.50  1.44  *$  0.56   8.1%   5.8%
FLAS   10.75   8.63   DEC   7.50  3.63  *$  0.38   5.3%   5.8%
ICGX   20.50  18.81   DEC  17.50  3.88  *$  0.88   5.3%   5.8%
AWEB   12.25  10.13   DEC  10.00  2.63  *$  0.38   4.0%   5.7%
CRUS   13.94  14.94   DEC  12.50  2.19  *$  0.75   6.4%   5.5%
PILT   18.50  20.19   DEC  15.00  4.38  *$  0.88   6.2%   5.4%
RRRR   14.75  31.44   DEC  12.50  3.25  *$  1.00   8.7%   5.4%
WAVX   13.19  13.56   DEC  10.00  3.88  *$  0.69   7.4%   5.4%
DRIV   22.75  30.75   DEC  20.00  4.25  *$  1.50   8.1%   5.0%
DIGE   14.44  17.94   DEC  12.50  2.75  *$  0.81   6.9%   5.0%
PILT   15.94  20.19   DEC  12.50  4.25  *$  0.81   6.9%   5.0%
BEAM   20.13  20.38   DEC  17.50  3.38  *$  0.75   4.5%   4.9%
PRGY   25.38  25.63   DEC  22.50  4.50  *$  1.62   7.8%   4.8%
LTXX   16.00  18.00   DEC  15.00  2.06  *$  1.06   7.6%   4.7%
IVIL   28.38  27.25   DEC  22.50  6.75  *$  0.87   4.0%   4.4%
TOPP    9.81  11.56   DEC   7.50  2.75  *$  0.44   6.2%   3.9%
DGII   13.56  15.56   DEC  12.50  1.69  *$  0.63   5.3%   3.8%
JDAS   11.63  15.69   DEC  10.00  2.13  *$  0.50   5.3%   3.8%
COOL   14.50  10.88   DEC  12.50  2.44   $ -1.18  -9.8%   0.0%
ABTE   10.75   8.13   DEC  10.00  1.63   $ -0.99 -10.9%   0.0%

SATH   12.69  11.63   JAN  10.00  3.38  *$  0.69   7.4%   4.0%
BNYN   15.81  14.38   JAN  12.50  4.13  *$  0.82   7.0%   3.8%

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

Comments/Observations on Open Positions:

This week two issues are faltering in a very bullish environment.
Cyberian Outpost (COOL) failed to hold above $11.50 and appears
headed for support near $9. With Cyberian becoming oversold, you
may consider using the next rally to exit the position. The other
bearish issue is Able Telecom (ABTE). The stock was pounded after
announcing that the SEC has concerns regarding the accounting of 
its acquisition of MFS Network Technologies from MCI/WorldCom. 
An exit was available near our cost basis and any ensuing rally
should be considered another opportunity to exit. Both of the 
above issues would require in excess of 6 months to roll down, a
long time to commit trading capital in a bearish position.


NEW PICKS
*********
Definitions:
OI - Open Interest
CB - Cost Basis (Price paid - Prem rec'd, the break-even point)
RC  - Return Called
RNC - Return Not Called (Stock Price Unchanged)


Sequenced by Company

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

BEAM   20.38  JAN 17.50  BAQ AW  4.13  63    16.25   7.7%   7.7%
BIDS    5.13  JAN  5.00  BDU AA  1.00  160    4.13  21.2%  21.2%
FSII   10.69  JAN 10.00  FQH AB  1.94  13     8.75  14.3%  14.3%
MESG   16.63  JAN 12.50  MUG AV  4.88  256   11.75   6.4%   6.4%
ONHN   10.25  JAN  7.50  OUN AU  3.38  84     6.87   9.2%   9.2%
PILT   20.25  JAN 15.00  PTU AC  6.38  246   13.87   8.1%   8.1%
RNBO   20.00  JAN 15.00  BQO AC  6.13  700   13.87   8.1%   8.1%
VUSA   12.50  JAN 10.00  UAS AB  3.63  30     8.87  12.7%  12.7%


Sequenced by Return Not Called

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

BIDS    5.13  JAN  5.00  BDU AA  1.00  160    4.13  21.2%  21.2%
FSII   10.69  JAN 10.00  FQH AB  1.94  13     8.75  14.3%  14.3%
VUSA   12.50  JAN 10.00  UAS AB  3.63  30     8.87  12.7%  12.7%
ONHN   10.25  JAN  7.50  OUN AU  3.38  84     6.87   9.2%   9.2%
PILT   20.25  JAN 15.00  PTU AC  6.38  246   13.87   8.1%   8.1%
RNBO   20.00  JAN 15.00  BQO AC  6.13  700   13.87   8.1%   8.1%
BEAM   20.38  JAN 17.50  BAQ AW  4.13  63    16.25   7.7%   7.7%
MESG   16.63  JAN 12.50  MUG AV  4.88  256   11.75   6.4%   6.4%


Company Descriptions

BEAM - Summit Technology  $20.38    *** New Trend? ***

Summit Technology and its subsidiaries consist of two operating 
segments: 1. Laser vision correction which includes manufacturing,
selling and servicing laser systems and related products to 
correct vision disorders and collecting per procedure license 
fees from users of its systems; and 2. Contact lenses and related
products which are sold via mail order through its wholly-owned 
subsidiary, Lens Express. Recent FDA approval of Summit's Apex 
Plus Excimer Laser Workstation (for the treatment of hyperopia)
and favorable earnings resulted in an upside exit out of a four-
month base. We favor selling the strike price within the recent
consolidation area, as it is now technical support.

JAN 17.50 BAQ AW Bid=4.13 OI=63 CB=16.25 RC=7.7% RNC=7.7%

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

****

BIDS - Bid.Com  $5.13     *** Rumors/Speculation ***

Bid.Com is one of e-commerce's leading international online sales 
and marketing organizations. The company offers a compelling, 
entertaining and cost-effective method of selling a wide array of
goods and services over electronic distribution channels. Bid.Com
is strategically positioned to leverage its business-to-consumer
technological leadership by offering the pre-eminent online auction
platform for co-ventures into business-to-business markets, 
licensing custom branded e-commerce solutions and for distribution 
through broadband/cable media. The recent pop in Bid.Com's price
was due to several buy-out rumors on the message boards. We favor
the basing formation that is establishing support near $4 along
with several positive, technical divergence's.

JAN 5.00 BDU AA Bid=1.00 OI=160 CB=4.13 RC=21.2% RNC=21.2%

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

****

FSII - FSI International  $10.69      *** New High Soon? ***

FSI is a leading global supplier of processing equipment used at 
key production steps to manufacture microelectronics, including 
semiconductor devices and thin film heads. The Company develops, 
manufactures, markets and supports products used in the technology
areas of microlithography and surface conditioning. FSI customers
include microelectronics manufacturers located throughout North 
America, Europe, Japan and the Asia-Pacific region. No recent 
news as FSI made a successful test of support (and the neckline of
a year-long double bottom) and should now take out the November
high. Reasonable speculation on an increasingly bullish chart 
with a favorable cost basis below technical support.

JAN 10.00 FQH AB Bid=1.94 OI=13 CB=8.75 RC=14.3% RNC=14.3%

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

****

MESG - MessageMedia  $16.63     *** New Entry Point ***

MessageMedia is a leading provider of e-mail-based customer 
relationship management and direct marketing services. MESG 
offers a comprehensive suite of outsource messaging services 
for information delivery, e-commerce services, permission-based
direct marketing, ongoing customer communications and real-time
customer feedback solutions using industry standard Internet 
protocols. A strong earnings report at the end of October
initiated the current rally. The launch of SupportView, a real-
time web-based customer survey and decision support system 
spurred a recent price jump. The January $12.50 striking price
offers conservative speculation on a bullish issue.

JAN 12.50 MUG AV Bid=4.88 OI=256 CB=11.75 RC=6.4% RNC=6.4%

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

****

ONHN - OnHealth Network  $10.25     *** Breakout! ***

OnHealth Network Company is a leading Internet health information 
and services resource that empowers consumers with integrated 
solutions to effectively manage their health and well-being. The
award-winning site was recently named "Best Health & Medicine Web 
Site" by US News & World Report and won three gold medals including
"The Best Consumer Healthcare Portal Site" at the November 1999 
eHealthcare World Awards. Over 500 different sites drive traffic to
OnHealth.com through various strategic alliances. OnHealth's web
site traffic continues to grow and should increase with the recent
acquisition of Health Decisions International. OnHealth is moving
out of a saucer bottom on improving technicals and the upgrade 
this week makes this play favorable speculation. 

JAN 7.50 OUN AU Bid=3.38 OI=84 CB=6.87 RC=9.2% RNC=9.2%

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

****

PILT - Pilot Network Services  $20.25     *** Up-trend Intact ***

Pilot Network Services, the Security Utility pioneer, is the only 
e-business network service provider of highly secure subscription
based e-business services. For companies of all sizes, in every 
industry, Pilot enables secure e-business by providing a wide 
range of services with built-in security to protect enterprise 
networks. Pilot announced earnings in October with revenues up 89%.
Very strong technically and the recent break-out has left us few
entry opportunities. The recent pullback marks a 50% retracement 
from the end of October and a successful test of support (the 
April high), above our recommended strike price.

JAN 15.00 PTU AC Bid=6.38 OI=246 CB=13.87 RC=8.1% RNC=8.1%

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

****

RNBO - Rainbow Technologies  $20.00     *** Internet Security ***

Rainbow provides Security Solutions for the Information Age. The
company is a leading developer, manufacturer and supplier of 
software protection solutions, and a leading provider of network 
license management, Internet and information security. Rainbow
continues to develop new products for the state-of-the-art online
security and authentication solutions and they are expected to 
become one of the leading players in this growing industry. The
recent consolidation has worked off an over-bought condition and
the technical outlook remains bullish. We favor the support area
near $15, more than a dollar below the recent pullback.

JAN 15.00 BQO AC Bid=6.13 OI=700 CB=13.87 RC=8.1% RNC=8.1%

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

****

VUSA - Value America  $12.50      *** Stage I ***

Value America is a brand-direct and factory-authorized marketplace
for technology, office and consumer products. With over 30 product
categories, Value America offers customers superior value on 
products from more than 3,000 of the world's most trusted brands. 
Through unique multi-media product demonstrations, customers are 
provided with thorough product information, allowing them to make 
informed and confident buying decisions. Value America reported 
that its revenues increased 269% last quarter, with gross margin
increasing 110%. Recent agreements were announced with Federal
Express, Ask Jeeves, and Citibank. Value America is consolidating
after the appointment of a new CEO and the naming of Wolf Schmitt
as Chairman of the Board. The technical outlook remains bullish
as Value America continues to churn within its stage I base. We
favor a strike price that is below the October (all-time) low.

JAN 10.00 UAS AB Bid=3.63 OI=30 CB=8.87 RC=12.7% RNC=12.7%

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



*****************
NAKED PUT SECTION
*****************

Position Management: One Traders View... 

Most experienced traders are aware of an old adage, "It is harder
to sell than to buy." Exiting a position is more difficult because
you are forced to make a decision about an issue that you already
own and had previously considered attractive. When emotion enters
the equation, your judgment becomes clouded and the alternatives
appear limited. When an investor focuses on the performance of a
single issue, anxiety increases exponentially. A decision must be
made: "Do you keep the stock, trade it, or dump it?" What if the 
technical outlook becomes ambiguous? When you trade without a plan
it's amazing how confusing the situation can become, and once you
are committed, you are playing by somebody else's rules. A system
of structured and pre-planned moves is the only solution. Each and
every day, you have to make a decision: "Take the profit? Take the
loss? Or let it run?" It doesn't matter which exit system is used,
the key is that all the decisions are made in advance. You don't
want to create a battle plan in the middle of a campaign. Once you
take a position, you should know exactly what you would do in any 
circumstances that may develop.

Professionals traders utilize various mechanical systems and exit
strategies to manage their positions. The primary goal of every
trader is to limit losses and maximize profits. The question is,
"How far do you let the position run before eroding your profits?"
Setting up rules before you enter a position will help to control
your emotions and improve consistency with exit decisions. Most
methods for taking profits (and preventing losses) fit into one of
two categories: 1. A prearranged goal, say 25%; 2. A trailing stop,
which is moved up as the stock advances. There are many different
methods using technical analysis to establish the stop loss level;
trend-lines, previous lows, moving averages, etc. With a stop-loss
system, you take profits (or limit losses ) after a violation of a
pre-established level. Traders may decide to combine both a profit
goal of 30% with a trailing stop-loss as there is no guarantee the 
first goal will be met.

Opening a new position is easier because you can pick and choose
from thousands of candidates. You don't have to buy unless you are 
completely satisfied; waiting for the perfect combination of sound
fundamentals, bullish indicators and favorable market conditions.
You can search through charts for the perfect pattern and perform 
extensive due-diligence until the number of reasons to buy becomes
overwhelming. The choice of ownership is yours to make and timing
is not a constraint or limitation; "Buy today, tomorrow, or next 
month...maybe never." The entry position is particularly important.
It deserves your best analysis and judgment. The issue should be
one you want to own and the price must be technically favorable,
with minimal downside risk. Correctly timing the purchase requires
a thorough knowledge of charting techniques and market trends. The 
entire process is something you must completely understand because
a successful exit is by and large the product of a proper entry.


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


SUMMARY OF PREVIOUS PICKS 

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

FLAS   10.06   8.63   DEC   7.50  0.75  *$  0.75  27.2%  19.7%
IVIL   27.25  27.25   DEC  22.50  0.94  *$  0.94  13.3%  19.2%
HEPH   16.50  13.50   DEC  12.50  0.38  *$  0.38  10.3%  15.0%
NSPK   16.38  18.56   DEC  12.50  0.50  *$  0.50  13.2%  14.4%
RNBO   18.13  19.88   DEC  15.00  0.44  *$  0.44   9.6%  14.0%
STRX    7.63   8.00   DEC   5.00  0.44  *$  0.44  22.3%  13.9%
DGII   14.88  15.56   DEC  12.50  0.50  *$  0.50  12.3%  13.3%
ZOMX   36.06  38.88   DEC  30.00  0.81  *$  0.81   8.8%  12.8%
PILT   21.31  20.19   DEC  15.00  0.56  *$  0.56  11.6%  12.6%
ONSL   24.00  26.63   DEC  17.50  0.63  *$  0.63  11.6%  12.6%
NPIX   37.50  37.00   DEC  22.50  0.69  *$  0.69   8.4%  12.2%
NSPK   15.50  18.56   DEC  12.50  0.50  *$  0.50  13.5%  11.7%
BNYN   12.75  14.38   DEC  10.00  0.38  *$  0.38  13.0%  11.3%
MSGI   16.94  16.88   DEC  12.50  0.50  *$  0.50  12.9%  11.2%
COOL    9.56  10.88   DEC   7.50  0.31  *$  0.31  14.0%  10.1%
ITVU   64.50  68.00   DEC  45.00  1.25  *$  1.25   8.8%   9.6%
CTIX   20.13  18.31   DEC  15.00  0.38  *$  0.38   8.6%   9.4%
NVDA   32.00  38.13   DEC  22.50  0.75  *$  0.75  10.5%   9.1%
MLTX   16.19  25.88   DEC  12.50  0.50  *$  0.50  13.4%   8.3%
XCED   31.63  30.19   DEC  22.50  0.63  *$  0.63   9.1%   7.9%
AMTD   28.19  23.50   DEC  20.00  0.44  *$  0.44   7.2%   7.9%
MTSN   15.56  15.69   DEC  12.50  0.31  *$  0.31   8.9%   7.8%
IONA   21.38  37.00   DEC  15.00  0.56  *$  0.56  11.6%   7.2%
TUTS   39.69  42.63   DEC  30.00  0.81  *$  0.81   9.3%   6.7%
CMDX   65.19  82.25   DEC  40.00  0.63  *$  0.63   4.6%   6.7%
MRVC   31.00  36.00   DEC  22.50  0.38  *$  0.38   5.8%   6.3%
PDLI   40.75  48.44   DEC  35.00  0.44  *$  0.44   4.0%   5.8%
NPIX   37.44  37.00   DEC  20.00  0.50  *$  0.50   6.3%   5.4%
LTXX   18.56  18.00   DEC  15.00  0.31  *$  0.31   7.4%   5.4%
CDNW   17.00  14.25   DEC  15.00  0.50   $ -0.25  -4.7%   0.0%

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

Comments/Observations on Open Positions:

The bullish market environment is doing little to help our merger
play on Cdnow (CDNW). The technical outlook is ambiguous and the 
position should be monitored closely (if you do not want to own
the stock. A bounce would be encouraging, especially above $13.


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


Sequenced by Company

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

ELIX   15.13  DEC 12.50  XQQ XV  0.25  10    12.25   6.8%
ELON   12.50  DEC 10.00  EUL XB  0.31  150    9.69  11.0%
HRBC   18.69  DEC 15.00   BQ XC  0.38  366   14.62   9.1%
MAIL   21.88  DEC 17.50  UMA XW  0.56  65    16.94  11.3%
MMWW   33.00  DEC 25.00  EQB XE  0.38  117   24.62   5.4%
NSPK   18.56  DEC 15.00  NNQ XC  0.38  167   14.63   8.8%
PILT   20.25  DEC 15.00  PTU XC  0.31  207   14.69   7.1%
SCOC   14.56  DEC 12.50  UQS XV  0.31  171   12.19   7.6%


Sequenced by ROI  

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

MAIL   21.88  DEC 17.50  UMA XW  0.56  65    16.94  11.3%
ELON   12.50  DEC 10.00  EUL XB  0.31  150    9.69  11.0%
HRBC   18.69  DEC 15.00   BQ XC  0.38  366   14.62   9.1%
NSPK   18.56  DEC 15.00  NNQ XC  0.38  167   14.63   8.8%
SCOC   14.56  DEC 12.50  UQS XV  0.31  171   12.19   7.6%
PILT   20.25  DEC 15.00  PTU XC  0.31  207   14.69   7.1%
ELIX   15.13  DEC 12.50  XQQ XV  0.25  10    12.25   6.8%
MMWW   33.00  DEC 25.00  EQB XE  0.38  117   24.62   5.4%


Company Descriptions

ELIX - Electric Lightwave  $15.13   *** Own This One! ***

Electric Lightwave is a full-service, facilities-based competitive
local exchange carrier providing a broad range of telecom services
in five major market clusters in the western United States. ELIX
provides state-of-the-art voice & data communications services to
retail customers, primarily communications-intensive companies and
wholesale customers, including telecom service providers. ELIX has
an extensive portfolio of products; local telephone, long distance,
data/video, and network access. Solid support at the sold strike
and coverage initiated (with a bullish outlook) by DLJ on Friday.

DEC  12.50  XQQ XV  Bid=0.25  OI=10  CB=12.25  ROI=6.8%

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

****

ELON - Echelon  $12.50     *** New Entry Point ***

Echelon Corporation develops, markets and supports a family of
hardware and software products and services that enables original
equipment manufacturers and systems integrators to implement open,
interoperable, distributed control networks. ELON is developing a 
systems integrator distribution channel and integrating LonWorks
control networks with enterprise data systems to exploit other
market opportunities. Echelon is well established in the building,
home, industrial, and transportation markets as the standard for
networking everyday devices and their potential to create future
revenue with new applications is excellent. A conservative, ground
floor entry opportunity for this unique issue.

DEC  10.00  EUL XB  Bid=0.31  OI=150  CB=9.69  ROI=11.0%

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

****

HRBC - Harbinger Corporation  $18.69     *** Entry Point ***

Harbinger Corporation is a leading single-source provider of
electronic commerce, with proven solutions for software, network
communications, consulting, and customer service/support. HRBC's
unique products include the only scaleable, platform-independent
suite of electronic data interchange management software in the
industry, which protects our customers' technology investments as
they migrate up or down; a leading PC-based solution for banks,
and corporate/small business cash management markets. The word
"revision" can sure scare a lot of traders. Harbinger has since
recovered from the October sell-off and appears ready to resume
its up-trend. A favorable entry point at technical support that
provides a reasonable risk/reward outlook.

DEC  15.00  BQ XC  Bid=0.38  OI=366  CB=14.62  ROI=9.1%

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

****

MAIL - Mail.com  $21.88     *** Target Shooting! ***

Mail.com is a global provider of email services. Mail.com's basic
email services are free to members and anyone can become a member.
The company generates revenues primarily from advertising related
sales, including direct marketing and e-commerce promotion. The
company also receives income from subscription services, such as 
increased storage capacity and premium email addresses. Mail.com
announced that it has exceeded the ten million mark in e-mailboxes
served in the consumer and business markets, a 178% increase since
the beginning of this year. A bullish chart history with improving 
technicals and a favorable entry point at recent support.

DEC  17.50  UMA XW  Bid=0.56  OI=65  CB=16.94  ROI=11.3%

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

****

MMWW - Metamor Worldwide  $33.00     *** Break-Out! ***

Metamor Worldwide is a leading provider of information technology
and staffing services. It was founded as a traditional staffing
business under the name CORESTAFF, Inc. The company now offers
information technology project support, management, outsourcing,
systems development, as well as supplemental staffing. The latest
structural change occurred when acquiring eleven new IT services.
No news on the recent break-out above the neckline of a year-long
double-bottom with heavy volume support. Can a new all-time-high
be far behind? Short term speculation on an entry point within
an established technical support area.

DEC  25.00  EQB XE  Bid=0.38  OI=117  CB=24.62  ROI=5.4%

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

****

NSPK - NetSpeak  $18.56     *** Momentum Play ***

NetSpeak develops, markets, licenses, and supports a suite of
intelligent software modules which enable real-time, concurrent
interactive voice, video and data transmission over packetized
data networks such as the Internet and local-area and wide-area
networks. In addition to marketing its technology, services and
systems to new strategic partners, NSPK has begun to sell those
products directly to end-users. Recent upside earnings surprise,
a solid technical history, and now above recent resistance (near
$17) with a new 52-week high on Friday.

DEC  15.00  NNQ XC  Bid=0.38  OI=167  CB=14.63  ROI=8.8%

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

****

PILT - Pilot Network Services  $20.25     *** Last Chance? ***  

Pilot Network Services, the Security Utility pioneer, is the only 
e-business network service provider of highly secure subscription
based e-business services. For companies of all sizes, in every 
industry, Pilot enables secure e-business by providing a wide 
range of services with built-in security to protect enterprise 
networks. Pilot announced earnings in October with revenues up 89%.
Very strong technically and the recent break-out has left us few
entry opportunities. The recent pullback increased the put-option
premiums and this is another conservative attempt to profit from
the bullish trend.

DEC  15.00  PTU XC  Bid=0.31  OI=207  CB=14.69  ROI=7.1%

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

****

SCOC - Santa Cruz Operation  $14.56     *** New CFO ***

Santa Cruz Operation is a leading supplier of UNIX System software
for business-critical, network computing environments. Network
computing offers businesses a more powerful, cost-effective way to
share business-critical applications and information with people
anywhere in the world. The two key elements are powerful, scalable,
and reliable servers; and support for a wide range of clients. The
company also offers an application broker for network computing.
The resignation of Santa Cruz's CFO (to become a CFO at a new Tech
company), caused a slight setback in price, offering put-sellers 
another chance to profit on this strongly bullish issue.

DEC  12.50  UQS XV  Bid=0.31  OI=171  CB=12.19  ROI=7.6%

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



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