Option Investor
Newsletter

Daily Newsletter, Sunday, 12/12/1999

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******************************************************************
MARKET STATS FOR LAST WEEK AND PRIOR WEEKS
******************************************************************
        WE 12-10         WE 12-03         WE 11-26        WE 11-19
DOW     11224.70 - 61.48 11286.18 +297.27 10988.91 - 14.98 +234.57
Nasdaq   3620.24 + 99.61  3520.63 + 72.82  3447.81 + 78.56 +148.10
S&P-100   763.49 -  3.99   767.48 + 13.91   753.57 +  4.27 + 18.21
S&P-500  1417.04 - 16.26  1433.30 + 16.68  1416.62 -  5.38 + 25.96
RUT       466.71 +  2.13   464.58 +  5.64   458.94 -  2.33 + 11.58
TRAN     2874.94 - 53.86  2928.80 + 19.64  2909.16 - 67.34 -113.07
VIX        20.92 +   .10    20.82 -  2.13    22.95 +  3.32 -  2.05
Put/Call     .45              .49              .42             .47
******************************************************************

I think I can, I think I can, I think I can.

It was touch and go at the open and it took almost all day for the
Nasdaq to build up steam and pull itself out of a -33 point deficit
but the result was the same. Another record high close on the fourth
largest volume day ever for the Nasdaq. The index with the can do 
attitude struggled to climb that mountain of overvalued worry but
the Nasdaq rolled right over the shorts and the bears. The Dow 
actually came along for the ride, closing up +89.91 points and 
only 102 points from a new high. From my vantage point it is 
looking like the start of a December rally and nothing has been 
able to hold it back. Do not get me wrong. We will have some serious
profit taking someday but with only the CPI and a lame duck Fed
meeting between us and Christmas, it may be January before the 
big one hits.


 


 


 


 

The PPI report was very tame at only a +0.2% increase overall
but the core rate at unchanged was even better. Analysts had
been predicting a +0.1% increase. The bond market continued
its rally and yields dropped to 6.16%. Already analysts are
forecasting sub 6% yields next week if the CPI is as benign
as the PPI. The main factor behind the decrease was lower
prices for cars, trucks and computer components.  There are
no economic reports on Monday but Tuesday starts a big list
beginning with the CPI, Retail Sales and Real Earnings.
Wednesday has Business Inventories, Industrial Production
and Capacity Utilization. Once over the CPI hurdle the next
big event is the Fed meeting the following Tuesday. With the
market in rally mode the CPI would have to be a disaster to
put any serious crimp in the sprint to Y2K. After the PPI
today the Fed is even more out of the picture. With the
massive amounts of cash they have been putting into the
system in preparation for Y2K, it would be out of character
for them to try and crimp its use by raising rates with
Y2K only 10 days away. Some analysts were calling for a bias
change to tighten but after the PPI even that has dropped
from discussion.

Another market mover today was the drop in oil prices. IRAQ
got approval to extend its oil for food program and the prospect
of that supply coming into the market again, crude dropped to
$25.20. Airlines rebounded and the transportation index gained
+59 points to end the slide, which started Wednesday. 

The tech bears were out in force today. Led by another Niles
downgrade of Intel and Dell just as the Nasdaq broke into
positive territory around noon. Citing falling sales from
Y2K freezes, slow chip production and falling PC prices, he
said Dell would have trouble meeting top line estimates.
Intel is unable to make chips fast enough on the top end
and PC prices on the low end just keep falling. He feels
fourth quarter profit margins will shrink. This one - two
punch comes only a day after IBM reminded analysts that the
Y2K event was slowing mainframes and PC sales and they would
only meet the already lowered fourth qtr earnings. Intel
finished down -$1.00, Dell -1.19 and IBM -4.38.

Just in case you forgot, earnings start in four weeks. Do
you remember what comes before earnings? Confession. The
four weeks before earnings is confession season. That is
when you confess to your stockholders and the world that
your sales plan is not working, new products were flops
and management does not have a clue. Of course they don't
actually say all of this, they just issue an earnings
warning and let you make your own deductions. Just to get
things started off right Xerox volunteered to be the scapegoat
and fired off their warning at 4:01 PM Friday. It was an
attention getter. They estimated they would miss earnings
by -40% and blamed it on everything except late deliveries
by Santa Claus. Bad product mix, Y2K, slow sales, high priced
systems not moving, etc, etc. It was really ironic that they
choose today since today was the only up day their stock
has had since November 19th. I can see the fund managers now.
Let's get some XRX today boys. Tech is so high and XRX has
been beaten up so bad it just can't go any lower. Looks like
an entry point to me. Wrong! Those lucky buyers that bought
in at $25 and change just before the close, saw their recent
acquisition dropped by -20% to $19.88 before the trade 
confirmations even arrived.


  
 
The Gloom and Doom team was out in force today. As soon as the
Nasdaq broke into positive territory the airwaves was full of
tech bears preaching immediate crash. The tech bubble theory
has reached the point where the bears and air personalities
have said it so often they think it is true. Now they can't
understand why it continues to expand. Nothing says a market
cannot continue up. Does anyone not think that the mere mention
of Linux should double or triple a companies value? You don't
think that $300 for a $30 stock on the first day is out of line?
Surely I jest, but in reality technology is driving productivity
gains faster than at any point in human history. Look at where
we were just ten years ago before the Internet. People actually
talked at the supper table, watched hours of boring TV and then
went to bed. People did not check their email or S&P futures
during bathroom breaks in the middle of the night. (I know
some of you really do this) The majority of you only moved 
into the Internet generation within the last two years. That 
is really scary. 

With the permanent bulls quoting Nasdaq 4000, 5000, even 
10,000 in the next three years and the Dow sharing space 
in orbit with the Hubbell telescope, there has got to be 
some tremendous rallies in front of us. Yes, the techs 
are overvalued. They are overvalued compared to previous 
historical values like a Mercedes is overvalued compared 
to a covered wagon. Both are four wheel vehicles but from 
different ages. Techs are changing daily. Products in 
production now will be scrap eighteen months from now. The
world as we know it is changing so rapidly that even us tech
savvy, Internet junkies have no comprehension of where we will
be ten years from now. 

A news article out today said that Nokia will be the leading 
personal computer maker by 2002. Think about it. The news is 
full of new Internet capable devices from pagers, cell phones, 
digital assistants, all miniature PCs. Your cell phone has more 
computing power now than a 286 desktop just five years ago. 
So is Nokia just a phone company and should have a PE of 25 or 
the largest computer manufacturer in the world with a PE of 78. 
Things change. In the Internet economy we are being exposed 
to on a daily basis the only rule is "change or die". 
Websites are forced to reinvent themselves daily to keep 
their visitors coming back. This kind of change previously 
took years to evolve, then months and now days in some cases. 
Why did I take you down this evolutionary path today? Simply 
to prove a point. Tech valuations today are subjective at 
best. Who knows what the value of today's ideas will be 
tomorrow. We are investing today in tomorrow's hopes. In 
reality by the time tomorrow comes those ideas will be old
and stale. How do you value that? Are techs overvalued,
correctly valued or perhaps undervalued when you take the
last five years changes and project the same changes over 
the next several years? Mankind's knowledge is doubling
every eighteen months. (fact) The rate of increase is 
exponential. In three years, we will know 300% more than we
know now. What will Intel be worth? Or HGSI, AMGN, BVSN, 
SUNW, EXDS, ARBA, RHAT or all four Microsofts? 

We will not continue to go up in a straight line. There will
be pullbacks and profit taking. All the whining and posturing
on CNBC is noise. As option traders we are privileged to be
able to make money quickly in either direction. Our only 
challenge is to pick the right direction and hang on until
the direction changes. The next five weeks should be very
profitable. We have the year-end rally as people who were
waiting for a Y2K sell off race to catch up with those who
stayed invested. We will have the January rally as those who
did stay out rush to get back into the market along with the
cash investments from year end retirement contributions. 
There maybe a pullback or two between now and January but 
the trend should be solidly up. Every pull back should be 
viewed as a buying opportunity. Just remember when buying 
the dips over the next two weeks that there may be a Y2K
pothole in the road ahead. Nobody has seen it yet but you
don't know if that next dip between now and Y2K is the real
thing. On any dip WAIT for the bounce before starting new 
positions. In any event, trade hard for the next six weeks 
and take February off. 

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

Jim Brown
Editor

Circumstances prevented me from doing an Options 101 article 
this week but I will pick up again next Sunday. 



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



***********
JIM'S PLAYS
***********


QCOM - Dec-400 Naked Puts
 


I am still holding the short position on the Dec-400 naked 
puts. I covered them on Friday morning when it appeared that
we we might have some Nasdaq weakness. I opened the position
again after the bounce for only $1 difference. I still have
faith that QCOM will end next week over $400 and they will
expire worthless. QCOM does have some weakness around 405
but when it does finally close over 400 I think it will 
rocket.


New Plays
 


I waited patiently for an entry point for what seemed like an
eternity but in reality was only three days. When the market
is moving up and you are not invested every point is painful.
My patience was rewarded on Thursday when the Nasdaq dropped
all the way back to support at 3520. The ensuing rebound was
a perfect entry point for several plays. I am not going to go
into much detail on each one because the entry point was based
on the Nasdaq drop. The stocks were just targets of opportunity
on my watch list.


QCOM - DEC-390 Calls 
 


I had been waiting for an opportunity since the big jump last
week. When it hit support on the Nasdaq drop I bought the 
UQD-LH for $8.00.

ARBA - $240 Calls
 


This was a classic example of an entry point. Nice pullback
on market weakness and quick recovery. I bought the DEC-240
calls on Thr for $9.25 and ARBA ran for over +$11 on Friday.
I held a sizeable profit over the weekend because I expect
the market to open higher and ARBA closed at the high of the
day.

INKT - $150 calls
 


Nice pullback right to support at $160. Not as big a bounce
as I expected and I am worried about a lack of follow through.

BVSN - $90 calls
 


Broadvision had been building a saucer bottom after a quick
recovery from the price downgrade last month. They are a 
strong play in the Internet sector and I think they are 
ready to move again. I bought the $90 BDV-LR for $14.50.

Strategy:

Because these are all December calls I plan to sell them on
Monday morning and hope for a brief pullback before or after
the CPI to give me another entry point for January positions
on the strong movers. 

With the CPI on Tuesday be very careful on Monday. Look for 
buying opportunities during the week instead of rushing into 
plays just because the market is open. We are extended and you
never know when the crowd will see a Y2K threat and run to the
sidelines for the next two weeks. It may not happen but buying
the next dip could be a challenge. Just be ready to pull the
rip cord on your parachute if the bottom falls out beneath 
you.

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

Jim



************
Stock News
************

Ciena's Turn to Shine
By  S.P. Brown

What a week it's been for Ciena Corp. (CIEN).  This leading
maker of equipment that increases the capacity of fiber optic
networks closed Friday at $71.88 a share, a 16.40 percent gain
over Thursday's close.  Friday, though, was only one day in an
amazing trading week for a company many investors had left for
dead. 

CIEN's ascent began on Tuesday when a rumor was circulated on
the Street that the company had signed Qwest Communications
(QWST) to a significant fiber optic equipment contract.  The
rumor couldn't be substantiated because neither company was
willing to comment.  

/members/stocknews/121299_1.asp



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

More fun than a coiled spring.
 
We had a lot of great questions for "Ask the Analyst" this week.
On top of the list were QCOM, CSCO, and CTXS.  Plus, a little bit
of oil (stocks) to help grease the wheels.
 
Send us an email to askoin@OptionInvestor.com and we'll apply
some basic technical analysis to the stocks of your choice.

/members/askoin/121299_1.asp



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

As of Market Close - Friday, December 10, 1999 

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

DOW Industrials   10,750  11,320  11,225    Neutral  11.12
SPX S&P 500        1,340   1,400   1,417    BULLISH  12.03
OEX S&P 100          700     750     764    BULLISH  12.03
RUT Russell 2000     430     450     467    BULLISH  11.12
NDX NASD 100       2,650   3,150   3,203    BULLISH  12.03
MSH High Tech      1,340   1,630   1,733    BULLISH  12.03

XCI Hardware       1,075   1,160   1,240    BULLISH  11.11
CWX Software       1,000   1,160   1,275    BULLISH   9.03
SOX Semiconductor    560     660     633    Neutral  12.10  *
NWX Networking       650     800     847    BULLISH  12.03
INX Internet         525     675     778    BULLISH  12.07

BIX Banking          645     690     587    BEARISH  11.30
XBD Brokerage        395     450     446    Neutral  11.30
IUX Insurance        625     650     619    BEARISH  11.30

RLX Retail           875     910     952    BULLISH  11.23
DRG Drug             375     395     361    Neutral  11.30
HCX Healthcare       750     790     713    Neutral  11.09
XAL Airline          180     190     148    BEARISH   5.21
OIX Oil & Gas        285     315     292    Neutral  11.23


Posture Alert    
The Nasdaq continues to march on, breaking new records on record 
breaking volume. Leaders Friday include Airlines (+2.77%), Software 
(+2.70%), Banking (+2.36%),  and Retail (+2.15%). Losers were 
limited to Oil & Gas (-2.08), and Semiconductors (-1.42%). For the 
week, the only major winner was the Internet sector, which posted 
an 18% gain for the week, followed by Networking, which had a 5% 
gain. With Friday's action, we have lowered the Semiconductor 
sector to Neutral from Bullish.



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

Sunday December 12, 1999

Throwing in the Towel!

The battle for control of this market continues, with the bulls 
tacking on another victory Friday. Overall for the week, there was 
not much progress in terms of the individual sectors (i.e. Dow, 
SPX, OEX, etc.). Most of the major sectors closed relatively near 
last Friday's closing prices. However, the sectors that did move 
this week were the Internet sector (INX), which closed up 18% for 
the week, and Networking (NWX), which closed up about 5%. Losers 
for the week included Banking (BIX), which was down about -8% for 
the week, as well as Drug (DRG) and Healthcare (HCX), which were 
both down about -6%. The violent tug-of-war that was apparent this 
last week, will most likely continue for the rest of the major 
indexes this next week. However, we will try to stick with sectors 
that are breaking out or breaking down, such as the ones named 
above, and we will continue to watch for other sectors showing 
signs of a major move.
			
The latest Investors Intelligence survey came out, and bullishness 
actually decreased and bearish sentiment increased. The change 
wasn't major, but it is a step in the right direction for this 
market. We recently stated that the figures were too bullish, too 
quick, and this slight move may be the start of something more 
significant. For this market to continue breaking new highs, we do 
need more bears in the mix.

We've been looking for signs of a slowdown in the amount of money 
being poured into this market, and we haven't found it yet. This 
last week saw some incredible IPO's, with Freemarket (FMKT) and VA 
Linux (LNUX) making record breaking debuts. This new money 
continues to be put to use, and as long as it does, it is a major 
advantage for the bulls.

Looking at the yield on the 30-year Treasury, we witnessed a 
significant move this last week, as the bond rallied by 96 basis 
points. This move is now safely off of the highs, and is getting 
close to bullish territory. The long bond has been a 
thorn-in-the-side to many bulls, but it may soon become another 
ace-in-the-hole.
 
Looking ahead to this next week, we do have option expiration. 
Pinnacle continues to track the levels of calls and puts for 
various stocks and sectors. The S&P 100, being the most liquid 
index option, continues to show very bearish signs. In terms of 
open interest, 5 out of the top 6 are on the put side. The 
put/call ratio on the OEX stands at 1.44, including LEAPS it 
stands at a whopping 1.98. This is very bearish and can only be 
beneficial for the bulls' camp. However, overhead for the OEX is 
currently significant. The Pinnacle Index is in double digits for 
the OEX (770-800), so a major rally this next week will be met with 
heavy resistance. Another sector showing heavy put activity is the 
Nasdaq 100. The NDX currently has a put/call ratio of 1.76, which 
is bearish. This bearish sentiment on both the OEX and NDX, from a 

contrarian stand, is very positive for this market. The day that 
these put buyers throw in the towel, is the day we start getting 
worried about a significant sell-off!    


BULLISH Signs: 

Cash Flow:
The amount of money being poured into this market continues to be  
Strong, as evidenced by this last week's record IPO's. 

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.

S-Squeeze:
News events continue to squeeze the shorts, as lately evidenced by 
Yahoo's incredible run, as well as Amazon's latest jump.


Mixed Signs:

Interest Rates (6.161%):
The yield on the 30-yr Treasury is now safely off of the highs.


BEARISH Signs:
 
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 too 
great, and may indicate a near term top in the market. However, we 
did see a slight downtick in sentiment this last week.

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

Volatility Index (20.92):
The VIX is trading once again near its previous lows. Another 
quick reversal at this benchmark will likely presage an 
intermediate top.

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 03       66,323       +83.4%
Friday, December 10       86,405      +138.9%


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                       (12/10)

Overhead Resistance (770-800)    14.51
Overhead Resistance (750-765)      .85

OEX Close                       763.49

Underlying Support (730-745)      3.01


What the Pinnacle Index is telling us:
Based on 12/7, overhead resistance (750-765) is very light, while 
and underlying support continues to build strength. Overhead 
(770-800) continues to be heavy, and will not likely break until 
after next week's option expiration.


Put/Call Ratio                  Friday
Strike/Contracts                (12/10)

CBOE Total P/C Ratio             .45
CBOE Equity P/C Ratio            .35
OEX P/C Ratio                   1.44


Peak Open Interest (OEX)
                     Friday
Strike/Contracts     (12/10)

Puts                 750 / 14,912
Calls                780 / 13,427
Put/Call Ratio         1.11




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 10, 1999                       20.92


Investors Intelligence
                    Major             Percent     Percent
Date                Turning Point     Bullish     Bearish

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

Oct. 13, 1999       Bottom?           39.2        37.5

November 24, 1999                     53.0        28.7
December 10, 1999                     51.7        29.3



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

For the week of December 13, 1999

Monday

None Scheduled

Tuesday

Consumer Price Index     Nov    Forecast: 0.3%   Previous: 0.2% 
Retail Sales             Nov    Forecast: 0.4%   Previous: unch 
Atlanta Fed Index        Nov    Forecast: --     Previous: 13.7 
Real Earnings            Nov    Forecast: --     Previous: 0.5% 

Wednesday

Business Inventories     Oct    Forecast: --     Previous: 0.4% 
Industrial Production    Nov    Forecast: 0.2%   Previous: 0.7% 
Capacity Utilization     Nov    Forecast: 80.7%  Previous: 80.7%

Thursday

Jobless Claims           12/11  Forecast: --     Previous: 293K 
International Trade      Oct    Forecast: -$24.3BPrevious: -24.4B
Phil Fed Survey          Dec    Forecast: --     Previous: 15.8 

Friday

Housing Starts           Nov    Forecast: 1.63M  Previous: 1.628M
Building Permints        Nov    Forecast: 1.58M  Previous: 1.594M

Week of 12/20

12/21 FOMC meeting on interest rates **!!**
12/22 Gross Domestic Product - Q3-Final
12/23 Personal Income - Nov
12/23 Durable Goods Orders - Nov
12/23 Help-Wanted Index - Nov



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

TWEAKING THE BULL

Last week I wrote an article about "conservative" bull put spreads 
and shared my criteria for entrance, exit and damage control.  As 
expected I received many letters with various specific questions, 
which I answered.  It was clear from the questions that more detail 
is wanted by many of you.  I would like to share one reader's letter, 
which is the basis of my article this week.

Lynda,
I thoroughly enjoyed your Sunday article on the Bull Put Spread. 
In fact, I am giving it a try on JDSU (210's and 220's) with 20 
contracts. We will see today if support holds at 245 since it 
closed yesterday at 247. I have a question: In your "Rules" you 
say make sure that there is, at least, 1-2 points to be made in 
the spread. Why wouldn't .75 work?  After all, you would still 
make $1500 on 20 contracts and you would only have to restrict 
$20,000 for a couple of weeks. That's still a 180% annual rate 
of return. 
John 


I also did a form of a bull put spread on JDSU this week, which 
I will explain while we go through the steps necessary before 
putting on the trade that john and I did. 

Let's go through the necessary steps and determine where, when 
and if we should put on a spread on JDSU.

Step 1:  Determine if you are bullish about the stock.

 


Once you have identified a stock that you might want to do this 
strategy with, identify if the longer-term trend is upward and 
still intact.  I use a three-month chart (shown above).  Look 
if volume is increasing or decreasing in relation to the price.  
If the price is going up and the volume is going up, you can 
reasonably expect the continuation of an up-trend.  In this chart 
you can see that throughout the month of October the volume was 
increasing and always above the average volume.  In November, the 
price of JDSU was rising but the volume was decreasing, indicating 
that the buyers were starting to fade away.  Possibly the 
institutions were no longer accumulating the stock.  You should 
expect to see a dip when there are more sellers than buyers.  
Sure enough, the fourth week in November the price drops and 
volume increases to a level higher than the last couple of months.  
The first week in December, the volume drops back down to a more 
average level, indicating that the dip MAY be over.  Overall, the 
trend is up so this stock is a candidate for establishing a bull 
put spread.  

Step 2: Is the dip really over?
Come in a little closer and take a good look.  Using one-month 
daily chart, you can see that from November 26th to December 2 
the volume was increasing and the price was decreasing.  Not a 
good time to buy or do any bullish strategies. After the dip to 
November 30 we see higher highs and lower lows, usually indicating 
some consolidation. 


 

Step 3:  If the dip is over, what are key support and resistance 
areas?  Determine when to enter the trade and when to exit if 
you're wrong.

 


I next look at a 10 day 15 minute chart (shown above) to get a 
better look at support and resistance levels.  .  The key support 
areas are 225, 230 235 238 and 240 with strong resistance at 253.   
Because there is strong support at the lowest level 225, I would 
want to put on a spread below this level.   Buy looking at the 
current premiums "at the money", you can see what cost of the 
spread probably would be if the stock dropped to 225. The cost 
of the spread if JDSU dropped to 225 would be about 10 or 11 
points. John entered the trade on the last Thursday in the chart 
(12/9).  I entered the trade on the last Monday in the chart (12/6) 

The premium for the 210/220 spread was only .75 because the strikes 
were so far away from the price of the stock.  Remember my rule says 
put on the spread after a dip and you have a signal that the dip is 
over but allow yourself plenty of room for error.  I didn't think 
it was worth my time to put on this spread at these prices, so I 
did a variation.  I bought the Dec 200 put for 1 3/8 and sold the 
JAN 200 put for 7 ¼, a credit to my account of 5 7/8.  My risk 
(highly improbable) was a loss of 11 if I had to buy back the 
spread if it dropped to 225 less the 5 7/8 points I already 
received.  Of if I really wanted to tough it out I was protected 
down to 200.   John was risking about a 5 point spread if JDSU 
went down to 225 but he could only make .75 points even though 
the risk was also highly improbable.  John's trade doesn't meet 
my criteria outlined last week.  I would move on to something 
else, which I did.  Don't try and force fit a strategy.  

Step 4:  When to enter?
  


I entered my spread on Monday Dec. 6th.  It was a wild day.  The 
stock gapped up at the open, ran up over former resistance of 253, 
dropped back to 245 and then back up to close at 251.  I never put 
on a trade during amateur hour (the first hour) and decided to see 
where this baby was going.  I was convinced it was ready to blow, 
so I needed to enter the trade now because the premiums would never 
be higher.  (My expectation was that it would continue much higher 
without first dropping).  From Monday to Thursday when John entered 
the trade JDSU basically went sideways.  I admit, I jumped the gun 
on my entrance on Monday; I was antsy and tried to convince myself 
that my criteria had been met.  On Thursday when John entered the 
trade, the stock opened higher, but John didn't wait for a 
confirmation that the dip/consolidation was over.  He put on the 
trade described in his letter above for .75 per contract.  (Not 
enough moola for me.)  He later went out and JDSU tanked.  Now, 
if John really understood where support really was, he wouldn't 
have panicked.  But he did, and wound out of the trade when JDSU 
hit about 240.  I also rode the roller coaster down that day, 
chewing what remained of my fingernails, reminding myself this 
was perfectly natural for this stock and not to panic unless it 
hits 225, my predetermined exit point.  JDSU as it would have it, 
went down and bounced firmly off 228 and went racing back up with 
strong volume.  Actually I was watching my intra day charts at the 
time and when JDSU tanked, the volume also dropped when it got 
down that low, indicating that there were no more sellers.  I kept 
telling myself, it's ok, don't panic.  I am still in the trade and 
will ride this one all the way to the bank or down to 225. 

Moral is: don't force fit strategies just because you are anxious 
to implement.  Also paper trade the strategy on 4 or 5 stocks for 
a month or so and see how good you are.  It will help you perfect 
your timing, gain confidence and you will have a chance to see how 
you handle the dips.    

Lynda Schuepp
lynda@OptionInvestor.com


*****************************************
MORE WOMANS WORLD ARTICLES IN SECTION TWO
*****************************************


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


************************
WOMANS WORLD - CONTINUED
************************

Fundamentals
  
Unbelievable, incredible, awesome. I sold the CMGI  190 leap I 
had bought last week at 38 for a 2 point profit on Thursday,
then I bought a 200 leap at 38 and sold it at 41 on Friday. On 
Friday I bought a June 160 leap at 38.5 and sold it on Monday  
at 38.  I don't really know why I sold that one, it was a spur 
of the moment decision. When the stock started moving again on 
Monday I bought a March 165 call for 34 5/8. On Tuesday I sold 
that for 35.5, bought a 190 leap at 55 1/8 and sold it Wed for 
58 1/4. I have now made over 100% on my original investment in 
a couple of weeks with this one position.  I am not really a 
one-stock woman, but this has been such a perfect and easy play 
that I have been focusing almost all of my attention on it. It 
is difficult in a very active market to direct your attention 
to many different plays. This stock has gone from 100 to over 
200 in a few weeks, and logic and common sense would dictate 
that it should have corrected long ago. However, the trend is 
your friend and for the last few weeks this trend has been up. 
Even in an aggressive play in a strong bull market anything can 
happen which is why I feel compelled to sell an option at a 
profit, any profit. You can always buy back in later. Frankly, 
this type of move is a little scary. I got out of my last option 
on Wednesday, and on Thursday I am staring at my screen watching 
the stock moving from 204 to 175.5 and back up to over 190. The 
old cliché "nobody ever went broke taking a profit" should be 
memorized by options traders daily.
 
My other positions for the last couple of weeks were adding to 
my Broadcom and my Nextlink position. I bought 50 Broadcom at 175, 
and watched it move another 50 points. I also bought Nextlink at 
51 15/16 last week and watched it move to over 64 . After reading 
Janar's column on taking one week off every month I plan to 
reassess my strategy on this play, particularly with earnings 
coming up on the 15th. Usually after a particularly large move 
a stock will level off after earnings to a 2 to 5 point daily 
trading range until it is ready for the next big move

The traditional thought is that you should buy what you know 
and if you don't understand it don't buy it. However, with the 
amount of money made in the technology and Internet sector over 
the last few years, the professionals and investing public want 
to participate. How well can any of us really know the technology 
stocks? Does "buy what you know" mean you have to be an engineer 
to buy Intel or Cisco, or a medical doctor to buy a biotechnology 
company? Not necessarily, in fact I know doctors who have lost 
money investing in medical stocks, possibly because they focus 
too much on a narrow area and not enough on the overall market. 
You can, however, use some general rules and develop an awareness 
for what is going on in the industries and the market.

Try to look for a company which has many products on the market 
as well as many in the research and development phase, and a 
market for their products which is big enough to support one or
many competitors. Remember: patents expire, technology changes 
at breathtaking speeds, and nothing is immune from competition 
in today's marketplace. Sure, right now Qualcomm has the CDMA 
chip every cell phone needs, but don't you think the engineers 
at the other companies are working on developing better and 
faster chips? Of course, you can ride the wave but always look 
over your shoulder. Research and development is particularly 
important among the giant pharmaceutical companies because of 
the rate at which medicine is advancing and changing. One 
blockbuster product is never enough. For example, drug patents 
generally expire after 14 years, and a brand name drug can be 
as much as 400% more expensive than a generic one.  

Warren Buffet puts a lot of stake in management. Some of his 
most famous investments have been on the basis of management 
change. Some of this is intangible, you can't always fully 
define what makes a good CEO today. Very few people nowadays 
have the opportunity to talk to the top CEOs like Michael Dell 
or John Chambers but sometimes you can see company representatives 
on TV and get an idea of what they are about. Does the management 
seem down to earth and concerned about the interests of the 
shareholders? Does the CEO take the time to give interviews and 
communicate with the investment community or does that person 
have the attitude that he/she doesn't give two hoots about the 
market? Does the management have a solid educational background 
and experience? Does the company have strategic alliances with 
other companies? Look at the news on some of the public news 
services like Reuters. How often does the company issue press 
releases? If the last press release was in 1997 the company 
probably doesn't bother to keep the shareholders up to date

Try to look for a company, which makes products or has assets, 
which are necessary, irreplaceable and unavailable elsewhere. 
This is an ideal situation, which is not always possible to find, 
but sometimes you can come close.  I have always been a little 
skeptical of retail Internet stocks. What are they doing someone 
else can't come along and do better? Unless they are selling 
proprietary products, you can't buy on other web sites someone 
else is eventually going to attempt to compete. When the Internet 
was a brand new phenomenon, some Internet retail sites increased 
their market value 1000 fold in a few years. However, the market 
is starting to mature, and many new initial public offerings have 
come out in the Internet sector over the last year or two. Many 
competitors in a field means the only way a company can maintain 
market share is to cut down on the price and decrease profit 
margins. Eventually this means less profit for the shareholders. 

Investing in infrastructure is probably the best way to invest 
in the future of the Internet. The future of the Internet is 
bandwidth. Bandwidth means the measure of transmission capacity 
through cables, wires, fiber optic lines or satellites. You simply 
have to have it. There is such a phenomenal amount of information,
which has to be transmitted over the Internet nowadays that 
companies are fighting to buy broadband assets, which are expected 
to be worth much higher multiples in the twenty first century. If 
you have broadband assets you have something solid, and you have 
book value. 

Mary Redmond
mary@OptionInvestor.com

****

Part Time vs Full Time Trading,  
Is the Grass Really Greener?

I was reminded Friday, of some of the differences between trying 
to trade part time amongst a demanding "regular" outside job, 
versus making that high risk decision to trade full time. As 
with anything else in this world which pays high rewards, the 
risks are high also. In option trading, it is important that 
one determine their own particular risk profiles, against a 
back drop of their true talents and devotion for learning, 
before making big changes. I'd like to explore a few of the 
differences involved in each, because we always seem to think 
the grass is greener on the other side.

On Friday at lunch, I had a major hard drive crash on my main 
laptop computer, from which I trade. That was a first for me 
and now I understand the need for a back-up system. It vaporized 
my mail program, most documents and my Qcharts. Luckily, I had 
another computer at home, but it was void of all my email, phone 
numbers, addresses and relevant programs with passwords for trading. 
So, forgive me for not responding to any lost emails. Thanks to my 
success in YHOO last week, I had already ordered a new laptop, due 
in 2 days. Boy, that was lucky!!

An emergent problem such as this, only brings to light the 
potential for high dollar losses in short term, high risk plays. 
Once I realized I had a BIG problem, I immediately called by phone, 
to exit my high risk December Qualcomm plays purchased on Thursday. 
Qualcomm was down on Friday but because I had been fortunate to 
enter those 60 high risk contracts at an incredible entry point, 
I was still able to exit those plays at net. Again, good entry 
points are the best protection you have. Also, although I did not 
really want to exit, I forced myself to exit 1/2 of my December 
290 YHOO contracts at what appeared to be the high of the day. I 
don't recall my entry at this time due to lost data, but I think 
they were up double or more (3x?) since entry this week. I had too 
many things to worry about and I did not want lost profits to add 
to it. Since Thursday, other than position for January YHOO and 
QCOM, I have entered no new plays.

This is just one of many possibilities that can affect your 
"perfect" trading environment at home. You may also experience 
cable outages which can give you CNBC withdrawal tantrums, or 
local phone outages which can cause nausea, vomiting and diarrhea 
since you are unable to trade by Internet, watch CNBC or even 
call in an order to your broker! Talk about a potential for a 
heart attack!!! That's usually when your cell phone battery is 
dead and right before you were planning to exit big trades. Ahhh, 
yes, the advantages of trading at home!!

Before I get to strategies, it is important that potential converts 
realize that the tax bite is much more obvious, when you pay it 
straight out of your own pocket, as is medical insurance. Being 
self-employed has its luxuries, but the isolation of trading is 
a very real phenomena which bothers me daily. After January, I 
will be thinking about this issue because for me, the money alone 
is not enough. I miss the social interaction. If I can figure out 
how to have both, then I will be happy. If I can't, then I will 
have some difficult decisions to make. I chose 1999 to trade full 
time, because of the Y2K effects on the market. It has been an 
incredible learning experience for me, for which I will benefit 
the rest of my life. 

Having been on both sides of option trading, I understand the 
confusion and frustration many eager young option traders face. 
The profit potential feels so tangible, that it looks so easy. 
As I've said before, there is more to the skills of trading, then 
only learning what the strategy is. When I first started option 
trading, the internet was still fairly new. Online trading was 
embryonic at best. I knew no other trader, until this year. I had 
to dig for information and figure things out the hard way...by trial 
& error. I was very fortunate in my successes but had OIN been 
available to me back then, I know it would have changed my life. 
They do so much research for you that would take hours and hours 
to do on your own. For a part time trader, this is truly an 
inexpensive educational trading tool.

As a full time trader, I find that time flies by so fast, because 
I am multitasking between CNBC, 1, 5, 15, 60 min and daily charts, 
quotes, bond rates, S & P futures, offsetting the markets against 
the equities I play and their sectors, setting alerts for entries 
& exits, and trying to figure out which is which when they all go 
off at the same time....which is usually when the doorbell rings and 
the dog wants out. Keep in mind that everyone in the outside world, 
does not appreciate your juggling routine, for if you are home, you 
must be playing hooky so therefore not answering the phone is not 
understood. You cannot tell them you have a heap of money sitting 
on a stock like YHOO on Tuesday, watching your net worth change by 
the second. No matter what, if they don't trade, they really don't 
understand. Discussing losses, just makes it worse, for there is no 
sympathy without being judged for doing something so stupid. 

But if I was trading part time again, based on what I have learned 
this year, I would do these things. I would faithfully read OIN. 
I would choose only a few trades to try at a time, then I would 
become familiar with what their charts looked like for the year, 
quarter, month and week. I would set buy limit orders on entry 
points suggested by the research team at OIN. I would immediately 
place sell limit orders of 25% profit on each contract and as it 
sells, I'd enter a lower value buy limit order at a good entry 
again. Again, place a 25% profit order. If the play is still 
successful and running, I would keep playing it. This churning 
of small cash flow profits, will make you consistently more money, 
then trying to wait for the high 100% returns that you occasionally 
read about. Not being able to watch plays closely, make these 
returns difficult to consistently achieve. Also, most great option 
traders, churn for cash flow, at smaller percent gains. They keep 
their money working constantly, buying low and selling high. Also, 
learn to put some of your profits in your pocket, instead of playing 
with 100% of it over again. I learned this mistake this year...and I 
promise you, I won't need to learn it twice!!!

You've heard it before, but never play with money you can't afford 
to give away or loose. Make sure you understand that. Then, I would 
find a system which sent email or pager alerts, if my underlying 
hit a particular target, triggering me to call in a trade. I do 
not use stop loss orders on options because of inherent problems 
with them. But, an email or pager alert would suite me fine, for 
downside risk.

Also, when distraction from the market is your norm, I think 
longer term and deeper in-the-money plays are safer. It gives 
you a little more margin of safety to recover from mistakes due 
to the extra time and built in intrinsic value. Again, great 
entry points help too. The longer the term of the option, the 
less volatile the extremes of option price movement, either for, 
or against you. Short term options make you more money, but they 
are higher risk and require careful monitoring to extract those 
high profits without falling victim to price swing reversals. 
Also, buying leaps at great entry levels, will give you nice 
upswing movement with time, plus allow you to write covered calls 
for added monthly income.  Remember AOL and AMZN in the summer? 
There is nothing that says you must keep these contracts till 
expiration.

If possible, I would check charts mid-morning, at lunch, 30 min 
before market close and after work, just to make sure everything 
is okay on your shorter-term plays. Anything going down into the 
closing 15 min, has the potential to gap down at the open the next 
day...more so over the weekend. If you are near your stop loss, 
consider exiting before the close. 
For more piece of mind, I would learn spreads and straddles for 
profit potential with minimal exposure to large losses. I would 
analyze myself, to know if I was a speculator, a conservative 
investor and I would place trades accordingly. Knowing how much 
I could afford to literally loose, knowing my strengths and 
weakness, and learning when trades are not appropriate for me, is 
valuable insight. If you loose big as a part time trader, you will 
be grateful you still have your day job. There is no room for these 
mistakes when trading full time for your income, your family's well 
being and Uncle Sam's pocket.

Other than this, I would recommend becoming sensitive to fed news 
and potential economic reports. Again, the OIN Market Analysis 
helps with this. The real key though, to both the full time trader 
and part time trader is like Jim says, learning to "sell too soon".

Renee
renee@OptionInvestor.com

For more considerations on this topic, try Getting Started in 
Options, by Michael C. Thomsett, Chapter Nine 'Choosing Your Own 
Strategy'


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

The Longer Breath?

When the immediate situation looks bad, but the overall 
situation looks good, decision makers are faced with a 
situation that German military writers call "the longer breath." 
Do I hold here in hopes of a breakthrough, or do I cut my 
losses and direct my efforts elsewhere? That is where I am 
at as I watch the market go into its final hour on Friday
afternoon. The market is up strongly, with DOW +110, and NASDAQ 
+20. Yet the three positions in my ST Option Portfolio are near 
the bottom of my rankings of underlying stocks for my options 
plays.

NOK. I have been buying Dec 160 and Jan 160 Calls when NOK dips 
below 170. Today, NOK started the day at 166 and hasn't really 
budged. I was stopped out of my Dec play, which is just as well, 
since the time premium will begin to drop radically next week. 
I bought the contracts at 12.5 and sold today, at the low, of 
8.75. One of the problems with stop orders is that if you don't 
get good entry points, stop orders can simply compound your
losses. Negative 10% returns compounded will empty your portfolio 
quickly. After last week's strong run up, I probably should have 
been more patient. I continue to hold the Jan 160 Calls, which 
are now underwater too. Hence, the dilemma -- do I hold, or cut 
my losses, and move on to more profitable plays? 

QCOM. I have been buying Jan 390 Calls to add to my Jan 380s, 
which I had decided to hold from last week. These plays have 
turned into a big slug in my portfolio which steal my focus. 
Today, like a slug, the stock is just crawling along 389. The 
lows of today and yesterday would push the "graphical convergence" 
(for what it is worth, which is doubtful), out to Dec 15 or 16. 
However, that accords with the fact that the shareholder meeting 
will take place on 12/20, and volume has been drying up as the 
lows get higher. But, the telecom sector has cooled a bit the 
last few days, and holding calls for this long exposes me to 
all kinds of general market vulnerability. Nonetheless I hold, 
due to my conviction that once the 4:1 date is announced, along 
with the sale of the handset division, the stock will react 
positively.

SCH. Yesterday, one of the members of our local club alerted us 
that one of the investment banks had finally put out a bullish 
note on trading volume and on line brokers. I had been itching 
to make a play on the Outside Line Backers, which, I knew would 
benefit from the growth in trading volume. I had SCH in my sights, 
as I own a few Jan45 contracts in my LT Stock Account, as well as 
some EGRP calls. I backed up the truck on the SCH Jan45 at 1.5 
yesterday afternoon when the market started to bounce back from 
its lows. Sure enough, the contract closed up with a last bid at 
2.25. 50% gain for a few hours work. Another astute member of 
our club posted a follow up email after the close noting that 
the best plays might be NITE, AMTD, EGRP, but perhaps not SCH. 
I loaded those plays into qcharts, and, sure enough, SCH was 
off a point today, though the Jan45 held its price (increased
volatility?). NITE & AMTD, however, were each up 3 - 4 points. 
SCH announces trading volume on Monday, though, and some analysts 
are expecting this to help all the outside line backers to make 
a pretty good run. 

The real dilemma is that with the market up and all of my plays 
down, it is very hard to pull the trigger on good plays when 
they cross your radar. For example, I had bought, then sold, AOL 
Jan80 calls last week and early this week. I was ready to make 
another play on those, but it was hard to justify, when my 
attention was focused on the wireless wonderstocks, NOK & QCOM. 
I thought about jumping aboard the AOL train yesterday, then 
again this morning, but missed profitable entry points as the 
stock moved up to 90 from a base of 80. So too, I missed making 
entries into NITE and AMTD plays. Last week, I did literally 
everything right, and the market cooperated perfectly. This week, 
on balance, I have made money, especially with a nice gain on 
Monday, but it has not gone quite so perfectly. I started loading 
up on NOK and QCOM a day too early on Wednesday. Had I waited 
until Thus, I would have had much better entries. Now, I am in 
a holding pattern, neither wanting to exit and miss good moves 
in the wireless twins, nor am I willing to put more capital at 
risk, though clearly there are good plays. This is the reality 
that we all face from time to time. There is no perfect answer. 
If this was easy, everyone would be a millionaire. So it goes.

Janar Joseph Wasito
janar@OptionInvestor.com

****

An Osmotic Technical Point of View. 
Trading Lessons from the Holiday Dinner Table. 

In looking at the market this past week I am reminded of 
something that I learn anew almost every Holiday Dinner and 
the lesson is a great analogy for the current market. The 
food is great and for the most part, so is the company, much 
like most of the tech stocks in the NASDAQ and even the DOW. 
The lesson is usually learned with the last few bites and 
that is where we are in this market feast that we have been 
partaking in. Your taste buds and accounts have been well fed 
(if you done your home work) and your are getting kind of full. 
But, oh the mashed, sweet, scalloped potatoes, cranberry sauce, 
ham, turkey or (fill in the blank) look awfully good and just 
another bite or two sounds really good and it is really hard 
to resist.. We have all given in and do you remember how it 
feels? Not too pleasant. However, it is the difference between 
taking those last few bites and not, that can make the rest of 
your day enjoyable or really uncomfortable for awhile. By not 
getting up from the table now with most of your profits, there 
is a very good chance that the next few weeks can become very 
uncomfortable indeed. And all because you wanted just a few 
more bites. I suggest that you might want to get up from the 
table now. 

But, I do not believe in depravation without reward, there is 
always dessert! Like the preverbal dinner, if you take a bit 
of a breather now, dessert might just be very sweet indeed. 
Take a few days off to reassess the market and look for some 
of the great Put plays that we are sure to see in the coming 
weeks and look for some support when some of the great stocks 
out there with good fundamentals start to retrace these great 
runs that they have had. Buying opportunities for Calls and 
Leaps will be there galore! 

The desserts that this market is going to serve up in the next 
few weeks are going to amaze and astound even the most jaded 
traders out there. Both Put and Call plays will abound. They 
are going to be very sweet and very profitable indeed. 

So, think about getting up from the table now and waiting for 
dessert. While your waiting, do you homework and get ready for 
some of the sweet trades that you left room for. You will be 
glad you did! 

Harrison
harrison@OptionInvestor.com




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

Sunday, December 12, 1999

OPTION INVESTOR TRADING CLUBS CONTINUE TO HAVE SUCCESSFUL AND 
PRODUCTIVE MEETINGS!!! 

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

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



UPDATE FROM BOISE, ID
*********************
The Boise club is having its first meeting Monday, December 13. 
Anyone interested can contact me at Ljohnstona@aol.com

Thanks so much,
Lynn Johnston


UPDATE FROM NEW ORLEANS, LA
****************************

Hello from New Orleans!!!!!! The New Orleans Club has had two 
very successful Club meetings and enthusiasm and interest is 
increasing. We even had 3 guests in attendance at our December 
Meeting who have said they are going to try the Free Trial 
subscription to OptionInvestor.com next week. The topics we 
discussed in our meeting has even persuaded one guest to look 
into switching to the online broker "Preferred Trade".

We had a very lively discussion on Split Plays and Earnings Plays 
from one of our experienced New Orleans member Rio Sonza. Rio's 
wife Thelma who also attended, is also an experienced Option 
Trader and has done quite well in watching and playing the 
splits. Over the past 45 days this dynamic couple has made over 
18 Trades of which only 2 were unsuccessful! 

We then had a lively round table discussion on Y2K and its 
implications on some of our Option Trades. In general, all the 
meeting participates agreed that Y2K would probably be a non-
event in the United States but could have a profound effect in 
other parts of the World that did not work on the problem in 
advance like the US. One member showed concern that the 
"uneducated public" may make a run on the banks to hoard money 
and if the media was to cover that event, it may cause panic, 
similar to what we see here in Louisiana when a hurricane is 
heading our way. All the ATM machines in Louisiana now carry $20 
dollar bills and nothing smaller, anticipating the last minute
customers trying to withdrawal large amounts of money.

All members in attendance have begun to switch their money and 
trading business to "Preferred Trade". All of us feel that 
with the NEW STOP system that Jim Brown has recommended that we 
try, we can all make more money in the long run.

Finally, our meeting focused on the "Top Ten Rules for Option 
Trading" written by Optioninvestor. We went over all ten rules and 
resolved that we must continue to followed these rules if we want 
to remain successful in our Options trading.

For our meeting in January we are lining up a Local Speaker who 
has over 9 years of experience in Option Trading to discuss 
Volatility and Spreads trading in Options. He has been quite 
successful in this area and doesn't mind sharing his knowledge 
with other Traders. Also at the January meeting, we will have a 
discussion from one of our Members on "Chart Reading". This too 
is a frequently requested topic to cover at our Club meetings.

Please e-mail me (skiprope@bigfoot.com) if you want more details 
concerning any of these events or to join the NO-OIC. We look 
forward to hearing from new members, and as always guests of 
members are welcomed to attend our meetings.

Warmest Regards,

Steven Johnson
skiprope@bigfoot.com


UPDATE FROM ST. LOUIS, MO
*************************
The OIN STL Group has been meeting regularly every other Monday 
night. Our next meeting is Monday 13 December at 0700 at the 
office of Wellness Therapies at 15274 Manchester Road, Ballwin 
(located west to Georgia Carpet Outlet). We will not be meeting 
the night of the 27th. Our first meeting of the new year will be 
on 3 January.

For future meetings we are exploring trading videos that we can 
buy as a group and show and discuss at future meetings. I am also 
going to try to arrange for brokers who specialize in options to 
discuss using brokers.

Anyone in the St. Louis or Southern Illinois area interested in 
meeting and discussing options or investing is welcome. You are 
not alone.

Call me at 618-235-3842 or my e-mail is ltcme108@prodigy.net.

Maris Eshleman 

**************************************************************
If you would like to join an option trading club anywhere in 
the world please contact us at Visit@OptionInvestor.com 
and Organize@OptionInvestor.com and we will put you in touch
with the one nearest you.
**************************************************************



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

Index      Last   Week
Dow     11224.70 -61.48
Nasdaq   3620.24  99.60
$OEX      763.49  -3.99
$SPX     1417.04 -16.26
$RUT      466.71   2.13
$TRAN    2874.94 -53.86
$VIX       20.92   0.10

Calls             Week

CMGI      194.06  34.00  We bask in the glow of being CMGI investors
ARBA      236.75  32.13  New, business is booming for B2B & ARBA
DCLK      196.00  26.63  Establishing itself as a dominant player
INKT      167.75  22.75  Inktomi is split-happy and on the move!
CLS        86.75  13.81  New, simply can't ignore this momentum!
AOL        91.50  13.38  AOL relishes the holiday season momentum!
NOK       168.00  11.94  Demand exceeds the loftiest projections
GE        147.00  11.69  A little holiday cheer with a split?
SUNW       81.88  10.88  New, the Sun keeps on rising after split
MACR       86.88  10.25  Perfect intraday for stock option traders
BRCM      217.75  10.00  Dropped, violates a good deal of support
TMX       110.13   8.50  New, welcome to another split party!
GMST      125.38   8.25  Dropped, meets a round of serious selling
NT         88.25   8.06  Take note!  NT is now a split candidate!
QCOM      391.50   7.06  The buyers gladly move in on higher dips
STM       136.81   5.44  Demonstrates food relative strength
USWB       50.88   4.69  ADV has more than doubled!
SNE       187.31   4.19  Waiting to receive direction from Tankan
VRTS      109.06   2.94  New, VRTS and the software sector heat up
PRGN       81.88   0.88  Looking to re-ignite the climb for PRGN!
VOD        49.81   0.31  The VOD takeover saga continues...
ANSR       33.00  -0.50  Dropped, disappointed in ANSR's response
EMC        94.44  -0.81  Dropped, momentum dies on the vine
MXIM       86.50  -5.81  Dropped, less than an optimum play 
JDSU      244.25  -6.94  JDSU gets a Strong Buy and a $300 target
SDLI      173.13  -9.88  Dropped, the demand looks to have dried 

Puts

ETYS       45.13  -8.69  New, Scrooge makes his holiday appearance
GILD       39.00  -6.56  New, a weak link in a weakening sector
KIDE       44.69  -4.88  Could KIDE be cleared for a healthy fall?
GT         28.75  -4.06  Goodyear struggles to find a good day!
PGR        76.56  -2.00  Progressive makes progress downhill
JCI        51.75  -0.69  Dropped, where did all of the sellers go
EK         61.25   1.13  Dropped, manages to scare away the bears



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

Calls

TMX  - Telefonos De Mexico 
VRTS - VERITAS Software
ARBA - Ariba Inc.
SUNW - Sun Microsystems
CLS  - Celestica Inc.


Puts

ETYS - eToys Inc.
GILD - Gilead Sciences Inc.



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

MXIM $86.50 (-5.81) Maxim was less than an optimum play for 
us last week.  It started to head south half way through the 
week.  So what happened to our split-run?  Hopefully, it just 
took a breather because it still has a week and a half before 
the ex-date, but it is the sector that is worrying us.  The 
Semiconductors are typically spikey one way or the other and 
right now are in the midst of a downward spike.  If this lasts 
a couple more days, we will have lost our split-run.  That is 
why we are dropping it now so that we can start searching for 
a good exit point.  A bright spot was CSFB speaking positively 
about the sector.  They sighted 16% year-to-date sales growth 
and the expectation for 25% growth next year.  Remember, we 
should see a good intra-day spike to allow for an decent exit. 

ANSR $33.00 (-0.50) We're disappointed ANSR hasn't responded to 
positive analyst forecasts or Nasdaq rallies this week.  Granted 
after flying up 46.5% the week before we anticipated some 
consolidation, but ANSR is simply channeling in the $32 to $34 
range.  On one hand the stock shows no signs of falling apart, 
but on the other no signs of a breakout either.  Time is wasting 
and we've decided to exit the play this week-end. 

GMST $125.38 (+8.25) GMST made a futile attempt to move higher
in the first hour of trading Friday morning, only to be met 
by a round of serious selling.  GMST split 2:1 after the close
of business Monday.  The bears drove the price of GMST stock
to a low of $120.75 in the first 90 minutes of the session.
We hope you had your trailing stops in place and were able to
close out this split run with a nice profit.  If you didn't
get stopped out Friday we would suggest closing this play
Monday so as not to leave any more money on the table.  We 
will keep our eye on GMST for opportunities in the near future.

EMC $94.44 (-0.81) As we mentioned Thursday EMC is stuck in a 
narrow trading range.  The hardware maker has seen its recent
momentum die on the vine.  EMC could find it again at any time
and continue on to new highs, or it could fall under its own 
weight.  Friday, after the major indices dipped early in the 
session and the began to rebound EMC stayed stuck in the mud. 
The hardware index closed in the red as well indicating stocks
in this sector could be setting up for a round of profit-taking.
EMC has given us several profitable trades in the last month, 
so we will say good-bye for now and look elsewhere for new 
opportunities.  

BRCM $217.75 (+10.00) Broadcom may be heading into a bit of a 
downtrend as it pulled back on Friday, finding lower resistance 
and violating a good deal of support, including it's 10-dma of 
$218.  BRCM does have a bit of support at $215, but this is weak 
support at best and we see the next level of solid support being 
$200.  BRCM simply has lost too much momentum and has too much
resistance to hold it back to make the risk of continuing this 
play worthwhile. 

SDLI $173.13 (-9.88) Another record close on the second highest 
volume day for the NASDAQ, and all SDLI could do is eke out 67% 
of its ADV, while submarining the price in the process.  Into the 
first hour of trading, SDLI fell below its $180 support level to 
a low of $172, then recovered back over $180.  It didn't hold.  
SDLI sank through the afternoon to close at $173.13.  Not only 
did sellers emerge, there were no buyers.  Demand dried up while 
supply increased, forcing the price down.  Hopefully you were 
able to set stops and make a hasty escape following our caution 
on Thursday night.  We can find no news that might explain the 
decline.  Therein lies the problem - SDLI isn't as well known and 
doesn't make the news like JDSU might.  Low volume tells us that 
it probably just fell off the radar screen.  Such are the risks 
with low volume stocks without much coverage.  Needless to say 
we're dropping it from the current lineup.  


PUTS

EK $61.25 (+1.13) Looks like the company's announcement of 
expanding its share buy back program was enough to scare the 
bears.  The company reported on Thursday that they will 
increase the buyback program by $200 million raising the total 
authorized for share repurchase to $900 million.  Last weeks 
action suggests that EK is attempting to build a bottom and 
find a little support.  The possibility that the major selling 
may be over in the shares of Kodak makes us not want to sit on 
puts and just watch the premium decay.  The stock developed a 
trading range between $62.50 and $60.25 last week.  It is very 
difficult to make money trading long options with such a tight 
range for the underlying security. 

JCI $51.75 (-0.69) Where did all of the sellers go?  JCI did 
manage to pull back grudgingly last week but it looks as if 
the downtrend is leveling off.  You do not want to be long 
puts on a stock that may be ending a long term downtrend. 
Granted, the jury is still out on whether JCI has found a 
bottom.  There has not been any news recently to get investors
interested in the stock on either the long or the short side.  
It is possible that tax loss selling in the shares of JCI is 
abating and everyone who wanted to liquidate shares has 
already done so.  The most interesting technical action 
occurred on Tuesday and Wednesday.  After a quick drop to new 
lows on Tuesday, JCI managed to climb out of the whole and 
regain most of those losses on Wednesday. If Tuesday's volume 
had been huge, this pattern would have been indicative of a 
final blowoff capitulation.  The possibility that it was a 
final capitulation and that time is ticking away on our 
options makes us believe that owning puts right now on JCI 
is not worth it on a risk to reward basis.



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

Current Split Candidates
 
SNE  - Sony Corp
CMGI - CMG Information Services
NOK  - Nokia
STM  - STMicroelectronics
ARBA - Ariba
DCLK - DoubleClick
 
Split Candidates that are not current plays
 
QLGC - QLogic Software
CMVT - Comverse Tech
CHKP - CheckPoint
HGSI - Human Genome Sciences
SDLI - SDL Incorporated
BRCM - Broadcom
YHOO - Yahoo!
MEDI - MedImmune



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

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

Symbol - Stock             Splits/Date  
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
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 Appliance 2:1 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
IQIQ   - Vialink           2:1 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
CLS    - Celestica         2:1 12-21-99 ex-date 12-22
FLEX   - Flextronics       2:1 12-22-99 ex-date 12-23
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
HOTT   - Hot Topic         2:1 12-27-99 ex-date 12-28
SEAC   - SeaChange         3:1 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
INKT   - Inktomi           2:1 12-30-99 ex-date 12-31
INSP   - Infospace         2:1 01-04-00 ex-date 01-05
FDRY   - Foundry           2:1 01-07-00 ex-date 01-10
ITN    - InterTan          3:2 01-13-00 ex-date 01-14
COST   - Costco            2:1 01-13-00 ex-date 01-14
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:
**********************

SUNW - Sun Microsystems $81.88 (+10.88 S/A)(+2.97 S/A)

See sector list for details

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

****

TMX - Telefonos De Mexico $110.13 (+8.50)

See sector list for details

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


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

GILD - Gilead Sciences Inc. $39.00 (-6.56) 

See put section for details

Chart = http://quote.yahoo.com/q?s=GILD&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          12-12-99  
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
***********

SUNW - Sun Microsystems $81.88 (+10.88 S/A)(+2.97 S/A)

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

A new Sun rises?  OK, a hokey tag line, but you have to admire 
the rise it's taken since the split on Wednesday.  While we don't 
recommend holding a position over a split, SUNW has turned out 
all right.  In fact, it's up $9 in three trading days with robust 
volume.  There is no single story that would cause such a move, 
but the one getting the most airtime is the news that Digital 
Island in a pact with Sun and Inktomi will deploy 5000 Sun 
servers in the next two years.  It's a big deal because Sun also 
agreed to a $20 mln equity stake in Digital Island, whose shares 
rose 60% the day of the announcement.  Sun also tacked on over $6 
that day.  Despite gapping up to $83.38 the day of the split, the 
price fell back to support of $77 before bouncing up to the next 
level of support at $79, from where it continues its current 
move.  $79 also happens to be a 35% retracement of the three-day 
gain, and should make good support from here.  Also, technically 
speaking, SUNW gave us a hammer formation on the chart ("t" 
shaped bar graph - the longer the t's tail, the better), which 
indicates good technical strength.  Just be careful since the 10-
dma is way down at $72 and would likely be the best level of 
support in a severe market hiccup.  To summarize, you may want to 
consider target shooting at $79, or $77 depending on your risk 
tolerance.  Volume will be the key to further moves.  Dips are 
buyable should SUNW move north from here.

There is a boatload of open December and January $85 contracts, 
which speaks bullishly to the future.

BUY CALL JAN-75 SUX-AO OI=4958 at $11.00 SL= 8.75
BUY CALL JAN-80*SUX-AP OI=4716 at $ 8.00 SL= 6.25
BUY CALL JAN-85 SUX-AQ OI=3655 at $ 5.63 SL= 4.00
BUY CALL APR-80 SUX-DP OI=4156 at $13.50 SL=10.75
BUY CALL APR-85 SUX-DQ OI=1906 at $11.00 SL= 8.75

Picked on Dec 12th at    $81.88    P/E =111
Change since picked       +0.00    52-week high=$83.00
Analysts Ratings     7-12-5-0-0    52-week low =$18.06
Last earnings 10/99   est= 0.33    actual= 0.31 surprise=+6%
Next earnings 01-13   est= 0.20    versus= 0.17
Average Daily Volume = 12.6 mln
Chart = http://quote.yahoo.com/q?s=SUNW&d=3m

****

CLS - Celestica Inc. $86.75 +3.50 (+13.81)

Celestica is a global leader in the electronics manufacturing
services industry. With over 17,000 employees worldwide, 
Celestica operates 28 manufacturing and design facilities in
the United States, Canada, Mexico, the United Kingdom, Ireland,
the Czech Republic, Thailand, Hong Kong and China. Celestica 
provides a broad range of services including design, 
prototyping, assembly, testing, product assurance, supply 
chain management, worldwide distribution and after-sales 
service. Its customers include industry leading original 
equipment manufacturers (OEMs), primarily in the computer and 
communications sectors. 

Shares in Celestica have closed higher than the previous
day or seven consecutive days.  We simply cannot ignore that 
kind of momentum.  Celestica, the world's No.3 manufacturer 
of electronics on a contract basis, announced a two-for-one 
stock split on Tuesday.  The stock of this Toronto based 
company will split on December 15th on the Montreal and 
Toronto exchanges and in New York it will trade on a due-bill
basis starting on the 15th with the ex-date on the 22nd.  CLS 
has the news and is in the right group to keep its momentum 
going.  Technically speaking, the shares of Celestica 
look very good.  On the day of the split announcement CLS 
gapped up just under 5 points on the open.  The charge 
continued for the rest of the week.  We are looking for a 
continuation of this uptrend next week.  Be very careful if
CLS drops below $80.  If it were to drop below $80, it would 
imply that CLS will attempt to close the gap all the back 
to $76 before heading higher.  Odds are this will be a quick 
momentum and split play for us with an exit point on or 
before the split date.  We would like a pullback to buy in and 
that is what we were originally waiting for, but we just never 
got it.  So since we want to take part in this very quick 
split-run (ex-date is less than two weeks out), we need to 
target shoot our way in on an intraday bounce.    

There was only one other significant news item, besides 
the split announced last Tuesday.  Schroder announced an 
outperform rating while initiating coverage of Celestica 
yesterday.

BUY CALL JAN-75*CLS-AO OI=3041 at $14.38 SL=11.25
BUY CALL JAN-80 CLS-AP OI= 105 at $10.88 SL= 8.75
BUY CALL JAN-85 CLS-AQ OI=  10 at $ 7.75 SL= 5.75 low OI

Picked on Dec 12th at    $86.75    P/E = 157
Change since picked       +0.00    52-week high=$87.13
Analysts Ratings      6-7-2-0-0    52-week low =$20.25 
Last earnings 10/99   est= 0.33    actual= 0.37 
Next earnings 02-08   est= 0.40    versus= 0.27
Average Daily Volume = 4.96 mln 
Chart = http://quote.yahoo.com/q?s=CLS&d=3m

****

SNE - Sony Corp $187.31 (+4.19)(-2.81)(+9.31)(+16.88 prev 3 wks) 

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.   

By the time the market opens here on Monday, the Bank of Japan 
will have announced the findings of the Tankan report 
(essentially the equivalent of our GDP).  As we mentioned last
Thursday, this may cause big swings depending, on their findings 
on the current status of the economy.  This will most likely be 
the driving force behind the direction Sony takes heading into 
next week.  Hopefully, everyone who is currently playing Sony, 
has tightened their stops in preparation for the possibility of 
an adverse report.  Sony had a fairly non-eventful finish to 
the week, trading in a fairly tight range throughout Friday and 
closing right at it's 10-dma.  Sony's 5 and 10-dmas look to be 
converging to provide support, though support and resistance 
may have little relevance on Monday, again because of the Tankan
report.  Your best bet is to wait and let Sony settle.  If the 
report is negative, watch for support levels to hold around $180 
but we will likely exit the play.  If the report is positive, 
this could be just the fuel we need to propel us through the 
resistance at $190 and the 52-week high of $192.  It should 
be an easy journey to $200 after that.

Sony recently announced plans to move into the world of online 
banking.  Sony and banking?  Apparently so!  Sony plans to focus 
on the individual consumer and has already begun working on this 
endeavor with the hopes of making it onto the emerging scene by 
2001.	Sony plans to help customers finance loans and pay bills 
on-line and is now working to decide whether they themselves
are going to acquire a banking license or if they are going 
acquire a lender.  The Bank of Sony, who would have thought? 
 
BUY CALL JAN-180 SNE-AP OI=419 at $15.63 SL=12.00
BUY CALL JAN-185*SNE-AQ OI=128 at $12.50 SL=10.00
BUY CALL JAN-190 SMW-AR OI= 56 at $ 9.63 SL= 7.00 low OI
BUY CALL JAN-195 SMW-AS OI=117 at $ 7.25 SL= 5.50 

Picked on Nov 7th at $164.69   P/E = N/A
Change since picked   +22.63   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 = 184 K 
Chart = http://quote.yahoo.com/q?s=SNE&d=3m


*************
SEMICONDUCTOR
*************

STM - Stmicroelectronics $136.81 (+5.44)(+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 continued to consolidate this week with a bias to the upside.
There is major support in this stock near the $134 level.  STM 
bounced off of this level each trading day last week before
closing the week at $136.81.  The trading pattern of STM is 
holding stronger than the SOX index which leads us to believe 
that STM should rally nicely when the Semiconductor sector 
turns around from this week long slump.  STM was able to hold 
at support levels in the midst of overall SOX weakness because 
of the favorable news being reported on the company.  The SOX 
finished the week down almost 25 points in the midst of what 
was widely reported profit-taking in the sector.  This pullback 
has been advertised by analyst as a screaming buying opportunity.  
We are bullish, but cautious on STM, 
look for the $134 level to continue to hold, this is a good
place to target shoot for a new entry point.  Once the profit 
taking has ceased in the sector, the momentum should resume to 
the upside.  A break above $137.75 should push the stock back
up to test the 52-week high of $145.

STMicroelectronics and Ericsson announced an agreement this week
where the two companies will develop a range of devices.  This
agreement will build on the companies leading positions in hot 
wireless technology sector. 

BUY CALL JAN-125 STM-AE OI=110 at $17.00 SL=13.75
BUY CALL JAN-130 STM AF OI=  2 at $14.63 SL=11.50 low OI 
BUY CALL JAN-135*STM-AG OI= 78 at $11.38 SL= 9.00 

Picked on Nov 30th      $125.06    P/E = 82
Change since picked      +11.75    52-week high=$145.00
Analyst Ratings      12-2-2-0-0    52-week low =$ 35.69
Last earnings 11-13  est=  0.43    actual= 0.46
Next earnings 01-25  est=  0.56    versus= 0.42
Average daily volume = 1.05 mln 
Chart = http://quote.yahoo.com/q?s=STM&d=3m



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

CMGI - CMGI Inc. $194.06 (+34.00)(+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. 

It was another great week for CMGI investors.  CMGI gained
$34 making a new high Thursday morning at $204.  They will
report earnings after the close of business Wednesday.  Last
quarter CMGI reported earnings of $4.24 per share.  Most of the
profits came from the sale of shares it holds in other Internet 
firms.  This quarter the street is expecting a loss of $-0.70
per share.  Investors are also anticipating a split announcement
to come from the Internet developer.  CMGI will conduct its 
annual shareholders Dec 17th.  Last month CEO David Wetherell
told a group of analysts that CMGI expects to become the 
second-largest Internet firm in terms of revenue by the end of
its fiscal year in July.  If that were to happen CMGI would have
to pass either AOL or Yahoo.  As for next week we would look for 
the strength to continue in CMGI.  Technical indicators say the 
stock is a bit over bought and due for a pullback.  CMGI did 
bounce off an intraday support level near $188 Friday and could 
be poised for one last surge higher prior to reporting earnings.  
If you re-entered a play in CMGI, we would consider $188 as a 
potential area to close your position.  If we see further strength 
in CMGI early in the week, traders could add to existing positions, 
but know it should be a very short-term play and you would want 
to be out by the closing bell on Wednesday.  Normally we do not 
suggest playing current month options during options expiration 
week, but the volatility in the January contracts is high and 
you will probably want to close any open positions this week.

In other news CMGI owned AltaVista announced the launch of UK 
and European Internet search engine.  AltaVista is also expected 
to announce Monday that it will use Homestead's Technology to 
power its home page builder service.  The real news for CMGI 
this week is the earnings report Wednesday.  

BUY CALL DEC-180*GCD-LP OI=2204 at $21.50 SL=16.75
BUY CALL JAN-200 GCD-AZ	OI=5246 at $29.50 SL=23.00
BUY CALL JAN-220 GCD-AD	OI=1399 at $23.38 SL=18.25

Picked on Nov 21st at   $124.88    P/E = 47
Change since picked      +69.19    52-week high=$204.00
Analysts Ratings      4-6-0-0-0    52-week low =$ 16.34
Last earnings 09/99   est= 4.08    actual= 4.24 surprise=+3.9%
Next earnings 12-15   est=-0.70    versus= 0.38
Average daily volume = 4.53 mln
Chart = http://quote.yahoo.com/q?s=CMGI&d=3m

****

DCLK - DoubleClick $196.00 (+26.63)

DoubleClick is a leading provider of comprehensive global
Internet advertising solutions for marketers and Web publishers.
Combining technology and media expertise, DoubleClick centralizes
planning, execution, control, tracking and reporting for online
media campaigns.  The online advertising firm offers a targeted
delivery of ads using its patented DART technology.  DART 
measures Ad effectiveness and Web traffic.  DoubleClick has
Global headquarters in New York City and maintains offices 
in 32 other major cities around the world.

There are numerous examples of companies counting on advertising
to support their delivery of media content via the Internet and
they are looking to the major ad-serving networks.  DCLK is well 
on its way to establishing itself as the dominant player in the 
sector.  DCLK received positive news and split rumors, that 
helped the shares go up another $26.63 points on the week to 
close at $196.  The trading range intra-day is very volatile, 
but biased to the upside.  The week's trading range was $168.38-
$209.38.  We continue to see higher-highs, but getting there is 
not a steady climb up.  Trying to enter a position into the 
stock can be an adventure.  This is not a stock to trade for 
the weak of heart.  Those adventurous traders can look for a 
bounce off of support levels near $190, more support is at $180.  
A move above $200 accompanied by volume would be a buy signal.  

Looking back at current history for DoubleClick, they last 
announced a 2:1 stock split in April.  At that time, the shares
were trading at $180, the shares now sit at $196.  Looking at
the records from the last annual shareholders meeting this past
May, shareholders authorized an increase of shares from 60
million to 400 million.  Currently only 45 million shares have
been issued, so they definitely have enough shares for another 
2:1 split. 
 
BUY CALL JAN-195 TDU-AS OI= 223 at $24.00 SL=20.75
BUY CALL JAN-200*TDU-AT OI= 955 at $21.50 SL=18.25
BUY CALL JAN-210 QTD-AB OI= 149 at $17.63 SL=14.13
BUY CALL JAN-220 QTD-AD OI= 126 at $14.50 SL=11.00

Picked on Dec 9th at    $197.00    P/E = N/A
Change since picked       -1.00    52-week high=$209.38
Analyst Ratings      11-7-1-0-0    52-week low =$ 16.00
Last earnings 10/99  est= -0.14    actual= -0.13
Next earnings 01-19  est= -0.10    versus= -0.13
Average daily volume =  2.7 mln 
Chart = http://quote.yahoo.com/q?s=DCLK&d=3m

****

USWB - USWeb Corp. $50.88 (+4.69)(+2.13)

USWeb seeks to transform businesses in the digital economy 
and create sustainable market leadership for its clients.
As the leading Internet professional services firm, USWeb
has created a new standard for success in the digital 
economy-Time-to-Value.  Time-to-Value means USWeb applies
extensive insight, experience and scale to deliver break
through results quickly.

The business to business side of the Internet has been on fire 
lately, with an influx of IPO's and positive news from the 
well establish players in the space.  This upcoming week will 
see more companies going public as the ad giants are trying 
to get listed, on the heels of successful IPO's such as 
Agency.com and Razorfish.  This positive sentiment is adding 
interest to shares like USWB, that saw a drastic move in volume 
this week.  The average daily volume has more than doubled from 
previous weeks.  This technical change, that has been accompanied 
by good relative strength has produced higher prices.  After a 
couple of days of minor profit-taking the shares are setting up 
for another leg to the upside.  The stock is attractive at 
current levels, with good support at the $50 level and then 
again at $48.  The shares can be volatile during the trading 
day, so be sure to confirm market direction before entering a 
new position.  The stock currently sits at $50.88, not far from 
a new 52-week high $53.81.

USWB is now giving their customers the best of both worlds 
as they recently introduced an Internet application manager 
for e-Commerce.  This service will encompass both managed 
application services and custom consulting.  This is the 
essence of Time-to-Value and is why USWB is the leader in 
Internet professional services. 

BUY CALL JAN-45*QWB-AI OI=3696 at $9.50 SL=7.50
BUY CALL JAN-50 QWB-AJ OI=2179 at $6.63 SL=4.88
BUY CALL JAN-55 QWB-AK OI= 193 at $1.19 SL=0.50 High Risk!

Picked on Dec 7th at     $50.06    P/E = N/A
Change since picked       +0.81    52-week high=$53.81
Analyst Ratings      10-6-1-0-0    52-week low =$17.00
Last earnings 10/99   est= 0.13    actual= 0.15
Next earnings 01-24   est= 0.16    versus= 0.07
Average daily volume = 2.60 mln 
Chart = http://quote.yahoo.com/q?s=USWB&d=3m

****

AOL - America Online Inc $91.50 (+13.38)(-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.    

AOL is a momentum play driven by news and the holiday season.  
We added the play when we saw signs of recovery following its 
post-split depression.  Recently AOL has been channeling between 
$78 and $82, finally breaking out on Thursday.  That day Wit 
Capital reiterated a Buy recommendation and issued a 12 to 18-
month price target of $105.  On Friday AOL jumped another $5.25, 
or 6.1% on news of an "imminent" cross-marketing deal with 
Walmart (WMT); however there's much speculation as to what kind 
of alliance will emerge.  Support remains firm at $80-$82 in-
line with the 10-dma ($80.60).  This level is an optimum point 
of entry, but if AOL continues to climb look for intraday 
volatility to get your foot in the door.

Keeping in the holiday spirit, AOL announced a new "concierge" 
shopping service to make gift-giving easier this season with its 
'At Your Service' on Shop@AOL.  The service gives shoppers 
direct access to over 50 AOL merchants with alerts to companies 
offering free shipping, gift wrapping, and bonus gifts. In other 
news Telescan announced a three-year deal to add its stock 
screening and portfolio analysis tools to AOL's personal finance 
channel.  And AOL is at war again.  This time with AT&T's 
WorldNet Internet who tried to give its 1.8 mln subscribers 
Instant Messaging access to not only AOL, but also to rival 
Microsoft (MSFT).  AT&T subscribers were quickly rejected from 
AIM system.  

BUY CALL JAN-85*AOO-AQ OI=35008 at $13.38 SL=10.75
BUY CALL JAN-90 AOO-AR OI=30005 at $10.50 SL= 8.00
BUY CALL JAN-95 AOO-AS OI=19805 at $ 8.25 SL= 6.50

SELL PUT DEC-85 AOO-XQ OI= 6655 at $ 1.75 SL= 3.00
(See risks of selling puts in the play legend)

Picked on Dec 2nd at     $79.88    P/E = 251
Change since picked      +11.63    52-week high=$93.00
Analysts Ratings    24-16-3-0-0    52-week low =$20.38
Last earnings 10/99   est= 0.13    actual= 0.15 surprise=+15.4%
Next earnings 01-19   est= 0.14    versus= 0.08
Average Daily Volume = 18.3 mln
Chart = http://quote.yahoo.com/q?s=AOL&d=3m



*********
SOFTWARE
*********

PRGN - Peregrine Systems Inc $81.88 (+0.88)

Peregrine Systems provides an integrated suite of packaged 
infrastructure management application software to businesses.  
Its primary products include the inaugural ServiceCenter, a 
helpdesk software; AssetCenter, a solution for managing 
equipment procurement and tracking inventory; and FleetAnywhere 
designed for managing fleets of vehicles.  Other services 
include training, consulting and support.  Chairman John 
Moores has a 22% stake in the company.

PRGN is a pure momentum play.  On November 24th, a Strong Buy 
reiteration by analyst David Breiner of Volpe Brown Whelan & Co 
and his upgraded price target of $90 from $49 launched PRGN 
upwards $16, or 25%.  Since the initial breakout last month 
near-term support has evolved at $80 and is more firmly 
established at $70.  The momentum kicked back into gear last 
Monday.  PRGN traded on more than double the normal volume and 
met the analyst's price target of $90 with a $10.75 advance.  
The gains extended immediately at the bell on Tuesday.  PRGN 
opened strong at $96.75 to set another new 52-week high beating 
Monday's record close.  By Thursday the Nasdaq sell-off was in 
full-swing and PRGN was brought down a notch two.  This 
downdraft has effectively offered entry points in the proximity 
of near-term support and the 10-dma ($80.66).  Despite the 
pullback First Albany reiterated a Strong Buy rating and issued 
a $120 price target on Thursday.  Since this play is based on 
momentum look for a broad market rally and more good news to 
re-ignite the climb.  

On Monday Peregrine announced the immediate availability of 
a management option that allows users of its InfraCenter for 
Workgroups to resolve its own support problems thereby reducing 
help desk calls.  And on Thursday, Peregrine announced its 
GetIt! solution suite, self-service applications for Internet 
Procurement.  Separately the company announced an alliance 
partnership with Commerce One to integrate its GetResources! 
(the 1st application in GetIt!) to allow for direct connection 
to Commerce One's MarketSite, the global trading portal; thus 
promoting real-time transaction capabilities.  Some other 
vendors who've signed GetResources! agreements include Compaq 
Computers, Office Depot, Dell, and IBM Global Services.

BUY CALL JAN-80*GQP-AP OI= 251 at $11.00 SL= 8.75
BUY CALL JAN-85 GQP-AQ OI=  51 at $ 9.25 SL= 7.00 low OI
BUY CALL JAN-90 GQP-AR OI=3004 at $ 6.50 SL= 4.75

Picked on Dec 7th at    $90.13    P/E = N/A
Change since picked      -8.25    52-week high=$96.75
Analysts Ratings    10-1-1-0-0    52-week low =$11.44
Last earnings 10/99  est= 0.15    actual= 0.16
Next earnings 01-19  est= 0.16    versus= 0.11
Average Daily Volume =   699 K
Chart = http://quote.yahoo.com/q?s=PRGN&d=3m

****

INKT - Inktomi Corp $167.75 (+22.75)

Inktomi develops the world's most scalable software for the 
world's fastest-moving software environment: the Internet.  The 
company's core technology underpins products for the Internet 
infrastructure that contribute to network performance, 
scalability and efficiency.  Inktomi technology paves the 
way for emerging opportunities in online commerce, media and 
communications by enabling the Internet to intelligently 
accommodate more users and data traffic. Inktomi developed the 
search engine that runs such popular portals as HotBot, NBC's 
Snap, Yahoo!, and the Disney Internet Guide.

INKT is split-happy.  On December 3rd, the Board of Directors 
announced a 2:1 stock split payable on or about December 30th. 
The company has 300 mln shares authorized and 50 mln 
outstanding.  Therefore there are plenty of shares available 
for the split.  INKT share prices surged on the news.  This week 
the momentum remained intact as the stock stretched into new 
territory.  On Wednesday, INKT hit $179.88, setting the most 
recent new high.  The profit-taking that followed on the Nasdaq 
was a blessing as it pulled INKT back into an entry range.  
Near-term support is established at $160 and an intraday dip 
to this level would be a solid entry. 

On Thursday, INKT received vote of confidence with a Strong Buy 
recommendation from Thomas Weisel Partners.  In other news this 
week, Inktomi and Sun MicroSystems (SUNW) agreed to invest $26 
mln in Digital Island, a company that provides high-speed data 
network services for Internet businesses.  This strategic 
alliance provides leadership in the content distribution 
industry.

BUY CALL JAN-165*KYQ-AM OI= 94 at $23.13 SL=18.00
BUY CALL JAN-170 KYQ-AN OI=418 at $20.38 SL=16.00
BUY CALL JAN-175 KYQ-AO OI= 11 at $18.00 SL=14.00 low OI
BUY CALL JAN-180 KYQ-AP OI=363 at $16.25 SL=12.75

Picked on Dec 9th at    $166.94    P/E = N/A
Change since picked       +0.81    52-week high=$179.88
Analysts Ratings      7-6-3-0-0    52-week low =$ 51.31
Last earnings 10/99   est=-0.10    actual=-0.09 surprise +10.0%
Next earnings 01-20   est=-0.08    versus=-0.14
Average Daily Volume = 1.98 mln
Chart = http://quote.yahoo.com/q?s=INKT&d=3m

****

MACR - Macromedia Inc. $86.88 (+10.25)(+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 getting a lot of positive press this past week and
traders were rewarding the company by pushing the stock 
price up over 10 points.  The intra-day trading pattern is
perfect for stock and option traders.  The recent pattern
has the stock surging up 5 or 6 points, profit-takers then
step up to the plate to take some of the chips off of the
table, the stock bounces back off of support levels,
currently between $77-$79, then the stock surges again to 
new highs.  $87.50 is the current 52-week high.  This has been 
a consistent pattern to the upside since we began initial 
coverage of the stock, the stock is now up close to 20 points
in three weeks.  Going forward, the bullish scenario is still 
firmly in place and we believe that at current levels the 
stock is setting up for higher-highs.  The stock closed up
strongly on Friday at $86.88, closing at the high end of the 
range, if history repeats itself we should see a pullback the
following trading session, look for a bounce near $80.  Trailing 
stops are a must after positions have been taken.  

At the Streaming Media West '99 conference this week, Chairman
and chief executive Rob Burgess said the company's Shockwave.com
Web site has signed the creators of "South Park" to produce 39
original animated shorts based on the show.  He added that the
Macromedia Flash Player has been installed by more than 180
million consumers worldwide.     

BUY CALL JAN-80*MRQ-AP OI=114 at $14.00 SL=11.25 
BUY CALL JAN-85 MRQ-AQ OI= 30 at $12.00 SL= 9.50 low OI
BUY CALL FEB-80 MRQ-BP OI= 42 at $17.00 SL=13.75 low OI
BUY CALL FEB-85 MRQ-BQ OI= 30 at $14.25 SL=11.50 low OI

Picked on Nov 23rd at   $67.56    P/E = 139
Change since picked     +19.31    52-week high=$87.50
Analyst Ratings      5-4-1-0-0    52-week low =$26.25
Last earnings 10/99  est= 0.31    actual= 0.19
Next earnings 01-26  est= 0.15    versus= 0.12
Average daily volume =   938 K 
Chart = http://quote.yahoo.com/q?s=MACR&d=3m



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

VRTS - VERITAS Software $109.06 (+2.94)

The world's largest maker of storage management software is 
located in Mountain View, California.  VERITAS supplies 
enterprise data storage management solutions and provides 
advanced storage management software for open systems
environments.  Other VRTS products offer centralized 
administration with a high degree of automation.  They also 
make backup software and cluster management tools.  VRTS has 
partnered with the likes of Hewlett-Packard, Microsoft and 
other manufacturers, all of which have licensed and bundled 
VERITAS products with their operating systems.  

The software index continues to make its way higher and VRTS is 
certainly doing its part to help lead the way.  VRTS got a boost
Thursday when it announced its software used to backup data on 
computer systems is being shipped with Red Hat Inc.'s Linux 6.1
Deluxe product.  These days anything connected to Linux seems to 
move.  Shares of VRTS gapped up over $11 to open at $116 Thursday 
morning.  By midday VRTS dropped back to a low of $102.88 amidst
some profit-taking.  VRTS finished the day +3.44 and tacked on 
another $1.13 on Friday.   The software sector continues to be 
hot.  Friday the software index helped lead the Nasdaq higher
gaining 2.7%.  As one analyst said recently, VRTS is becoming the 
"gorilla vendor" as the software market explodes.  Speaking of 
analysts, Tuesday, Michael Stanek from Lehman Brothers initiated 
coverage of VRTS, with a Buy rating.  His twelve month target for 
VRTS came in at $140 per share.  Wednesday analysts at SG Cowen 
reiterated a Strong Buy rating of the software company.  Most 
feel that despite recent losses brought on by acquisitions Veritas'
business is a long term one, since the increased reliance on 
database storage by corporations isn't going away.  VRTS settled 
the week in the middle of an intraday trading range between $105 
and $110.  The next area of support for VRTS lies at $100, near 
its 10-dma of $101.95.  Should we see further profit-taking a 
bounce off $105 with solid volume could provide a good entry 
point.  If VRTS moves higher, a breakout above $110 would also 
provide a good point of entry.  

BUY CALL JAN-105 VUQ-AA OI=317 at $15.50 SL=12.00
BUY CALL JAN-110*VUQ-AB OI=455 at $13.25 SL=10.75 
BUY CALL JAN-115 VUQ-AC OI= 32 at $11.13 SL= 8.75 low OI
BUY CALL JAN-120 VUQ-AD OI=621 at $ 9.25 SL= 7.00

Picked on Dec 12th at   $109.06    P/E = N/A
Change since picked       +0.00    52-week high=$116.00
Analysts Ratings     6-15-2-0-0    52-week low =$ 17.53
Last earnings 10/99   est= 0.14    actual= 0.11 surprise=+27.3%
Next earnings 01-13   est= 0.15    versus= 0.08
Average daily volume = 2.42 mln
Chart = http://quote.yahoo.com/q?s=VRTS&d=3m

****

JDSU - JDS Uniphase $244.25 (-6.94)(-13.81)(+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.  UNPH makes the laser modules and pumps (in 
addition to other components) that split a fiber optic strand 
into many different, potentially unlimited channels.  Basiclly 
they do for light what Intel does for electrons.  Their 
components are critical to the development of optical networks.  
Were you able to catch that dip to $228 on Thursday?  If so, and 
you were lucky enough to catch Friday's top at $248, you made out 
like a bandit.  Unfortunately, sellers took over in the last hour 
of Friday's trading to snuff out a big part of the gain...that 
is until buyers puffed $2 back into the price during the last 
five minutes.  Whew, what a roller coaster!  While we originally 
thought we were seeing a nice ascending pennant formation, it's 
actually turned out to be your standard pennant.  Last week, the 
highs were getting lower as the lows were getting higher.  It 
still portends a breakout, but the direction is less clear on a 
technical basis.  We still vote for a breakout to high side 
though, thanks to a 2:1 split coming on December 30.  The lower 
consolidating volume should be considered a good sign.  Aside 
from Thursday's major dip to $228, nobody appears to willing to 
sell in the face of the impending split.  Anyone playing JDSU's 
last split in late July will remember the five-day rise from $82 
to $94 upon its occurrence.  Profits happen!  With the Santa 
Claus rally and the January effect (coupled with a lot of cash) 
handily crushing speculative bubble and inflation fears, the 
market is likely to continue moving up.  Support is tough to 
find, in the congestion lately, but historically, the 10-dma has 
been there to lend it (support) when need be.  JDSU is currently 
on it at $244.

In the news, brokerage firm Thomas Weisel named JDSU a Strong 
Buy, while Wachovia named it an LT Buy with a $300 price target.  
Also noted is that Janus and Franklin funds own a big chunk of 
JDSU.

Time premiums are high.  You may want to wait until you see 
volume come back before taking a position.  If you are itching 
to play right now, we suggest January strikes since the rate of 
decay is a bit slower.  For those desiring to be time merchants, 
consider selling ATM covered calls (currently DEC-240) for a 
3.3% return on a five-day hold if called out.  Naked puts can 
be profitable too if you understand the inherent risks.

BUY CALL JAN-230*UQD-AF OI= 819 at $35.75 SL=28.00
BUY CALL JAN-240 UQD-AH OI= 813 at $30.88 SL=24.00
BUY CALL JAN-250 UQD-AJ OI=1913 at $26.75 SL=21.00
BUY CALL JAN-260 UQD-AL OI=1040 at $22.88 SL=18.00

Picked on Nov 21st at  $213.81    P/E = N/A
Change since picked     +30.44    52-week high=$273.61
Analysts Ratings   13-13-0-0-0    52-week low =$ 27.69
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 = 2.8 mln
Chart = http://quote.yahoo.com/q?s=JDSU&d=3m

****

NOK - Nokia $168.00 (+11.94)(+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?

The words of the Chairman still echo.  In an analyst meeting two 
weeks ago, he noted that demand was exceeding even his lofty 
projections...so much so that NOK was raising its projected 
growth rate to 30-40% from 25-35% through 2002.  He noted too 
that he thinks the world will hit 1 bln wireless subscribers by 
the end of 2002, a year ahead of schedule.  That's like stuffing 
3 years of revenue into 2.  You can bet he's been conservative 
with the numbers and that there are still some positive surprises 
in store later (say around earnings tentatively scheduled on 
January 20).  As the largest cap stock on all of Europe, the last 
thing NOK wants to do is disappoint.  Needless to say, the buzz 
caused numerous upgrades from analysts, which feed on themselves 
prompting others to join the party.  Unfortunately, it also 
caused NOK to get ahead of itself a bit and step outside (to the 
upside) of the current trading channel on strong volume.  NOK 
spent most of the week drifting back to the center of the 
ascending channel, finding good support at $165.  Careful, any 
move south would likely set up a test at $155, the low end of the 
channel.  While that's unlikely given the increasing volume and 
price bounce into Friday's close, it's still something to watch 
as you plan the trade.  Barring a meltdown in the markets, we'd 
consider target shooting in the $165 range.  Of course, if volume 
picks up and the rest of the market looks good, you may not want 
to wait.  Resistance is way up at $177, so there's room to run.  
Just be sure to use a protective stop or a trailing stop for any 
reversals.

Janus funds disclosed this week that they own 6.5% of NOK.  
Goldman Sachs was the latest to join the analyst party with a 
price target over $210.  They also placed it on their European 
recommended list.  Nomura Securities even went on to say that NOK 
will be the biggest PC company in unit sales, alluding to a trend 
of bringing more sophisticated data to mobile phones.  Just a 
thought of our own that we'll add:  with over $3 bln in cash, 
they have made it know that they are on the acquisition path.  
What better target than Qualcomm's handset division, in which 
QCOM announced that they hope to have buyer by year-end?  The 
announcement could come at QCOM's shareholder meeting on Dec 20th 
Don't hang your hat on this.  It's just a speculative hunch.

BUY CALL JAN-160 NAY-AL OI=1509 at $19.50 SL=15.25
BUY CALL JAN-170*NZY-AN OI=1027 at $14.25 SL=11.25
BUY CALL JAN-180 NZY-AP OI= 948 at $10.13 SL= 7.75
BUY CALL APR-170 NZY-DN OI= 351 at $24.50 SL=19.00
BUY CALL APR-180 NZY-DP OI=  68 at $19.63 SL=15.25

Picked on Nov 14th at   $122.25    P/E = 77
Change since picked      +45.75    52-week high=$179.12
Analysts Ratings     13-8-0-0-0    52-week low =$ 52.31
Last earning 10/99    est= 0.52    actual= 0.57 surpris=+9.6%
Next earning 01-20    est= 0.66    versus= 0.58
Average Daily Volume = 3.10 mln 
Chart = http://quote.yahoo.com/q?s=NOK&d=3m

****

QCOM - Qualcomm Inc. $391.50 (+7.06)(-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.

This isn't a complaint.  In fact, it's just the opposite.  
Despite a $7.06 gain this week, QCOM has been consolidating 
nicely in the current ascending pennant range on anemic volume.  
It has not exceeded it ADV in the last 15 trading days.  That's a 
good thing and gives the stock a breather before its next ascent.  
How can that be good?  If you connect the lows (or pullbacks) on 
the chart since mid-November, you will have an ascending line, 
or the lower border of the pennant.  It means there are fewer 
sellers at these levels, and buyers gladly move in on every 
successfully higher dip.  Connecting the resistance points should 
give a flat line (roughly) in the $390-$405 range.  As the lows 
(support) get higher to converge with resistance, you get the 
pennant formation.  If it's ascending, you usually get the 
breakout to the upside, which we expect to happen with QCOM.  The 
catalyst?  The December 20 shareholder meeting wherein we expect 
approval of a share reauthorization plan, which will enable the 
4:1 split to occur shortly thereafter.  QCOM could also announce 
the sale of its handset business, which it has said it would like 
to sell by year-end.  That would swell the volume and thus the 
price back up.  If that were going to happen, we'd expect to see 
the move this week in anticipation of the meeting.  Volume will 
be the key.  Short-term support is $380-$385, but Friday's strong 
close may keep it over $390 from here.  Target shoot to your level 
of comfort.  A major breakout occurs when the volume moves up and 
takes the price over its all-time high of $407.50.  Of course, 
if the market does its best imitation of a submarine, QCOM will 
be under water too.  So keep your stops set just in case.

December strike time decay will really be working against call 
buyers this week.  The ATM DEC strikes still have roughly $13 
of time value and the ATMs have $10 of time value.  We don't 
recommend their purchase.  However, a covered call writer 
(seller) can still earn 3.2% on the ATMs if called out in the 
next five days so long as QCOM remains above $390.  Naked put 
sellers can do equally well, but this carries a bit more risk if 
you are not careful.  Buying anything past January is inherently 
more expensive, so we offer only January strikes this week.

BUY CALL JAN-380 AAF-AP OI=1232 at $46.00 SL=36.00
BUY CALL JAN-390*AAF-AX OI=1103 at $43.13 SL=33.50
BUY CALL JAN-400 AAF-AY OI=7011 at $38.75 SL=30.25

SELL PUT DEC-370 AAF-XN OI=1607 at $ 4.00 SL=6.25
(See risks of selling puts in play legend)

Picked on Nov 16th at   $330.00    P/E = 319
Change since picked      +61.50    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 = 5.70 mln
Chart = http://quote.yahoo.com/q?s=QCOM&d=3m

****

VOD - Vodafone Group $49.75 (+0.31)(+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.

The takeover saga continues.  Whether VOD can pull off its 
hostile take-over of Mannesmann remains to be seen.  The take-
over talks have been the driving force behind shares of VOD 
stock.  When potential good news comes out, VOD shares rise.
As Mannesmann executives continue to make comments against the 
merger the VOD stock begins to slip.  Late last week Hamburg 
based shareholders in Mannesmann filed a lawsuit against the 
company's CEO for trying to woo selected investors in his favor 
to help fight the takeover.  Klauss Esser, Mannesmann's CEO
said Wednesday he is not against further talks, however he didn't
see the any point in discussing the current offer any further.
We really feel the merger or hostile bid will eventually take 
place.  Friday the Telecom index gained about 1 percent on the
news of a deal between KPN and BellSouth.  VOD fell $1 to close 
the week at $49.75 for a gain of $0.31.  VOD provided us with a
good entry point for our play and a quick profit early in the 
week.  Technically, VOD has filled the gap from last Monday and
could be setting up for another move higher.  The volume on the
decline from the highs made earlier in the week has been below 
normal indicating no one is rushing to get out.  We would watch 
VOD for a bounce off the $48-$49 area as a place to target shoot
for a new play in VOD.  VOD is looking a little weak and may 
need a boost of good news to get the stock back on track.  
Before entering a new play in VOD, check the news, and assess 
your risk profile.  

In other news concerning the takeover, VOD said it would sell a 
minority stake in Mannesmann AG's traditional phone business if
its $148 billion hostile offer is successful.  VOD executives 
said they hope to hold more than 50% of Mannesmann shares by
the close of February.  VOD's CEO reiterated earlier remarks 
that a merger of the two companies wouldn't result in job cuts 
or the sale of any Mannesmann assets not already on the auction 
block.

BUY CALL JAN-40 VOD-AH OI=1843 at $10.25 SL=7.75
BUY CALL JAN-45 VOD-AI OI=3045 at $ 6.25 SL=4.50
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=1.00

Picked on Dec 5th at     $49.44    P/E = 94
Change since picked       +0.31    52-week high=$53.63
Analysts Ratings      6-3-3-0-0    52-week low =$27.73
Last earnings 09/99   est=  N/A    actual= N/A 
Next earnings 12-99   est=  N/A    versus= N/A
Average daily volume = 3.83 mln
Chart = http://quote.yahoo.com/q?s=VOD&d=3m



*****************************************
CALLS - TELECOM CONTINUED IN SECTION FOUR
*****************************************

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

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And the offer is.....Renew your subscription in December at the 
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*******************************
CALLS CONTINUED IN SECTION FOUR
*******************************
SEE DISCLAIMER IN SECTION ONE






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


*************************
CALLS - TELECOM CONTINUED
*************************

NT - Nortel Networks $88.25 (+8.06)(1.50)(+0.44)(P3W +19.31)

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 was looking pretty flat for most of the week, 
topping out at firm resistance of $85.50 on Tuesday, Wednesday, 
and Thursday, with support in the $82-$83 range.  Despite a short 
dip on Friday morning to $83, buying volume didn't let up, which 
propelled NT in a breakout through $85.50 all the way to $88.69 
(a new trading high) with no hesitation.  Volume was a fist-
pumping 40% above the ADV.  Just as there is no substitute for 
cubic inches in drag racing, there is no substitute for volume in 
price movement.  As the number one producer of optical networking 
equipment ahead of Lucent, fund buyers are looking for large-cap 
companies with 20% revenue growth prospects and increasing 
margins.  NT fits the bill, and we look for funds to keep putting 
some of their cash to work in this issue.  Part of the attraction 
too is their ability to fulfill big orders in a hurry.  For 
instance, they just inked a $600 mln deal with AT&T wireless to 
supply new TDMA equipment (CDMA is the future, but when you are 
an arms merchant, the revenue source is of little concern) over 
the next three years.  Not one to stand still either, NT 
continues on the cutting edge of the optical business with 
development of equipment that can move 28 mln simultaneous 
Internet connections over a single strand of fiber.  But we 
digress.  Look for support back at previous resistance of $85.50, 
a shootable target.  However, if volume should persist (and we 
hope it does so that this breakout may continue), you may have 
to be content with buying small dips.  Just don't buy in the 
first hour of trading.  FYI, NT is now a split candidate.  
Unfortunately, their announcements don't usually correspond with 
earnings announcement, the next of which is scheduled January 25.  
You can play Clarify (CLFY) options too for 30% greater leverage 
(NT is buying CLFY), but there are fewer OI, thus it's a bit more 
volatile.  While this looks like a great play, it too will be 
toast if the market rolls over or suffers a big downdraft.  
Remember the stops.

While not a bold step, CSFB raised their target price from $80 to 
$100 after an upbeat meeting with management.  Their rating 
remains a Strong Buy, with NT as a core holding.  The bigger news 
is that NT is in talks to acquire privately held Qtera for $3.8 
bln.  Qtera is developing technology that allows a light signal 
to travel further without regeneration or amplification.

NORTEL STRIKES:

BUY CALL JAN-85 NT-AQ OI=1762 at $ 9.00 SL=6.75
BUY CALL JAN-90*NT-AR OI=1110 at $ 6.75 SL=5.00
BUY CALL JAN-95 NT-AS OI=  70 at $ 4.25 SL=2.50 low OI
BUY CALL MAR-90 NT-CR OI= 372 at $10.13 SL=7.75
BUY CALL MAR-95 NT-CS OI= 142 at $ 8.00 SL=6.25

CLARIFY STRIKES: (CLFY = $111.38)

BUY CALL JAN-105 QCY-AA OI= 22 at $10.25 SL=7.75
BUY CALL JAN-110 QCY-AB OI=  0 at $11.25 SL=9.00

Picked on Nov 7th at     $68.81     P/E = 516
Change since picked      +19.44     52-week high=$88.69
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 = 4.10 mln
Chart = http://quote.yahoo.com/q?s=NT&d=3m

****

TMX - Telefonos De Mexico $110.13 (+8.50)

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

Welcome to another split party!  On November 11th the Board of 
Directors announced a proposal to split its shares 2:1 to boost 
trading activity.  On December 6th shareholders approved the 
stock split with a paydate of February 1st.  Consequently the 
ADR's traded on the NYSE would be affected as well.  An investor 
would receive 2 ADRs or every one they owned.  Initially the 
split approval was shadowed by the growing concern surrounding 
Mexico's government spending.  However that all changed on 
Wednesday as their interest rates dropped to a five-year low 
and the Internet craze sparked a renewed attention to Mexican 
telecom stocks.  Although it's very likely the upgrade by 
Salomon Smith Barney played a more direct role in the upsurge 
as TMX jumped $5.69, or 5.9% on Wednesday.  The firm raised its 
price target on the ADR to $140 and adjusted its EPS projections 
to reflect the 2:1 stock split.  

In all reality it may be too early for an "official" split run, 
however there's no doubt a momentum run powered by analysts' 
forecasts is in our midst.  On Thursday, another analyst firm, 
Dresdner Kleinwort Benson, raised its 12-month price target to 
$126 from $106 citing a strong outlook for the peso.  MSDW also 
came forward and upped its price target on TMX to $125 from $105 
and raised its fiscal profit expectations for 1999 and 2000.  
The analyst wrote "Telmex is generating more revenues and 
investors are becoming increasingly aware of the sustainable 
long-term potential of these business segments" and "the 
upcoming stock split should increase the stock's appeal to 
retail investors".  On Thursday TMX proceeded to set an all-time 
high hitting $109.94 only to have it shattered on Friday.  The 
ADR continued its lofty ascent and tacked on another $5.06, or 
4.8%.  Intraday it peaked at $110.50 and closed just a fraction 
under this new 52-week high - a very bullish indication.  
Support is firm at $100, a mark just a smidge above the 10-dma 
($99.72).  However at this point we need to confirm direction 
and sentiment next week before opening any positions.

BUY CALL JAN-105 TMX-AA OI= 445 at $10.25 SL=7.75
BUY CALL JAN-110*TMX-AB OI=1735 at $ 7.50 SL=5.75
BUY CALL JAN-115 TMX-AC OI= 324 at $ 5.25 SL=3.50
BUY CALL FEB-110 TMX-BB OI= 623 at $ 9.38 SL=7.00
BUY CALL FEB-115 TMX-BC OI=   0 at $ 7.13 SL=5.25

SELL PUT DEC-105 TMX-XA OI=1006 at $ 1.13 SL=2.50
(See risks of selling puts in play legend)

Picked on Dec 12th at   $110.13    P/E = 23
Change since picked       +0.00    52-week high=$110.50
Analysts Ratings      1-3-5-0-0    52-week low =$ 39.88
Last earnings 10/99   est= 1.38    actual= 1.67
Next earnings 02-03   est= 1.46    versus= 1.26
Average Daily Volume = 1.51 mln
Chart = http://quote.yahoo.com/q?s=TMX&d=3m


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

ARBA - Ariba Inc. $236.75 (+32.13)

Ariba is a leading provider of intranet and Internet-based 
business-to-business electronic commerce solutions for 
operating resources.  The company's products efficiently connect 
requestors to approvers and buyers to suppliers to deliver an 
automated solution for improving the acquisition and management 
of operating resources, the goods and services required to 
operate a company.  Ariba Operating Resource Management Systems 
(Ariba ORMS) enables organizations to automate the procurement 
cycle within their intranets, lowering the costs of acquiring 
and managing operating resources.  Ariba Network, a global 
business-to-business electronic commerce network for operating
resources, enables buyers and suppliers to automate transactions 
on the Internet. 

Talk about being in the right place at the right time!  Business 
is booming in the business-to-business (B2B) world of e-commerce 
and ARBA looks to be a leader in the game.  ARBA began trading 
in June at a mere $61.  Here we are $175 later in just six 
months!  ARBA has certainly been in the holiday spirit lately, 
as it has posted a gain nearing $50 since December 1st.  ARBA 
has positive momentum play written all over it.  ARBA has 
created a beautiful chart, consistently tagging higher-highs and 
higher-lows.  ARBA currently has support at $230 and again at 
$220.  ARBA found resistance at $240 this week and therefore, 
we will want to see a breakthrough of this level going forward 
to confirm continuing momentum.  The ultimate resistance sits 
at the 52-week high of $246.  ARBA does a nice job of providing 
room for entry on a seemingly daily basis, offering a wide trading 
range, i.e., $15.50 on Friday.  Your best bet for playing ARBA 
is to target shoot your way in on an intraday dip or to wait for 
a bout of profit-taking, backed by holding support.  Being that 
ARBA is such a big mover, it will be important to pay close 
attention.  Use your stops and keep them tight once you're in 
to protect your profits. Don't forget ARBA splits 2:1 next Friday the 17th.
Get out before the close!! 

ARBA is currently working with American Management Systems to 
launch Buysense.com, which will provide an on-line marketplace 
for state and local government agencies.  The goal is to provide 
a common venue for purchases by region.  On December 9th, 
Friedman, Billings, Ramsey and Co., initiated coverage of ARBA 
with a Buy rating and 12-month price target of $300, citing 
the growth of Business to Business e-commerce as the main 
catalyst for ARBA's expected rapid growth.  Bear Stearns also 
initiated coverage the same day, with a Neutral rating, noting 
ARBA's high rate of competition and "generous" valuation.   

BUY CALL JAN-230 IUR-AF OI=560 at $35.13 SL=27.50
BUY CALL JAN-240*IUR-AH OI=211 at $30.63 SL=23.75
BUY CALL JAN-250 IUR-AJ OI=209 at $26.75 SL=20.75
BUY CALL JAN-260 IUR-AL OI=501 at $23.25 SL=18.00

SELL PUT DEC-210 IRU-XB OI=279 at $5.25 SL=7.00 
(See risks of selling puts in play legend)

Picked on Dec 12th at   $236.75     P/E = N/A
Change since picked       +0.00     52-week high=$246.00             
Analysts Ratings     2-10-2-0-0     52-week low =$ 61.00                 
Last earning 10/99    est= 0.21     actual= 0.26                            
Next earning 01-26    est= 0.27     versus= 0.13                            
Average Daily Volume = 1.36 mln
Chart = http://quote.yahoo.com/q?s=ARBA&d=3m

****

GE - General Electric $147.44 (+11.69)

One of the most profitable companies in the world, General 
Electric has been able to make money in all kinds of different 
industries.  The company is engaged in developing, marketing 
and manufacturing of a wide variety of products involved in 
generation, transmission, distribution and utilization of 
electricity and other goods.  It produces aircraft engines,
transportation equipment such as locomotives, appliances (both 
kitchen and laundry equipment), lighting, generators and 
turbines, nuclear reactors, medical imaging equipment, and 
plastics.  GE is also a large player in the financial services 
field as well as information services.  With ownership of NBC, 
General Electric is one of the largest broadcasters in the 
world.  With this diversity and reach, it is no wonder 
they count their profits in the billions.

GE is the largest capitalized stock on the U.S. exchanges.  
Because of this fact it is a very widely held stock.  This fact 
is important to understanding why GE's stock might be a strong 
performer in the next couple of weeks.  The biggest news item 
influencing our decision to profile GE has not been announced 
yet.  The Board of Directors are meeting on December 17th.  It 
is widely anticipated that GE executives will spread a little 
holiday cheer by announcing the first split of the company's 
stock over two years.  GE shareholders have had an excellent 
year.  A stock split would be the star on top of the Christmas 
tree.  The main question that remains is whether the Board will 
decide to split 2:1 or 3:1.  GE typically has announced good 
news in December.  The shares of GE have done very well this 
year, trading over 50 points higher than last January's low of 
$94.  Because of this we anticipate very little selling pressure 
on the stock for the rest of December.  Why take a profit and 
pay tax on it in April when you can wait till next year to take 
a profit and delay paying taxes until April of 2001?  Technically, 
GE had an excellent week.  Since July, GE's stock has broken 
above six double tops.  The stock is in a very strong up trend, 
and on Thursday it broke into new high ground again.  With the 
lack of overhead resistance and possible good news coming we 
feel GE has a chance to continue rising.  Support is at the 
recent breakout point of $141.  A more cautious investor may 
try and wait to see if there is any market weakness next week 
and attempt to add a call position at the support point.  More 
aggressive investors can buy calls on any strength.

From the NBC news desk, well actually from many sources, GE 
announced that it had received a $1.98 billion Air Force engine 
contract on Tuesday.  Also in the news, GE was named the world's 
most respected company for the second straight year in a  
worldwide survey of chief executive officers conducted for the 
Financial Times.  GE Chief Executive Officer Jack Welch, who 
probably voted for himself and his company, was selected as the 
world's most respected business leader in the survey.  Further 
proof that GE is perhaps the most ubiquitous company in the 
world, last week the National Christmas tree was lit up with 
70,000 GE lights. 
 
BUY CALL JAN-135 GE-AG OI=4046 at $15.75 SL=11.75
BUY CALL JAN-140 GE-AH OI=5578 at $12.00 SL= 9.50
BUY CALL JAN-145*GE-AI OI=5591 at $ 8.63 SL= 6.50
BUY CALL JAN-150 GE-AU OI=4917 at $ 6.38 SL= 4.25

SELL PUT DEC-140 GE-XH OI=2856 at $ 1.00 SL= 2.00
(See risks of selling puts in play legend)

Picked on Dec 9th at    $143.56    P/E = 46
Change since picked       +3.88    52-week high=$147.88
Analysts Ratings     9-10-1-0-0    52-week low =$ 86.19 
Last earnings 10/99   est= 0.79    actual= 0.80 
Next earnings 01-20   est= 0.92    versus= 0.80
Average Daily Volume = 4.96 mln 
Chart = http://quote.yahoo.com/q?s=GE&d=3m



*****
LEAPS
*****

Our LEAPS portfolio lived up to its motto of the gift that 
keeps on giving this week.  We've seen the bull market and 
continuing high volatility directly impact the price of our 
contracts.  We've noted before that even when the stock price 
stays even, the LEAPS can go up do to increasing volatility 
and therefore, a greater euphoria for the future.  We are 
wishing AOL had come down to our target to $75 before sky-
rocketing, but it only made it as far down as $78.50.  That 
was a play we would like to have but we won't chase it.  
Instead, let's wait for a pullback to $80.  I know its a long 
shot but we need a solid entry point to be successful.  Besides 
there are always plenty of plays that look good.  We still 
urge patience if you have time to wait.  The last couple weeks 
of the year could prove volatile and give us the entry point 
we want.  The VIX remains low at 20.99.  

Current Plays

SYMBOL  SINCE     LEAPS         SYMBOL    CURRENT  PICKED   RETURN

EMC     11/07/99  JAN-2001 $80  ZOH-AP at $29.38   $15.38   91.03%
                  JAN-2002 $90  WUE-AR at $33.25   $19.00   75.00%
DELL    11/07/99  JAN-2001 $50  ZDE-AJ at $ 7.13   $ 7.00    1.86% 
                  JAN-2002 $50  WDQ-AJ at $11.50   $11.25    2.22%
GPS     11/07/99  JAN-2001 $40  ZGS-AH at $13.25   $ 5.75  130.44%
                  JAN-2002 $45  WGS-AI at $14.63   $ 7.88   85.66%
IBM     11/07/99  JAN-2001 $100 ZIB-AT at $24.75   $13.63   81.59%
                  JAN-2002 $110 WIB-AB at $27.88   $16.50   68.97%
WMT     11/07/99  JAN-2001 $70  ZWT-AN at $ 9.00   $ 6.50   38.46%
                  JAN-2002 $75  WWT-AO at $12.63   $ 9.75   29.54%
LU      11/14/99  JAN-2001 $80  ZEU-AP at $17.00   $12.88   31.99%
                  JAN-2002 $90  WEU-AR at $20.13   $16.13   24.80%
CSCO    11/14/99  JAN-2001 $80  ZCY-AP at $31.88   $19.13   66.65%
                  JAN-2002 $90  WIV-AR at $34.25   $22.00   55.68%
SLR     11/14/99  JAN-2001 $85  ZSR-AQ at $23.75   $21.75    9.20%
GE      11/21/99  JAN-2001 $150 ZGR-AU at $22.75   $16.25   40.00%
                  JAN-2002 $150 WGE-AU at $31.50   $25.50   23.53%
GTW     11/21/99  JAN-2001 $90  ZWB-AR at $11.63   $17.75  -34.48%
                  JAN-2002 $100 WGB-AT at $16.38   $22.50  -27.20%
NT      11/28/99  JAN-2001 $75  ZOO-AO at $28.63   $22.25   28.67%
                  JAN-2002 $75  WNT-AO at $35.63   $30.25   17.79%
VOD     12/05/99  JAN-2001 $50  ZAT-AJ at $11.25   $10.75    4.65%
                  JAN-2002 $50  WHV-AJ at $15.25   $15.00    1.67%
KM      12/05/99  JAN-2001 $10  ZKM-AB at $3.25    $ 2.50   30.00%
                  JAN-2002 $15  WKM-AC at $2.31    $ 1.75   32.00%

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

New Leap Plays

ADBE - Adobe Systems $62.63

It's hard not to love a company that has their hand in about 
everything that crosses the Internet and Adobe fits in that 
category.  Their Acrobat and Photoshop software products are 
becoming household names in the industry.  ADBE had a great 
run this year from $20 to as high as $80 in mid-November.  
We view this little pullback to $60 as one worthy to be 
considered as an entry point.  Proceed with caution because 
we don't like to try and pick a bottom but a well planned 
entry near $60, with a stop loss in place in the mid-$50s 
can only do some much damage relative to the possibility of 
a good move to the upside.   

BUY LEAP JAN-2001 $65.00 ZAE-AM at $15.00 
BUY LEAP JAN-2002 $70.00 WAE-AN at $20.38

http://www.OptionInvestor.com/playimages/index.asp?image=adbe121299

****

TXN - Texas Instruments $106.88

TXN is the main player in providing chips for cell phones, 
VCRs, camcorders and modems.  Their DSP chips own a 45% market 
share.  Not to mention, they also make analog chips and other 
microprocessors.  You will notice that most of our LEAP plays 
are on well-known companies and this one is now exception.  We 
like the stock here based on its relative strength to the 
Semiconductor sector.  This has been a hot sector but is subject 
to short-term pullbacks, like last week.  TXN has been holding 
up better and better and is probably due to the cell phone 
craze that is going on.  We've seen what kind of gains some of 
those stocks have put up (QCOM, NOK, VSTR, etc).  TXN and their 
DSP chips have a direct benefit from the wireless revolution.  
$104 has been great support for TXN when looking for an entry.  
A breakout would be anything over $111.  Target-shoot your way 
in according to your risk tolerance.   

BUY LEAP JAN-2001 $110.00 ZTN-AB at $22.25
BUY LEAP JAN-2002 $120.00 WGZ-AD at $28.50

http://www.OptionInvestor.com/playimages/index.asp?image=txn121299


Drops

Yep, still no drops.  We considered cutting our losses on GTW 
but since the news about the CFO leaving is out, the LEAPS 
have settled down.  We are now expecting GTW to bottom in this 
area before running higher again.  It's worth a look if you 
want to make a play on GTW.  



*****************
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.

****

KIDE - 4Kids Entertainment $44.69 (-4.88)(-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.

KIDE spent the majority of Friday's session flirting with $44, 
posting weak volume and trying to make up its mind what direction 
it wanted to head.  It is extremely important to exercise caution 
at this point as KIDE has solid support at the 100-dma of $43.50.  
This is were KIDE has been bouncing for the past couple weeks.  
We are looking for a violation of this level backed by good 
volume.  If this occurs, KIDE could then be cleared for yet 
another healthy fall, as we see the next levels of support 
being the psychological level of $40 and then $38.  KIDE has 
some immediate resistance overhead at its 30-dma of $45 and 
further resistance at $46, $48 and $50.  That should keep even 
KIDE busy for a bit!  Technically KIDE still looks like a solid 
put play as the rallies continue to become shorter, the highs 
lower, and support levels turning over into resistance.  In 
reality, cautious investors should just walk away with their 
profits in hand but we are curious to see who will win this 
battle between buyers and sellers at $44.  The failing rallies 
points to the sellers but this is a high-risk play so use 
caution.

BUY PUT JAN-50 IUK-MJ OI=191 at $12.25 SL=9.75
BUY PUT JAN-45*IUK-MI OI=111 at $ 8.88 SL=6.50
BUY PUT JAN-40 IUK-MH OI=433 at $ 6.13 SL=4.50
 
Average Daily Volume = 1.45 mln
Chart = http://quote.yahoo.com/q?s=KIDE&d=3m

****

GT - Goodyear Tire and Rubber Co. $28.75 (-4.06)(-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.

Goodyear did manage one good day last week, but that's about 
it.  Though GT traded up to gain $0.50 in Friday's session, it 
never found the momentum to make it through it's 50-dma of $29.  
GT has further resistance ahead at the psychological level of 
$30, which is also GT's current 100-dma (these two combined 
could provide rather staunch resistance).  Be careful with new 
entries.  GT has opted to spend the weekend resting on converged 
support at its 10 and 30-dma, which could hold heading into 
this week.  Therefore, we will want to see a violation of these 
two levels backed with good volume before even entertaining the 
thought of a new entry.  Should GT exhaust it's support, your 
best bet for a new entry is to wait for one of GT's mini-rallies 
backed with holding resistance.  Obviously, confirm continuing 
negative momentum before entering and remember to tighten your 
stops to protect your profits.

BUY PUT JAN-35 GT-MG OI=459 at $6.38 SL=4.50
BUY PUT JAN-30*GT-MF OI=680 at $2.56 SL=1.25

Average Daily Volume = 995 K
Chart = http://quote.yahoo.com/q?s=GT&d=3m

****

PGR - The Progressive Corporation $76.56 (-2.13)(-3.19)

In business since 1937, Progressive is one of the nation's 
largest auto insurers.  Progressive offers all types of 
vehicle insurance and property-casualty insurance through 
30,000 independent agencies, the Internet and through 
affiliate programs.  PGR is a holding company for 82 
subsidiaries.  PGR also has one mutual insurance company 
affiliate.

As a huge insurance company, Progressive has been hurt along with 
the other major financial stocks.  With interest rates rising, 
the cost of money increases.  When the cost of money increases 
for a company in the insurance business they have to pass along 
those costs to their customers in the form of higher rates, in 
order to stay profitable.  That scenario assumes that customers 
will accept the higher rates.  However, if you remember the last 
recession, and do not get us wrong we are not calling for a 
recession, many people who were struggling simply stopped buying 
insurance for things like cars, Progressive's bread-and-butter 
business.  There is another possible explanation for the 
distribution of Progressive's shares.  There may be the 
perception that PGR could be inordinately vulnerable to any civil 
unrest that may occur because of the Y2K event.  Probably nothing 
will happen.  But a huge property insurer would be hit rather 
hard if there was any rioting.  Perception is a powerful 
influence on the price of a stock and if investors are fearful of 
potential civil unrest then certainly they will not be buying 
Progressive's stock.  PGR's stock has been in a downtrend since 
November 17th.  Last week the stock broke down to new lows only 
to recover very quickly.  That pattern requires us to be very 
cautious about any put position.  It is possible that PGR is 
attempting to build a base here.  Look to buy puts if PGR drops 
below $75.  You could also buy puts if PGR tests resistance at 
$79.50 and falls back.  Aggressive investors can buy puts if PGR 
shows weakness in the face of any rally next week which would be 
indicative of the likely scenario that PGR will test support 
before it attempts resistance.

BUY PUT JAN-80 PGR-NP OI= 55 at $6.25 SL=4.50
BUY PUT JAN-75*PGR-NO OI=233 at $4.38 SL=2.00 

Average Daily Volume = 328 K
Chart = http://quote.yahoo.com/q?s=PGR&d=3m

****

ETYS - eToys Inc. $45.13 (-8.69)

ETYS is a leading web-based retailer focused exclusively on
children's products, including toys, video games, software,
videos and music.  Designed to be the consumers primary
source for children's products, ETYS online store offers
an extensive selection, with over 100,000 products and 750
brands.  With its recent purchase of BabyCenter, ETYS now
also provides online parenthood information and baby gear.

Christmas is coming, and consumers are rating ETYS second
only to Santa Claus.  Over the past six weeks, the company 
has garnered the top slot in Robertson Stephens' Online
Shopping Challenge, a consumer survey of online shoppers and
their habits.  Mentioned more often than all other e-tailers
except for Amazon.com, ETYS rating of 9.4 out of 10, puts it
well above the average score of 8.4.  Elsewhere, Gomez Advisors
rates eToys as the No. 1 online toy site.  So what is the
problem?  Scrooge made his appearance on Thursday in the form
of J.P. Morgan analyst Tom Wyman, with a Market Perform rating
and a price target of $50.  That's not exactly a glowing
recommendation for an internet stock trading in the lower half
of its 52-week range.  He likes the company long-term, but
cites concern over high valuations relative to its peer group.
He sees it taking another year for the company to grow into its
current valuations.  This, coupled with the recent offering of
$150 mln in convertible debt should continue to pull investors
interest away from the stock.  Since late November, the constant
pressure has produced almost a $25 haircut.  On Thursday, still
refusing to show any strength, prices broke through long-term
support at $50.  Adding insult to injury on Friday, the shares
dropped another $3.63, closing near the low of the session.
Throughout the decline, volume has been heavy, roughly 50% above
the average of 2.2 mln.  ETYS is a volatile stock with large
daily price swings, so take advantage of the movement.  Look for
a bounce near resistance, now at the old support of $50, to 
provide an entry as the selling pressure returns.  During the
move down over the past 2 weeks, the 5-dma (currently $50.76) 
has been reliable resistance and should continue to provide good 
entry points going forward.  Watch the volume, as a return to 
more sedate levels could warn that this free-fall is approaching 
ground level.  For now, enjoy the ride down to the next level 
of support at $40, followed by $36.

BUY PUT JAN-50*ETU-MJ OI=536 at $9.25 SL=7.00
BUY PUT JAN-45 ETU-MI OI=372 at $6.25 SL=4.75

Average Daily Volume = 2.21 mln
Chart = http://quote.yahoo.com/q?s=ETYS&d=3m

****

GILD - Gilead Sciences Inc. $39.00 (-6.56) 

GILD, a biopharmaceutical company, seeks to provide accelerated 
solutions for patients & caretakers.  GILD discovers, develops, 
and commercializes proprietary therapeutics for viral diseases.  
GILD has some potentially significant new products now being 
readied for the market.  These include adefovir dipivoxil for 
HIV and Tamiflu treatment for influenza, both of which are 
expected to receive FDA approval before year-end 1999.  The 
R&D pipeline also includes other drugs for AIDS, hepatitis B, 
macular degeneration, cancer, and other conditions.  However, 
the company is unlikely to be profitable before 2002.

Biotech stocks in general had a tough week.  The BTK index 
was down 6.40 for the week.  It appears that the stocks of 
this sector are running out of gas after a spectacular year.  
Market interest seems to be concentrating on the pure tech and 
Internet plays.  When attempting to take advantage of a downturn 
in a sector you should always look for one of the weakest
stocks in the group for a put buying candidate.  Gilead is 
just the kind of stock we are looking for.  GILD broke down on 
November 1st when the USFDA advisory panel recommended the FDA 
not approve GILD's HIV drug.  On the open it gapped down over 
20 points.  In the subsequent weeks it attempted to rally back 
but fell short at $54.  On December 3rd the company decided to 
stop pursuing development and testing of the drug in the U.S.   
Since then it has been in a steady downtrend and seems likely 
to continue in that direction for the rest of the year, especially 
with the likelihood of tax-loss selling adding continued pressure
on the stock.  Some support can be found for the stock in the 
$35 area.  Resistance at $42 might make a good entry point for 
a put.  However, if you want to catch a possible drop to the 
test of support, the recommendation is to pick up the puts on 
any small bounce next week.  Longer term support is $31.75 
which was established in December of 1998.  That area could 
provide an excellent exit point for a profitable put position. 

BUY PUT JAN-40*GDQ-MH OI=389 at $4.88 SL=3.25
BUY PUT JAN-35 GDQ-MG OI=130 at $1.88 SL=0.75
 
Average Daily Volume = 886 K
Chart = http://quote.yahoo.com/q?s=GILD&d=3m



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

Another Day, Another Nasdaq Record, Ho Hum..

Friday, December 10

Technology stocks surged late in the day driving the Nasdaq index
above 3600 for a new all-time high. The composite of high-tech
issues advanced 26 points to 3620. Financial stocks led the Dow
higher on tame inflation news and the blue-chip gauge posted a 90
point rise to close at 11,224. It was the Dow's second straight
double-digit gain and the index is well within striking distance
of the August record. The S&P 500 index rose 9 points to 1417.
Advances outpaced declines 1,557 to 1,494 as 990 million shares
traded on the New York Stock Exchange. Breadth was positive for
the first time since last Friday's record-setting rally. The 30
year bond was at 99 14/32, up 22/32, with the yield down at 6.16%.

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

Kmart       KM     JUN7C/JAN10C    $2.25   debit   diagonal  
Pillowtex   PTX    MAY5C/JAN7C     $1.38   debit   diagonal 
Qwest       QWST   JAN30C/JAN35C   $4.00   debit   bull-call 
Quest       QWST   DEC35C/DEC37C   $2.00   debit   bull-call

Our new spread candidates were less than cooperative with regard
to entry opportunities but there was plenty of movement for those
that target-shoot individual positions. None of the spreads were
available at the recommended prices on a simultaneous order basis.

Portfolio plays:

Banks and Brokerages led the spreads portfolio today on the heels
of a well-received rally in the bond market. Strong trends in the
levels of trading volume are also contributing to the upward bias
of online brokers. A senior analyst from Robertson Stephens said 
Ameritrade Holdings' (AMTD) daily transactions are reaching record 
volumes this quarter and a new upgrade was issued based on revised
earnings-per-share estimates. Shares of Ameritrade soared $3.12 to
$28 and E*Trade Group (EGRP) was close behind, climbing almost $2
after another incredible day of online trading volume. Technology
stocks continue to move higher even in the wake of the incredible
valuations and two of our best performers were in this category.
Network Associates (NETA) rose $2.62 after BancBoston Robertson
Stephens raised its investment rating on the company to a "buy."
Analyst John Powers said that traditional anti-virus products
which contribute more than 50% of revenues, are showing strength
in the fourth quarter. He expects the stock to trade in the $35 to
$40 range. Unisys (UIS) has quietly been on the move, and today
the stock price rose $1.12 to a recent high near $34 after 3Com
(COMS) announced a consulting alliance with the company to help
build and manage corporate networks. Both of our bullish spreads
are at maximum profit with the stock above $30.

Positive market breadth was one of the notable exceptions in the
rally today and many of our small-cap stocks rebounded during the
session. Echelon (ELON), Loral Space (LOR), Micron Electronics
(MUEI), ProxyMed (PILL), Silicon Graphics (SGI), Shop-At-Home
(SATH), 3dfx (TDFX) and Zoltek (ZOLT) all made favorable moves.  
Two of the issues that did not participate were Talk.com (TALK)
and Toys-R-Us (TOYS). Toys-R-Us continues to offer a profitable
exit even in light of the recent slump and the Talk.com position
can be closed for $2.12 credit; a $0.75 return on $1.38 invested.

United Airlines (UAL) led our long-term portfolio with a $2.25
gain after a group of major carriers increased travel fares in
select markets. The latest attempt to offset soaring fuel costs
is not as broad as the one near the end of November but it was
seen as a positive move by most analysts. Our bullish LEAP/CC's
positions on UAL are trading in positive territory and we expect
a favorable roll-out to January options next week. The majority
of other issues in this section suffered from profit-taking in
the wake of recent rallies and only three stocks ended positive.
Johnson & Johnson (JNJ), Motorola (MOT) and Sun Micro (SUNW) all
made small gains during the session.

Next Monday begins the final week of the last options expiration
before Y2K and we expect it to be very interesting. Many of our
long-term positions have already been rolled-forward to January
in anticipation of a small correction but we do have some moves
to complete before the deadline on Friday. Those of you with sold
(short) positions in calendar spreads might consider making the 
necessary adjustments while the volatility remains high, taking 
advantage of the excess premium in many of the January options
series. This is one of the few times that a majority of traders
have avoided the front-month options in favor of distant series
and it will be interesting to see if the contrarian theories are
supported by the outcome.

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


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

AIG - American International Group  $111.69   *** Up We Go? ***

American International Group is a holding company which through
its subsidiaries is primarily engaged in a range of insurance and
related activities and financial services in the U.S. and abroad.
AIG also engages in securities brokerage and consumer finance,
aircraft leasing and data processing. The company's activities
include both general and life insurance operations and they even
own a Ski Resort (Stone Mountain) in Vermont. AIG is the leading 
underwriter of commercial and industrial insurance in the U.S.
In particular, they have established a leading position in many
of the most specialized markets and they produce consistently
strong operating performances and conservative balance sheet
management.

Big news on Friday for the company as federal regulators granted
AIG permission to operate a federal savings bank. AIG is just the
latest in a string of insurance companies, securities firms and
other businesses outside the banking industry to get new federal
thrift charters in recent months. The changes came about after
Congress enacted sweeping new legislation rewriting the financial
services laws and allowing banks, insurance and securities firms
to merge and participate in competing industry products.

AIG intends to start with a full-service savings bank in Delaware
but that's only the beginning. After initial plans are in place,
a major expansion should occur in many of their core markets and
the growth possibilities are virtually unlimited.

Technically, AIG has exited a stage III top formation (over nine
months long) on improving technicals and should soon resume its
historical, long-term uptrend. Last month's consolidation appears
to be over as the chart is now increasingly bullish. Both of the
suggested positions are based on favorable option pricing.
 
PLAY (aggressive - bullish/debit spread):

BUY  CALL JAN-96  AYG-AV OI=363 A=$17.25
SELL CALL JAN-110 AIG-AB OI=191 B=$6.12
INITIAL NET DEBIT TARGET=$8.88 ROI(max)=68% B/E=$104.88

- or -

PLAY (aggressive - bullish/diagonal spread):

BUY  CALL JAN-104 AYG-AW OI=2243 A=$10.50
SELL CALL DEC-115 AIG-LC OI=3261 B=$1.00
INITIAL NET DEBIT TARGET=$9.00 TARGET ROI=22%

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

****

GERN - Geron Corporation  $13.00     *** New Discoveries? ***

Geron Corporation is a biopharmaceutical company exclusively
focused on discovering and developing therapeutic and diagnostic
products based upon common biological mechanisms associated with
cancer and other age-related diseases. The company focuses on
telomeres (which are structures at the ends of chromosomes) that
have demonstrated the characteristics of a molecular "clock" of
cellular aging, and telomerase, an enzyme which appears to stop
time and confers cellular immortality.

Geron made the news this week when the company said test-tube
studies demonstrated their unique chemicals used to block the
telomerase enzyme eliminated breast-cancer and prostate-cancer
cells. The data may support the company's earlier findings that 
oligonucleotide and other genetic means of blocking production
of the telomerase enzyme can cause death of immortalized cancer
cells. Geron has theorized that telomerase prevents that normal
and gradual cell-death process, effectively immortalizing cells
into a cancerous state, particularly since the enzyme has been
detected in more than 30 different types of cancer.

Geron traded as high as $20 earlier this week, well above the
previous 52-week high of $15 and volume has been incredible.
The stock price broke-out of a long term base and although the
current "gap-up" will probably be filled, solid support exists
above $11.50. Heavy accumulation over the last several months
suggests the issue also has institutional interest. It appears
the news has some merit as option traders swamped the pits with
heavy order flow during Tuesday's rally. We are going to pursue
a longer-term outlook with a bullish, limited-risk position.
The inflated premiums in the front-month options will help us
open the play at a small discount.

PLAY (aggressive - bullish/diagonal spread):

BUY  CALL MAR-12.50 GQD-CV OI=139  A=$2.31
SELL CALL DEC-15.00 GQD-LC OI=1483 B=$0.31
INITIAL NET DEBIT TARGET=$1.88 INITIAL TARGET ROI=32%

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

****

SWBT - Southwest Bancorp  $19.93     *** Technicals Only ***

Southwest Bank Corporation is a holding company for Southwest Bank
of Texas. The bank has a number of full-service facilities in the
Longhorn State, which provide both commercial and private banking 
services, including financial planning and investment management.
SWBT offers a full line of cash concentration, disbursement, and 
automated information reporting services. The individual branches
also utilize local customers to staff a business development board
that assists in developing or modifying products and services to
better meet patrons' needs.

A very unique situation with an issue that trades in a relatively
small range and the recent bullish movement. The current outlook
is certainly favorable but the question is how far can the stock
price move on any significant break-out. The downside risk appears
somewhat limited with near-term support at $17.50 and disparities
in option pricing will allow us to open the position at a discount.

PLAY (conservative - neutral/calendar spread):

BUY  CALL MAY-20 ZRQ-ED OI=14 A=$2.88
SELL CALL DEC-20 ZRQ-LD OI=60 B=$0.62
INITIAL NET DEBIT TARGET=$2.12 TARGET ROI=50%

The basic premise in a calendar spread is simple; time erodes
the value of the near-term option at a faster rate than it will
the far-term option.

It is generally best to establish this type of spread at least
2 - 3 months before the long option expires, capitalizing on the
ability to sell another option against the longer-term position.
That is the basic idea in this spread play; selling time value
in the options when they are overpriced (high implied volatility)
and buying it back (if necessary) when they return to intrinsic
value. Ideally, the spreader would like to have the stock finish
just below the sold strike when the near-term option expires. If
the short options are in-the-money at expiration, he will have
to buy them back to preserve the long-term position.

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


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

This week's candidates are probability-based debit straddles and
the basic guidelines for this type of play are relatively simple.
There are three rules we use to identify favorable conditions for
this type of straddle. First, the trader must select options that
are undervalued (cheap). Next, the underlying security must have
the potential to move (high or low) enough to make the straddle
profitable. Finally, the underlying stock should have a history
of multiple movements through a sufficient range in the required
amount of time to justify the overall risk/reward of the position.

Both of these issues are squarely between the strike prices and
rather than open the straddles with a directional bias (or use
ratio positions), we will simply buy the slightly ITM options for
each series.

****

JMED - Jones Pharmaceuticals  $38.56     *** On The Move! ***

Jones Pharmaceuticals manufactures, markets and distributes a wide
variety of specialty medical products under its own trademarks and
trade names. Their business strategy is to acquire a number of
specialty prescription pharmaceutical product lines or operations
that complement the marketing or distribution of existing product
lines and to develop and apply marketing initiatives to those new
products. A large part of their revenues are from thyroid-disorder
drugs Tapazole, Levoxyl, Triostat, and Cytomel. Its other products 
include Thrombin-JMI; controls blood loss during major surgery,
the anesthetic Brevital Sodium; and veterinary pharmaceuticals
Soloxine, Tussigon, and Pancrezyme. 

A leading industry analyst from Robertson Stephens reiterated his
"Strong Buy" rating on the company last month based on increasing
prescription orders for Levoxyl (up 21%), Tapazole (up 11%) and
Cytomel (up 33%). He also reported that organic growth continues
to be strong and JMED is undervalued relative to specialty
pharmaceutical companies.


PLAY (conservative - neutral/debit straddle):

BUY  CALL MAR-37.50 JQM-CU OI=125 A=$4.12
BUY  PUT  MAR-40.00 JQM-OH OI=0   A=$4.00
INITIAL NET DEBIT TARGET=$7.88-$8.00
TARGET ROI=50% SL=$4.75

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

****

CBR - Ciber  $27.29     *** Roller Coaster ***

Ciber is a leading provider of information technology consulting, 
including application software staff supplementation, management 
consulting solutions for business/IT problems, package software 
implementation services, system life-cycle projects, millennium
date change conversion services and networking procurement and
engineering services.

Lots of reports and announcements concerning new agreements and
service contracts but the unique characteristic of this issue
is the relatively continuos motion in which it moves. It appears
the stock price has never traded in a range for more than a few
weeks, and it changes direction significantly almost once each
month. A strange candidate for sure!

PLAY (conservative - neutral/debit straddle):

BUY  CALL MAY-25 CBR-EE OI=410 A=$5.25
BUY  PUT  MAY-30 CBR-QF OI=0   A=$5.12
INITIAL NET DEBIT TARGET=$10.00-$10.12
TARGET ROI=50% SL=$6.00

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

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

Announcing the cheapest renewal rate available! $24.91 mo*

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


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

Technical Analysis: Interpreting Statistical Trends...


The recent anemic appearance of the advance-decline figures is
beginning to affect the opinions of all but the most optimistic
analysts. While many experts would suggest the market can climb
higher regardless of the quality of breadth, it is important to
understand when historically important gauges are confirming a
subtle change in direction or signaling a major reversal. The
advance-decline numbers have long been used to help distinguish
market tops early in their development and give advance warning
to upcoming bearish cycles.

There are several ways to use a statistical summary of advances
and declines. Weekly figures offer a perspective for long-term
investment analysis while daily numbers can be charted to indicate
reversals of a short-term nature, suitable for trend-trading or
scalping. The methods of A/D interpretation are basic to technical
analysis and the results are accurate and easy to understand. One
of the most common evaluations is based on the divergence of the
A/D line and popular market indices. Another successful indication
involves the use of long-term moving averages of the daily numbers.

A well-known axiom suggests that a trend in motion can be expected
to continue until it reverses. Using a long-term moving average of
the A/D statistics can help identify this trend and recognize the
true momentum of the market. Interpreting this type of indicator
is similar to other momentum-based techniques in that the primary
signal is a crossing (in either direction) of the median line. A
move from one area to the other confirms a trend in that direction
and the longer the period that the gauge has been either above or
below the median, the more meaningful the signal when it occurs.
The most significant trends are those indicated when a move has
come from deep in positive or negative territory. In a bullish
market, this indicator will usually achieve new highs before any
of the major indices and a preemptory sell signal is identified
by a sharp drop from the peak reading while it's still in positive
territory. The most significant exit signals occur when the gauge
has been in the upper region for extended periods and reached the
highest extreme before finally issuing a bearish signal.

This unique indicator can help identify the beginning of a bearish
market well before the future trend surfaces and when utilized on
a regular basis, it can provide added insight into the strength
and character of the current cycle. The ability to recognize
fundamental changes in the market outlook is a requirement for
successful investing. To profit on a consistent basis, one must
become familiar with the most common methods of technical analysis
and apply this knowledge as a practical part of his (or her) daily
trading strategy.


SUMMARY OF PREVIOUS PICKS

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

EMIS   16.88  19.88   DEC  15.00  3.38  *$  1.50  11.1%  16.1%
FSII   10.44  10.25   DEC  10.00  1.81  *$  1.37  15.9%  13.8%
ITIG   10.00  18.50   DEC  10.00  1.25  *$  1.25  14.3%   8.9%
MESG   17.63  16.91   DEC  15.00  3.63  *$  1.00   7.1%   7.8%
ALGO   15.25  14.56   DEC  12.50  3.75  *$  1.00   8.7%   7.6%
ONEM   19.94  17.69   DEC  17.50  3.25  *$  0.81   4.9%   7.0%
WSTL    8.00  10.75   DEC   7.50  1.06  *$  0.56   8.1%   7.0%
BTOB   18.38  17.69   DEC  15.00  4.63  *$  1.25   9.1%   6.6%
SATH   12.44  12.94   DEC  10.00  3.00  *$  0.56   5.9%   6.4%
MESG   17.88  16.91   DEC  15.00  3.50  *$  0.62   4.3%   6.2%
AND     8.38   9.38   DEC   7.50  1.38  *$  0.50   7.1%   6.2%
CYCH    8.38  10.50   DEC   7.50  1.44  *$  0.56   8.1%   5.8%
FLAS   10.75   7.63   DEC   7.50  3.63  *$  0.38   5.3%   5.8%
AWEB   12.25  12.13   DEC  10.00  2.63  *$  0.38   4.0%   5.7%
CRUS   13.94  13.06   DEC  12.50  2.19  *$  0.75   6.4%   5.5%
PILT   18.50  17.75   DEC  15.00  4.38  *$  0.88   6.2%   5.4%
RRRR   14.75  40.75   DEC  12.50  3.25  *$  1.00   8.7%   5.4%
WAVX   13.19  14.75   DEC  10.00  3.88  *$  0.69   7.4%   5.4%
COOL   14.50  12.50   DEC  12.50  2.44   $  0.44   3.6%   5.3%
DRIV   22.75  39.00   DEC  20.00  4.25  *$  1.50   8.1%   5.0%
DIGE   14.44  18.44   DEC  12.50  2.75  *$  0.81   6.9%   5.0%
PILT   15.94  17.75   DEC  12.50  4.25  *$  0.81   6.9%   5.0%
PRGY   25.38  23.75   DEC  22.50  4.50  *$  1.62   7.8%   4.8%
LTXX   16.00  17.50   DEC  15.00  2.06  *$  1.06   7.6%   4.7%
IVIL   28.38  25.06   DEC  22.50  6.75  *$  0.87   4.0%   4.4%
TOPP    9.81  11.81   DEC   7.50  2.75  *$  0.44   6.2%   3.9%
DGII   13.56  16.00   DEC  12.50  1.69  *$  0.63   5.3%   3.8%
JDAS   11.63  18.75   DEC  10.00  2.13  *$  0.50   5.3%   3.8%
ICGX   20.50  17.06   DEC  17.50  3.88   $  0.44   2.6%   2.9%
MOGN   13.44  11.38   DEC  12.50  1.63   $ -0.43  -3.6%   0.0%
VUSA   14.38  11.25   DEC  12.50  2.63   $ -0.50  -4.3%   0.0%
BEAM   20.13  15.31   DEC  17.50  3.38   $ -1.44  -8.6%   0.0%

FSII   10.69  10.25   JAN  10.00  1.94  *$  1.25  14.3%   8.9%
VUSA   12.50  11.25   JAN  10.00  3.63  *$  1.13  12.7%   7.9%
ONHN   10.25  11.25   JAN   7.50  3.38  *$  0.63   9.2%   5.7%
BIDS    5.13   4.50   JAN   5.00  1.00   $  0.37   9.0%   5.6%
PILT   20.25  17.75   JAN  15.00  6.38  *$  1.13   8.1%   5.1%
RNBO   20.00  20.56   JAN  15.00  6.13  *$  1.13   8.1%   5.1%
SATH   12.69  12.94   JAN  10.00  3.38  *$  0.69   7.4%   4.0%
MESG   16.63  16.91   JAN  12.50  4.88  *$  0.75   6.4%   4.0%
BNYN   15.81  15.88   JAN  12.50  4.13  *$  0.82   7.0%   3.8%
BEAM   20.38  15.31   JAN  17.50  4.13   $ -0.94  -5.8%   0.0%

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

Comments/Observations on Open Positions:

Cyberian Outpost (COOL) did offer a profitable exit if you chose
to take it, and a JAN-$10 "roll-out/down" is available. Monitor
Mgi Pharma (MOGN) while it tests support at $11.00. Value America
(VUSA) appears to be testing its recent low (support) near $11.00. 
Summit (BEAM) has taken collateral damage on the VISX news (lost
their lawsuit). Evaluate your risk-reward and the possible effect
of several upgrades this week.

December Positions Closed:  Able Telecom (ABTE) at break-even.


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

AGY    16.88  JAN 15.00  AGY AC  2.75  248   14.13   6.2%   6.2%
AWEB   12.13  JAN 10.00  UWB AB  3.00  19     9.13   9.5%   9.5%
CBIZ   10.31  JAN  7.50  SSQ AU  3.63  453    6.68  12.3%  12.3%
EMIS   19.88  JAN 17.50  MTQ AW  4.50  110   15.38  13.8%  13.8%
LGND   11.69  JAN 10.00  LQP AB  2.75  74     8.94  11.9%  11.9%
MCRE    7.56  JAN  7.50  MQZ AU  1.31  113    6.25  20.0%  20.0%
SCOC   17.88  JAN 15.00  UQS AC  4.13  492   13.75   9.1%   9.1%
TTWO   16.31  JAN 12.50  TUO AV  4.63  255   11.68   7.0%   7.0%
WSTL   10.75  JAN 10.00  QLW AB  1.88  84     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

MCRE    7.56  JAN  7.50  MQZ AU  1.31  113    6.25  20.0%  20.0%
EMIS   19.88  JAN 17.50  MTQ AW  4.50  110   15.38  13.8%  13.8%
WSTL   10.75  JAN 10.00  QLW AB  1.88  84     8.87  12.7%  12.7%
CBIZ   10.31  JAN  7.50  SSQ AU  3.63  453    6.68  12.3%  12.3%
LGND   11.69  JAN 10.00  LQP AB  2.75  74     8.94  11.9%  11.9%
AWEB   12.13  JAN 10.00  UWB AB  3.00  19     9.13   9.5%   9.5%
SCOC   17.88  JAN 15.00  UQS AC  4.13  492   13.75   9.1%   9.1%
TTWO   16.31  JAN 12.50  TUO AV  4.63  255   11.68   7.0%   7.0%
AGY    16.88  JAN 15.00  AGY AC  2.75  248   14.13   6.2%   6.2%


Company Descriptions

AGY - Argosy Gaming Co.  $16.88  *** Buyout Speculation ***

Argosy Gaming is engaged in the business of providing casino style
gaming and related entertainment to the public and, through its 
subsidiaries or joint ventures, owns and operates several casinos,
hotels, and riverboats. Argosy reported record earnings, revenues 
and cash flows for its third quarter and a completion of their
recent refinancing. The downgrade by Prudential had little effect 
(they had upgraded Argosy a month before) as the gaming sector is
ripe with merger/take-over rumors. The heavy volume supporting
Argosy's climb above a four month consolidation is a bullish sign.
We favor a cost basis within support as investors speculate on the 
potential merger partners.

JAN 15.00 AGY AC Bid=2.75 OI=248 CB=14.13 RC=6.2% RNC=6.2%

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

****

AWEB - Autoweb.com  $12.13   *** Internet Commerce *** 

Autoweb.com is the leading consumer automotive Internet service, 
guiding consumers through every stage of vehicle ownership. From 
research and buying, to enjoying, maintaining and selling, AWEB
delivers what consumers want. Autoweb.com works with over 5,000 
Member Dealers and other commerce partners to provide the best 
experience at every stage of vehicle ownership. Autoweb appears
ready to emerge from a four month base as the current rally has
heavy volume support. On Thursday, Fletcher and Faraday added 
Autoweb.com to their "buy" list. Favorable speculation with a
cost basis near technical support.

JAN 10.00 UWB AB Bid=3.00 OI=19 CB=9.13 RC=9.5% RNC=9.5%

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

****

CBIZ - Century Business Services  $10.31   *** Buyout/Merger? ***

Century is a diversified company which provides professional
out-sourced business services to small/medium-sized companies,
as well as individuals, government entities, and not-for-profit 
enterprises predominantly throughout the US. In October, Century 
enlisted Merrill Lynch to explore strategic alternatives
including a merger, or selling the company. The recent heavy
volume suggests something is afoot. We favor a conservative
position well below technical support. Requires due-diligence.

JAN 7.50 SSQ AU Bid=3.63 OI=453 CB=6.68 RC=12.3% RNC=12.3%

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

****

EMIS - Emisphere Technologies  $19.88   *** Stage II ***

Emisphere is a biopharmaceutical company specializing in the oral 
delivery of therapeutic macromolecules and other compounds that 
are not currently deliverable by oral means. The Company has two 
drugs in human clinical trials using its unique carrier technology
and has strategic alliances and ongoing feasibility studies with 
several pharmaceutical and biotechnology companies, including 
Novartis and Eli Lilly. EMIS's most clinically advanced product is
oral heparin which is designed to capture and expand the existing
$2 billion coronary anti-thrombosis market. Emisphere recently
crossed above the neckline of a long term double-bottom as it
continues its stage II climb. The sold strike price is at support
as Emisphere should consolidate after the recent 52-week high.

JAN 17.50 MTQ AW Bid=4.50 OI=110 CB=15.38 RC=13.8% RNC=13.8%

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

****

LGND - Ligand Pharmaceuticals  $11.69   *** News On Monday ***

Ligand Pharmaceuticals discovers, develops and markets new drugs 
that address critical unmet medical needs of patients in the areas
of cancer, skin diseases, and men's and women's hormone-related 
diseases, as well as osteoporosis, metabolic disorders and 
cardiovascular and inflammatory diseases. A very speculative play
as the FDA panel will begin scrutinizing Ligand's Targretin on
Monday for treating a rare form of cancer called cutaneous T-cell 
lymphoma (CTCL). Trading may be halted until the news is released
which could make this position unavailable. Research required.

JAN 10.00 LQP AB Bid=2.75 OI=74 CB=8.94 RC=11.9% RNC=11.9%

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

****

MCRE - MetaCreations  $7.56   *** New Products ***

MetaCreations designs, develops, publishes, markets and supports 
visual computing software tools for the creation, editing and 
manipulation of computer graphic images and digital art. MCRE
is focused on developing and marketing 2D and 3D visualization 
software for the World Wide Web and commercial graphic artists.
The company recently rolled out a new broadcast licensing model 
for MetaStream(TM) that they expect will generate significant 
recurring revenue in the year 2000. The chart is showing signs
of improvement as MetaCreations recently exited a year long base
in a favorable reaction to positive earnings and new products.

JAN 7.50 MQZ AU Bid=1.31 OI=113 CB=6.25 RC=20.0% RNC=20.0%

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

****

SCOC - Santa Cruz Operation  $17.88   *** Up, Up, and Away ***

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 key elements are powerful, scaleable,
and reliable servers; and support for a wide range of clients. The
company also offers an application broker for network computing. A
nice bullish chart with excellent support near the cost-basis.

JAN 15.00 UQS AC Bid=4.13 OI=492 CB=13.75 RC=9.1% RNC=9.1%

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

****

TTWO - Take-Two Interactive Software  $16.31  *** New High! ***

Take-Two is an integrated global developer, marketer, distributor,
and publisher of interactive entertainment software games and 
accessories for the PC, Sony PlayStation, Nintendo 64, Nintendo 
Game Boy Color and the Sega Dreamcast. Take-Two has a plethora of
news on new game releases, game sites, strong sales, etc. The
effect on the chart is apparent as the stock is in a strong stage
II climb supported by heavy volume. With earnings due on December
16, we favor a cost basis near the top of the recent range at $10.

JAN 12.50 TUO AV Bid=4.63 OI=255 CB=11.68 RC=7.0% RNC=7.0%

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

****

WSTL - Westell Technologies  $10.75   *** DSL Technology ***

Westell Technologies is a holding company for Westell, Inc. and 
Conference Plus, Inc. WSTL manufactures and licenses DSL systems
and value added CPE, and manufactures telecommunications access
products. Conference Plus is an Applications Service Provider 
managing and hosting audio, video, IP conferencing and support 
services. Westell reported a significant rise in revenues last
quarter. A recent "buy" recommendation by Warburg Dillon Read was
followed by Robinson Humphrey's upgrade. This led to a nice price
jump in November (unless you were short!), which moved WSTL above
its recent trading range. The technical picture continues to
improve with price support now at our cost basis.

JAN 10.00 QLW AB Bid=1.88 OI=84 CB=8.87 RC=12.7% RNC=12.7%

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



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

Successful Stock Ownership: Selling For Profit...

Our recent discussion on the art of selling has generated a flood
of suggestions and techniques. A number of entry and exit systems
were generously contributed by our subscribers and this week's
article (from one of the readers) summarizes the most commonly
used method for position management; Sell-Stops.

Learning to correctly manage portfolio positions; maximizing gains
while limiting losses, is one of the most important aspects of
successful investing. There is a good reason why the majority of
investors lose money in the market. Most of them have yet to learn
the #1 secret of profitable trading; the market will do whatever
is necessary to prevent the uneducated masses from making money
while consistently rewarding the astute professional minority.

The first thing an investor should realize is that they must never
hold any position without a protective Sell-Stop. The majority of
market professionals use protective trailing stops but the retail
trader is far less proficient in this practice. Using sell-stops
eliminates the risk of emotional or reaction-based judgments in
difficult situations and removes fear, hope and greed from the
entire equation. The consistent use of this technique provides a
mechanical and disciplined method for achieving profit. Allowing
the market to make the exit decision is much more precise than
relying on our complex human intuition.

The proper placement of sell-stops requires a thorough knowledge
of chart analysis and basic market trends or cycles. The primary
price support areas and short-term (18 - 40 dma) moving averages
are the main indicators that determine the initial target exits.  
After a trend had been established with the stock price above the
moving average, the sell-stop is simply adjusted higher with each 
successive rally. As long as the stock price remains above its
rising moving average, the trend is intact. As the moving average
begins to level, the effects of short-term weakness become more
apparent and the consolidation period begins. As the issue enters
this high-risk area, the complexity of decision-making increases 
exponentially. Rather than try to discern the differences between
a healthy dip and a full-scale reversal, a successful trader will
focus on the positioning of the sell-stop. A quick review of the
trend-lines and regression channels will provide the necessary
information for a timely and accurate adjustment. In this manner,
the potential for profit is maintained without the possibility of
losing previous gains.   

Even with the most successful positions, the time to take profits
will eventually arrive. The use of disciplined techniques can help
one avoid the confusion that occurs when hard-earned money is at
stake and make the whole experience less intimidating, possibly
even enjoyable. Remember, taking profits is a good thing!


                      *** 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

MAIL   21.88  25.63   DEC  17.50  0.56  *$  0.56  11.3%  24.6%
ELON   12.50  13.75   DEC  10.00  0.31  *$  0.31  11.0%  24.0%
HRBC   18.69  24.63   DEC  15.00  0.38  *$  0.38   9.1%  19.8%
FLAS   10.06   7.63   DEC   7.50  0.75  *$  0.75  27.2%  19.7%
NSPK   18.56  20.50   DEC  15.00  0.38  *$  0.38   9.0%  19.5%
IVIL   27.25  25.06   DEC  22.50  0.94  *$  0.94  13.3%  19.2%
SCOC   14.56  17.88   DEC  12.50  0.31  *$  0.31   7.6%  16.5%
PILT   20.25  17.75   DEC  15.00  0.31  *$  0.31   7.1%  15.4%
HEPH   16.50  12.50   DEC  12.50  0.38   $  0.38  10.3%  15.0%
ELIX   15.13  15.06   DEC  12.50  0.25  *$  0.25   6.8%  14.8%
NSPK   16.38  20.50   DEC  12.50  0.50  *$  0.50  13.2%  14.4%
RNBO   18.13  20.56   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  16.00   DEC  12.50  0.50  *$  0.50  12.3%  13.3%
ZOMX   36.06  44.63   DEC  30.00  0.81  *$  0.81   8.8%  12.8%
PILT   21.31  17.75   DEC  15.00  0.56  *$  0.56  11.6%  12.6%
NPIX   37.50  46.00   DEC  22.50  0.69  *$  0.69   8.4%  12.2%
MMWW   33.00  37.31   DEC  25.00  0.38  *$  0.38   5.4%  11.8%
NSPK   15.50  20.50   DEC  12.50  0.50  *$  0.50  13.5%  11.7%
BNYN   12.75  15.88   DEC  10.00  0.38  *$  0.38  13.0%  11.3%
MSGI   16.94  15.06   DEC  12.50  0.50  *$  0.50  12.9%  11.2%
COOL    9.56  12.50   DEC   7.50  0.31  *$  0.31  14.0%  10.1%
ITVU   64.50  74.25   DEC  45.00  1.25  *$  1.25   8.8%   9.6%
NVDA   32.00  37.94   DEC  22.50  0.75  *$  0.75  10.5%   9.1%
MLTX   16.19  35.75   DEC  12.50  0.50  *$  0.50  13.4%   8.3%
XCED   31.63  39.00   DEC  22.50  0.63  *$  0.63   9.1%   7.9%
AMTD   28.19  28.00   DEC  20.00  0.44  *$  0.44   7.2%   7.9%
MTSN   15.56  15.63   DEC  12.50  0.31  *$  0.31   8.9%   7.8%
IONA   21.38  35.13   DEC  15.00  0.56  *$  0.56  11.6%   7.2%
TUTS   39.69  42.50   DEC  30.00  0.81  *$  0.81   9.3%   6.7%
CMDX   65.19  92.44   DEC  40.00  0.63  *$  0.63   4.6%   6.7%
MRVC   31.00  42.44   DEC  22.50  0.38  *$  0.38   5.8%   6.3%
PDLI   40.75  49.00   DEC  35.00  0.44  *$  0.44   4.0%   5.8%
NPIX   37.44  46.00   DEC  20.00  0.50  *$  0.50   6.3%   5.4%
LTXX   18.56  17.50   DEC  15.00  0.31  *$  0.31   7.4%   5.4%
EGGS   24.00  14.31   DEC  17.50  0.63   $ -2.56 -47.1%   0.0%
CTIX   20.13  12.50   DEC  15.00  0.38   $ -2.12 -48.1%   0.0%

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

Comments/Observations on Open Positions:

Investors are exiting Onsale in droves after the merger with
Egghead.Com (EGGS), and the symbol change from ONSL to EGGSD and
back to EGGS just added to the confusion. You may consider
closing this position if you are not prepared to own the issue.
Cheap Tickets (CTIX) released an earnings warning and suffered 
quick and harsh punishement: also a candidate for an early exit.

Positions Closed: Cdnow (CDNW).


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

MAIL   25.75  DEC 20.00  UMA XD  0.31  723   19.69   5.7%
        
AND     9.25  JAN  7.50  AND MU  0.44  10     7.06  18.4%
CCUR   17.75  JAN 12.50  URC MV  0.50  40    12.00  12.3%
EGRP   35.56  JAN 25.00  QGR ME  0.56  2896  24.44   7.3%
INSO   32.13  JAN 20.00  IJQ MD  0.75  100   19.25  10.5%
MMWW   37.38  JAN 22.50  EQB MX  0.50  0     22.00   6.3%
PRRC   23.56  JAN 17.50  MQX MW  0.56  10    16.94  10.6%
SATH   12.94  JAN 10.00  SQR MB  0.56  70     9.44  17.8%
SCOC   17.88  JAN 12.50  UQS MV  0.44  40    12.06  11.0%


Sequenced by ROI  

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

MAIL   25.75  DEC 20.00  UMA XD  0.31  723   19.69   5.7%
        
AND     9.25  JAN  7.50  AND MU  0.44  10     7.06  18.4%
SATH   12.94  JAN 10.00  SQR MB  0.56  70     9.44  17.8%
CCUR   17.75  JAN 12.50  URC MV  0.50  40    12.00  12.3%
SCOC   17.88  JAN 12.50  UQS MV  0.44  40    12.06  11.0%
PRRC   23.56  JAN 17.50  MQX MW  0.56  10    16.94  10.6%
INSO   32.13  JAN 20.00  IJQ MD  0.75  100   19.25  10.5%
EGRP   35.56  JAN 25.00  QGR ME  0.56  2896  24.44   7.3%
MMWW   37.38  JAN 22.50  EQB MX  0.50  0     22.00   6.3%


Company Descriptions

AND - Andrea Electronics  $9.25   *** A New Range? ***

Andrea Electronics Corporation has been engaged in the design and
development of electronic audio systems, intercommunications and
related equipment. The company's products include its traditional 
systems for military and industrial applications and its newer
Andrea Anti-Noise products for voice-activated computing, telecom
and computer/Internet communications. Andrea Electronics' DFTA 
technology will be now used in VCON telecom's MediaConnect system
and other agreements are expected in the coming months. The break
above recent resistance at $8.50 could signal the transition to a
new trading range.

JAN  7.50  AND MU  Bid=0.44  OI=10  7.06  ROI=18.4%

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

****

CCUR - Concurrent Computer  $17.75  *** Stage II ***

Concurrent Computer is a supplier of high-performance systems,
software, and services for the real-time and video-on-demand
markets. A real-time system is one designed to acquire, process,
store, and display large amounts of rapidly changing information
in real time that is, with microsecond response as changes occur.
Its systems provide real-time applications for gaming, simulation,
engine test, air traffic control, weather analysis, interactive
video-on-demand, multimedia, and mission critical data services
such as financial market information.  Acquisitions and alliances
have strengthened Concurrent's video-on-demand market. A stage II
stock that has resumed its up-trend after a normal retracement.

JAN  12.50  URC MV  Bid=0.50  OI=40  CB=12.00  ROI=12.3%

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

****

EGRP - E*Trade Group  $35.56   *** Record Online Volume ***

E*Trade Group is a leading provider of cost-effective, secure
online discount brokerage services. It offers automated order
placement, portfolio tracking and related market information,
news and other information services through the Internet, direct
modem access, telephone and interactive television. Wall Street
expects daily trading volumes for online brokers to grow 20%-30%
in the fourth quarter and the number of online accounts may
escalate to 25 million by the year 2003. Analysts are revising
their forecasts upwards for sequential transaction growth among
online brokerages and that should boost the share value of these
issues.

JAN  25.00  QGR ME  Bid=0.56  OI=2896  CB=24.44  ROI=7.3%

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

****

INSO - Inso  $32.13     *** Technicals Only ***

Inso is a supplier of various software solutions for sharing and
publishing electronic information. The company provides software
for the distribution of all forms of electronic information, from
simple memos to complex technical manuals in environments ranging
from desktop computers to the Internet. Inso's Specialties are:
Electronic Publishing Solutions, Dynamic Document Exchange, and
Lexical and Linguistic Products. Once last opportunity to enter
the position as the issue moves to a two-year high. A reasonable
correction would bring the stock price back to the cost basis.

JAN  20.00  IJQ MD  Bid=0.75  OI=100  CB=19.25  ROI=10.5%

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

****

MAIL - Mail.com  $25.75   *** Short-Term Speculation ***

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. This is a
one-week play to own the stock below recent technical support at
$22.00 (or get paid for trying).

DEC  20.00  UMA XD  Bid=0.31  OI=723  CB=19.69  ROI=5.7%

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

****

MMWW - Metamor Worldwide  $37.38   *** Xpedior Spin-off ***

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 MMWW acquired new IT services. Now
Metamor is spinning off 20% of Xpedior and the remainder will go
to MMWW shareholders. One share of Metamor will get you almost 1.5
shares of Xpedior. The new company is profitable and target values
reach $60 a share. The transaction is expected to occur near 12/15.

JAN  22.50  EQB MX  Bid=0.50  OI=0  CB=22.00  ROI=6.3%

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

****

PRRC - Precision Response  $23.56   *** Up, Up and Away! ***

Precision Response answers the phone for its clients, providing
primarily inbound telephone services such as the taking of sales
orders, service requests, and customer questions and complaints.
The company's call management and database software, CCPro, lets
clients monitor and adjust particular service programs while they
are in progress. Precision Response also derives a small portion
of its revenue from outbound tele-services. The recent deal with
Priceline.com (PCLN) and the big jump in November has put this
company in the limelight. Bullish brokerage estimates and a clean
break to a new all-time high suggest a favorable future.

JAN  17.50  MQX MW  Bid=0.56  OI=10  CB=16.94  ROI=10.6%

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

****

SATH - Shop-At-Home  $12.94   *** Seasonal Sales ***

SATH sells specialty consumer products, primarily collectibles, 
through interactive electronic media including broadcast, cable 
and satellite television and, increasingly, over the Internet. 
Shop-At-Home Network reaches over 56 million unique cable and 
satellite households and is the nation's 15th largest television 
broadcaster. Shop At Home reported record revenues this quarter
and recently announced a new weekday sales record. Lots of news
on collectibles.com, and the new website appears to be drawing
the interest of investors. The technical picture is bullish and
Shop-At-Home has moved above a recent consolidation area. Once
again, we favor a cost-basis well below the technical support.

JAN  10.00  SQR MB  Bid=0.56  OI=70  CB=9.44  ROI=17.8%

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

****

SCOC - Santa Cruz Operation  $17.88   *** Own This One! ***

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 key elements are powerful, scaleable,
and reliable servers; and support for a wide range of clients. The
company also offers an application broker for network computing. A
nice bullish chart with excellent support above the cost-basis.

JAN  12.50  UQS MV  Bid=0.44  OI=40  CB=12.06  ROI=11.0%

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

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