Option Investor

Daily Newsletter, Sunday, 12/19/1999

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The Option Investor Newsletter            Sunday  12-19-99  1 of 5
Copyright 1999, All rights reserved. 
Redistribution in any form strictly prohibited.

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

Entire newsletter best viewed in COURIER 10 font for alignment
        WE 12-17         WE 12-10         WE 12-03        WE 11-26
DOW     11257.43 + 32.73 11224.70 - 61.48 11286.18 +297.27 - 14.98
Nasdaq   3753.06 +132.82  3620.24 + 99.61  3520.63 + 72.82 + 78.56
S&P-100   773.93 + 10.44   763.49 -  3.99   767.48 + 13.91 +  4.27
S&P-500  1421.05 +  4.01  1417.04 - 16.26  1433.30 + 16.68 -  5.38
RUT       466.21 -   .50   466.71 +  2.13   464.58 +  5.64 -  2.33
TRAN     2918.42 + 43.48  2874.94 - 53.86  2928.80 + 19.64 - 67.34
VIX        23.01 +  2.09    20.92 +   .10    20.82 -  2.13 +  3.32
Put/Call     .43              .45              .49             .42

Triple Witch Puts Spell on Markets

The triple witch options expiration on Friday was credited with
putting a volatility spell on the markets. After gapping open 
over +80 points to almost 3800 the Nasdaq ran in place until the
Dow caught up after lunch. About 1:30 the Dow started climbing
on the strength of a financial upgrade to JPM and soared to a
new intraday high of 11383 dragging the Nasdaq along for the ride.
About 2:30 both indexes topped out and support started thinning.
The advance/decline line turned negative on the Nasdaq and the
race to the exits began. What had been euphoria at new highs for
both indexes turned to worry as each bled points faster the closer
we got to the closing bell. Not only could the Dow not hold the
intraday highs but fell back under its previous record closing 
high as well. A sure double record close evaporated in an avalanche 
of volume. The NYSE set two volume records today. The heaviest 
volume day ever with 1.3 bln shares and four days in a row with 
volume over 1 bln shares. After being up +100 at 2:45 the Dow 
barely managed to close positive +12 points. The Nasdaq lost 
over half of its gains to close +38. Friday was expected to be 
the last major volume trading day of the year as many funds went 
into lock down for Y2K. With options expiring volume was high as 
traders squared positions and moved to the sidelines, some for
the year.




The fear of the Fed meeting on Tuesday has prompted many traders
to simply step aside for the next week and await a possible Santa
Claus rally the following week. Will they or won't they, change the
bias, not the rates. The debate is not over a possible rate hike but
on how the Fed will move on the bias. With many analysts complaining
about how the Fed handles the bias statements and the different
views of what they mean, the Fed may change the way they express
their views. However they say it the outcome is still the same.
Traders will worry and volatility will reign. This uncertainty was
seen with the run for the exits on Friday. The bonds held their 
ground Friday with 6.38% yields.

You would think with four one-billion+ share days in one week the 
Dow would have made some significant gains. This was not the case 
as the index only managed to add +32 points for the week. The 
broader market attempted to rally but the sellers were out in 
force. The very big caps were the only NYSE stocks to post gains. 
The same is true on the Nasdaq as the big caps continued to rise 
but the smaller stocks lagged. Liquidity is the key. With billions 
continuing to flow into funds there is just no safe small caps in
which to put the money to work before Y2K. Smaller companies are 
deemed to be risks and big caps are assumed to have the problem 
under control. If things go wrong, funds cannot move out of the 
small caps fast enough without impacting the price substantially. 
This flight to the very large caps is likely to continue until 
Y2K. Adding to this trend is the year end window dressing as 
funds want to show the big safe names in their portfolio in the 
year end statements. 

The Nasdaq has now exceeded 70% gains for the year and ranks as
the largest gain ever. Previous high years were 1991 +56.84%,
1995 +30.9% and 1998 +39.6%. Tech valuations are now the highest
since 1983 and are likely to adjust in January. 

The housing starts came in much lower than expected this morning
with a -2.3% drop. Analysts expected a +1.4% gain. This shows
the Fed interest rate hikes in action as increased costs of home
ownership slow the demand. This was the lowest level since August.
The housing permits however rose more than expected which point
to a future increase in housing starts. The economy is still 
cooking along at a +5% rate and that is more than the Fed will

The big turnaround today came from JP Morgan. Earlier in the 
day a Merrill Lynch analyst cut their earnings estimates for 
JP Morgan and JPM dropped over -$5. Later in the day after
speaking with JPM again the same analyst retracted her comments
and JPM rebounded to positive territory taking the Dow with it.
Another Dow component, GE, made several high profile announcements
including a 3:1 stock split, an increase of +17% in their dividend
and an increase in their share buyback program of $5 billion.
The triple witch of the three announcements launched the Dow
into record territory. Another Dow component, MSFT, finished the
week up +$23 or almost +100 Dow points. Remember, the Dow was
only up +32 for the week yet MSFT contributed over +100. Yes,
the Dow was technically up for the week, but was it really?
It looks like MSFT was up helped by INTC +$10 (+50 Dow), HD
+10 (+50 Dow) and DD +10 (+50 Dow).  After checking there were 
only eight Dow stocks up for the week, 2 flat and 20 down. Four
Dow stocks MSFT, INTC, HD and DD accounted for almost +250 points.
If it were not for three of the four new stocks the Dow would 
have been down substantially. Think about it. Was the market
up or just four stocks? 

The liquidity driven market is about to get another boost. 
Year end bonuses for most people in the financial sector
typically go directly into the market. With the hundreds of
thousands of newly rich from the Internet boom their big year
end bonuses are also going back into the market. The funds
are faced with receiving millions of dollars every day and
nothing to do with it. The cash buildup over the next two
weeks will be unprecedented and the end of year retirement
contributions will be the largest ever. The cash flood will
make it impossible for the market to mount a serious pull 
back anytime soon.

The coming week should be a week for family, shopping, parties
and friends. It should not be looked on as a great trading
opportunity. The Fed meeting on Tuesday will impact trading
on Monday and Tuesday. Wednesday is a tossup and low volume
on Thursday will make it a yawner. If you are going to open
new positions the best targets should be the very big caps.
Historically the market is up the week after Christmas but
the Y2K event could blunt that rally depending on the negative
hype in the news. This would be a good week to wait for the
bus. Bus? If you want to go somewhere on the bus you probably
would not simply hop on the first bus that came along. You
would wait for the one with your route on the header. Would
you get on a bus going to a different stop simply because
you were impatient or tired of waiting? Of course not! You
would wait as long as necessary for the right bus to come
along. This week would be a good week to wait for the right
bus. Trading just because the market is open is a good way
to lose money. There are literally hundreds of good plays
setting up for a post Christmas run. Spend your time 
analyzing the prospects and narrowing your targets to
only three or four. Decide what your entry point will be and
how you are going to scale into the position. I am going to
place some ridiculous target shooting orders on several stocks
I would like to play the week after Christmas. If I get 
filled this week, great! If not, I did not lose any money
and I can still buy them after Christmas. We are probably
going to get one more good rally into January and then some
instability as we see how Y2K impacted fourth quarter profits.
Plan your trades to capitalize on this rally and then be
ready to take profits. 

Have a safe week in the market. Don't buy the first dip.
Plan for the January rally and execute your plan. 

Jim Brown

Reminder for our male readers: There are only three days 
left before you have to shop for Christmas. I have heard 
that some stores will actually take money from males, 
without a spouse or girlfriend present, before Christmas
Eve but I have yet to prove this theory.

Y2K Renewal Offer!!!

Announcing the cheapest renewal rate available! $24.91 mo*
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Long time readers know that each December we offer our 
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don't delay. Click here for more info.


QCOM - DEC-390 Calls, Naked Dec-400 Puts 


Last week the chart on top was predicting a blowout soon. I
was long the Dec-390 calls @ $13 and short the Dec-400 Puts
@ $54.50.  As you can see by the second chart is was a very
profitable play. I covered the naked puts on Tuesday for 
$4.00 for a profit of a little over $50 per share. When the
drop started just before the close I was afraid they would
spike up again and closed the position. They eventually
expired worthless but who can complain about a $50 a share
profit? I closed the Dec-390 calls on Monday at $30 which
was WAY!!!! too soon but again, who can complain about a $17
profit when the Nasdaq can connect at any minute? I took 
advantage of the Wednesday drop to buy the Dec-420 calls at
an average of $22 and sold them on the open Thursday for 
$32.75. On Friday I felt the market and QCOM would tank by
the end of the day and I sold Dec-440 calls naked at the open
for $10.00 and covered them just before the close for $5.00.
Just barely!!


This is a one minute chart of QCOM for late afternoon. I had 
been nursing the $440 calls as they hovered around $10-11.00
all afternoon. When the sell off finally came I was sitting
on the trigger. When it bounced on $444 the first time I
covered 10 contracts @ $5.00 and put in a limit buy to cover
10 more at $4.00. When it bounced at 15:45 I was afraid it
was going back up. By the time I decided to change my limit
price it started back down again but I was already nervous.
I changed it to $6.00 and got a fill at $5.63. I was also
riding some OEX puts and as soon as I got the fill I switched
screens to watch the OEX. You can imagine my surprise when I
checked back just before the close. I was thinking about buying
some Jan calls but when I saw the spike I was in such shock I
decided to wait. If I had only held off covering those naked
calls five more minutes I would have been burnt toast. Never
fail to take a profit when offered. Especially when there is
only 15 minutes until expiration!

JDSU - DEC-240 Calls

Good plan, bad entry. I had entered the DEC-240 calls UQD-LH
for $8.00 on the previous Fridays drop. I tried to catch the
falling knife and got stabbed. It continued on down and I got
stopped out at $6.00. Hindsight is 20:20 and Wednesday morning
I could have bought the same calls for $2.00 with a high on
Friday of $25. I had removed JDSU from my watch screen and
missed the rebound completely until the gap open on Thursday.

ARBA - $240 Calls

This play suffered from December decay. I had a nice profit
going into the weekend on the Dec-240 calls bought at $9.25.
After the dip at the open on Monday they never recovered the
premium from the previous week. I closed at a profit for 
$12.00 but remained disappointed. The bounce off resistance
took all the expectation out of the premiums and it never
came back.

INKT - $150 calls 

Luck never hurts. Sometimes your luck is all bad and sometimes
you can do no wrong. The gap open on Monday offered too much
of a profit to pass up and after looking at the chart for 
Tue/Wed I am very glad I sold for $30. I wish I could be lucky 
like this for a $15 profit on every play! This is not normal
and you should not expect this kind of return.

BVSN - $90 calls

I had bought the Dec-90 calls BDV-LR for $14.50 the previous 
week on the strength of the saucer bottom formation. They 
looked ready to breakout over $110 again and the chart above 
shows the perfect follow through. I jumped at the chance to
sell at the open on Monday for an average of $28 for another 
double. I was kicking myself at the close when they were
trading for $45 but +100% gain is still 100%!!. 

MSTR - Stock and Jan-170 calls

This is the painful part. I owned 1000 shares of MSTR in
another account that I had bought the prior week. Options
on MSTR are very expensive due to the strong price swings
in the stock. Note that the chart lines are $40 graduations.
When some stocks correct they can really correct. MSTR had
gone from $100 to $230+ in about three weeks. When the Nasdaq
corrected last week MSTR fell off the cliff. I first noticed
it when it took the first drop to the $210 range. I was 
concerned but a -$25 drop and a solid hold, surely it was
over. Wrong! 


When the bottom fell out it really fell out. The long red
line at the close on Tuesday was literally about ten ticks.
I was holding at -$20 and I looked away for a minute or
two and now I am -$35 for the day. OUCH! Then it gapped down
the next morning. I finally sold in disbelief at $180 for a
serious hit. The good news was extremely high option premiums
were dropping like a rock. I queued up the Jan $180, 170, 160
calls on Interquote and waited for the bounce. When MSTR hit
$160 and started rebounding I bought 20 contracts of the $170
calls for an average of $20. My rationale was with 20 contracts
MSTR would only have to go back up half as much to recover my
loss on 1000 shares since I now controlled 2000 through options.
Everything was looking real good midmorning on Friday but it
eased off its highs before the close. I calculated I need a
recovery to $200 to recover my loss on the stock.

CLS - Jan-75 calls

CLS got killed on the Solectron news. CLS is the third largest
electronics manufacturer in the world. CLS was on a split run
and would probably have been $110 by now without the SLR news.
When It dropped to $84 on Monday on the news I thought it
would be a quick entry point. I bought the Jan-75 calls for
$12.75. Wrong again! The next day the bottom fell out and it 
lost another -$8. The drop was temporary and with the split 
coming next week and the numerous upgrades on the sector as 
a whole I elected to not sell. That was a good decision as 
you can see. The ex-date on the split is 12/22 and I plan to
sell on Mon/Tue depending on the market. The calls closed at
$19 Friday. 

OEX - Puts


After the big recovery in the Nasdaq since Wednesday and the 
possibility of a sell off at the close on Friday, which was
the last day of business this year for many funds, I decided
to play OEX puts on Friday. The huge gap open setup the OEX
for some profit taking but the JPM downgrade/upgrade at
midday stopped it dead. I was stopped out with a dollar loss
at midday but the mid-afternoon run just put me in a stronger
position. I could not believe it. The OEX was sitting right 
on 780 at 3:15 and the DEC-780 puts were only $1.06x1.13.
When the market stalled at the highs of the day I bought
50 contracts for $1.13 to $1.25 (what a bargin!) and within
ten minutes the sell off started. I closed them just before
the bell for an average price of $5.50.  The play only took
30 min to run but all day to wait the entry point.


I had some incredibly lucky plays this week. Actually I like
to think of them as being in the right place at the right
time. By researching and planning carefully you can help
these accidents happen more often.

The downside was my failure to bail out on the two big losers
soon enough. I did not have stops set on the MSTR stock
because I was not planning to sell it any time soon. This
just reinforces the fallacy of this type of thinking. You
should always plan for the worst and hope for the best. A
trailing stop would have taken me out well over $200 and I
would be spending my time finding new plays instead of trying
to nurse that one back to health. The JDSU play was simply
a bad pick. Good stock, bad entry. These happen to everybody
all the time. The key is to run quickly for the exits and
minimize your losses. Stocks gap down just as much as they
gap up. Stocks trending down tend to gap down and those 
trending up tend to gap up. If you are already nursing a
losing position and the stock is showing signs of weakness
then which way do you think the next gap will go?

I am not planning to "trade" next week. I am planning to 
target shoot some options on several stocks using the 
contingent order feature on Preferred. (Place an order
to buy options based on the stock price not the option
price) This way I don't have to worry about what the option
price will be if/when the stock drops intraday. 

I would like to get back into some January options on QCOM,
YHOO, JDSU, INKT, CMGI. Some of these stocks are splitting
and should have a decent split run. (market permitting)
I am not going to chase them but if I have not filled I
may consider opening some positions on Thursday afternoon.

Something you should consider for your stock only accounts. 


The HHH is a basket of the 20 largest Internet stocks by 
market cap and was started by Merrill Lynch. It trades like
stock on the AMEX. I bought some when it hiccuped at $162
and sold it when it rolled over last week at $180. I was
expecting it to drop more on Wednesday and missed the $163
dip. If we get any weakness in the Internet market this
week we could see a pullback to $163-165 again. I would be
a buyer here. I think the Internets will be strong the two
weeks after Christmas and we could see $190 easy. There
are no options on it yet but it does let you profit from
the top 20 stocks without having to pick one or two to
play. We all know the trend is up overall. We just do not
know which ones are going up this week. This is very safe
and with proper stops very easy to trade because of the low

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

Good Luck



Incremental Positions
By Jim Brown

Sometimes the best way to open/close a position is one
bite at a time. 


Stock News

AOL Reaches 20-Million Member Mark
By Cindy Christ

No. 1 U.S. Internet Service Provider America Online reported
Friday that membership of its AOL service has doubled over the
past two years, reaching 20 million members.

"Put another way, twice as many people belong to AOL as those
that watch the USA, ESPN, Nickelodeon, MTV, TBS, CNN and CNBC
cable networks  -- combined -- during prime time," AOL said.



An Osmotic Technical Point of View
Is the Internet Ringing the Bell on Commercial Real-Estate?

As I was watching the talking heads on the tube today babbling 
on about the coming rally of REITS (real-estate investment trusts) 
and commercial real-estate companies, I realized that the analysts 
out there are missing the big one and I do mean BIG.

Here it is. The Internet is going to gravely and negatively impact
commercial real-estate over the next decade.



Jingle Bells, Greenspan Smells...

Inflation? We hope not. With bond yields skyrocketing to almost
6.4%, economists worried that the U.S. economy is overheating,
the American consumer spending money like it grows on trees, and
Y2K nearly upon us, let us all bow our heads and pray that the Fed
will wait until February to raise rates.

It was a volatile week in the market and the next two weeks may
be more of the same. Some of this week's charts, show it.

I'd like to introduce some basic concepts for technical analysis.


Market Posture

As of Market Close - Friday, December 17, 1999 

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

DOW Industrials   10,800  11,320  11,257    Neutral  11.12
SPX S&P 500        1,340   1,400   1,421    BULLISH  12.03
OEX S&P 100          700     750     774    BULLISH  12.03
RUT Russell 2000     430     450     466    BULLISH  11.12
NDX NASD 100       2,850   3,150   3,360    BULLISH  12.03
MSH High Tech      1,450   1,630   1,723    BULLISH  12.03

XCI Hardware       1,160   1,210   1,319    BULLISH  11.11
CWX Software       1,100   1,200   1,289    BULLISH   9.03
SOX Semiconductor    580     660     639    Neutral  12.10
NWX Networking       750     800     849    BULLISH  12.03
INX Internet         600     675     746    BULLISH  12.07

BIX Banking          645     690     547    BEARISH  11.30
XBD Brokerage        410     450     420    Neutral  11.30
IUX Insurance        625     650     582    BEARISH  11.30

RLX Retail           900     935     972    BULLISH  11.23
DRG Drug             380     400     347    BEARISH  12.07
HCX Healthcare       760     790     689    BEARISH  12.07
XAL Airline          180     190     150    BEARISH   5.21
OIX Oil & Gas        290     315     298    Neutral  11.23

Posture Alert    
The Nasdaq continued its surge Friday on the back of a few select 
issues, while the Dow closed positive but gave up most of its 
gains late in the day. For the week, surprisingly, many of the 
select indexes didn't have major moves to the upside. Sectors that 
made some positive moves for the week are the Hardware Index 
(+6.37%), the Nasdaq 100 (+4.90%), and the Retail Index (+2.10%). 
Losers for the week were plentiful, and included Banking (-6.90%), 
Insurance (-6.00%), Brokerage (-5.90%), Internet (-4.20%), Drug 
(-3.90%), and Healthcare (-3.40%). There are no current changes 
in posture.

Market Sentiment 

Sunday December 19, 1999

Will the Santa Claus Rally Continue?

The markets closed out the week on a positive side, sending 
technology investors to the shopping malls with an optimistic 
attitude. Whatever the new-toy craze is, parents will undoubtedly 
be able to afford the price tag as long as they owned a dot.com 
stock this year. Department stores should feel the love as well, 
as the stock market wealth should translate into solid sales 
across the board. However, what lies in the future for this 

The one front that is most apparent to the end of the Bull Run is 
the long bond. Interest rates are still in the danger-zone and any 
poor economic indicator or fed-speak could cause a significant 
sell-off. We do have a Fed meeting on Tuesday but most 
professionals believe this meeting will be a non-event. However, 
Wall Street loves to scrutinize and read between the lines of 
every Greenspan paragraph, so when you combine this love of 
dissecting Greenspan with the fact that this December meeting has 
extremely low sentiment, what you get is the dangerous potential 
for a new high in the bond market. It is the holidays, so maybe we 
will all be lucky and find a Greenspan-gag in our stockings. If 
not, we may opt for the lump of coal. 

Recently, we spoke to several large fund managers that specialize 
in technology stocks, and we asked them if they were nervous 
about the bond yield. Now to make a long story short, the 
consensus seemed to believe that as long as the bond doesn't 
break above 6.75%, technology shares should do just fine (assuming 
delivery of growth). With the bond currently under 6.4%, this 
prediction gives the bond some room to work with (and screw up 
with), and also give credence to the fact that the market has 
priced in two rate hikes already for early 2000. This is the 
attitude that must have been prevalent this week, as the long 
bond jumped near 52-week highs, yet technology shares continued 
to soar. So until the sentiment changes and it can change very 
quickly, we have to stick with the old adage of: the trend is your 

There always seems to be many investors who are always worried 
about a large market sell-off. Recently, we talked to an investor 
who said the DOW was overvalued at 5000 (Boy, that was quite 
awhile-ago (1/96)), and he was getting ready to buy stocks after 
the big Y2K drop. It reminds me of the old TV sitcom of Sanford & 
Son, where the father is always talking about the "big one", that 
it becomes rather amusing. Well, we get lots of questions from 
investors asking if the "big one" is coming. It is our feeling 
that we will see a market, very similar to last years. You will 
see many stocks doing phenomenally well, but stocks that make 
rumors of missing expectations or actually report negative 
numbers will get their legs chopped off. With many individual 
sectors, the "big one" has already occurred. The momentum game is 
so prevalent in today's market, that any negative remarks will 
cause an equity to lose many months (or years) worth of value in 
a couple of hours. Last January, it seemed like day after day, 
where we would see some stock getting chopped in half due to an 
earnings disappointment. You would watch CNBC, and every day they 
talked about some stock down -30 dollars. Every day, we would be 
thankful that we weren't long that issue, yet unhappy that we 
didn't own 100 puts of the pig. However, it is our feeling that 
you will see the same thing this year. The overall technology 
sector should continue to outperform, with the winners continuing 
to be winners, and the losers continuing to be losers. Many 
individual stocks will soon have the "big one!"  Just look at the 
recent performance of Tandy (TAN) or Electronic Arts (ERTS) and 
you will get an early indication of what the rest of December and 
January will look like. So apart from individual stocks getting 
crushed and no surprises at this weeks Fed meeting, we continue to 
believe that the Santa Claus rally will continue with the leading 


Cash Flow:
The amount of money being poured into this market continues to be  
Strong, as evidenced by this last week's IPO's and the strong 
volume on all exchanges. 

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.

News events continue to squeeze the shorts, as lately evidenced by 
Yahoo's incredible run up in stock price.

Mixed Signs:

Volatility Index (23.01):
Once again, the VIX presaged a near-term market top, when it 
bounced off of 20. It is now safely off of the lows, however, a 
break through its 50dma may signal more downside in the market.


Interest Rates (6.377%):
The yield on the 30-yr Treasury is back into dangerous territory, 
and could cause a precipitous sell-off should we see new highs.
Advance/Decline Line:
The A/D line's continual break does not serve the best interests of 
the overall market.

Investor Intelligence:  
The rapid change from bearish to bullish sentiment has been 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 

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.

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 (780-800)     9.69

OEX Close                       773.93

Underlying Support (750-770)      1.10

What the Pinnacle Index is telling us:
Based on 12/17, current overhead (780-800) is heavy, and underlying 
support is light.

Put/Call Ratio                  Friday
Strike/Contracts                (12/17)

CBOE Total P/C Ratio             .43
CBOE Equity P/C Ratio            .34
OEX P/C Ratio                   1.24

Peak Open Interest (OEX)
Strike/Contracts     (12/17)

Puts                 700 / 8,398
Calls                700 / 6,272
Put/Call Ratio         1.34

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 17, 1999                       23.01

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


For the week of December 20, 1999


None Scheduled


Federal Reserve Meeting on interest rates (FOMC) !!!!!!!!!!!!!!!!


GDP                      Q3-Rev Forecast: 5.5%   Previous: 5.5% 
Univ Michigan Sentiment  Dec-F  Forecast: --     Previous: 104.2


Jobless Claims           12/18  Forecast: --     Previous: 266K 
Personal Income          Nov    Forecast: 0.2%   Previous: 1.3%  
Personal Spending        Nov    Forecast: 0.4%   Previous: 0.6% 
Durable Goods Orders     Nov    Forecast: 1.1%   Previous: 1.3% 
Help Wanted Index        Nov    Forecast: --     Previous: 86   


None Scheduled

Week of 12/27

12/27 Existing Home Sales - Nov
12/28 Consumer Confidence - Dec 
12/29 APICS Survey - Dec
12/31 Chicago PMI - Dec



Last week I put on an unorthodox spread on JDSU.  Many of the 
readers had questions regarding my reasons.   First of all, my 
longer term (30-45 day) outlook on JDSU was and is very bullish.  
The trade I put on was a long Dec200 put for 1-3/8 and a short 
Jan200 put for 7-1/4 points netting me 5-7/8 points.  The reason 
I didn't put on both legs with a December expiration was because 
the spread was less than one point.  My criteria is a minimum of 
1 but nearer to 2 points for a current month spread.   I could 
have put on a January Spread but I was greedy (not enough money 
on the spread because it was so far out of the money).   However, 
I didn't want to go naked for that long a period of time and tie 
up that much money in margin.   I was confident that JDSU would 
hold above 200 in January but that there might be some turbulence 
in December especially during expiration week.   By purchasing the 
Dec200 put I wouldn't tie up a lot of capital and I would have a 
position to trade if JDSU tanked below 200 before expiration.  
Then I could sell the Dec200 put for a sizable profit and hold the 
January put naked.   Worst Case, it would provide me insurance for 
1-1/2 weeks at a cost of 1 3/8 points.  After expiration, if it 
expired worthless (I sold it for 25 cents), I could put on a 
January spread by purchasing the Jan 190 put for far less money, 
because JDSU would be up in price and there would be much less 
time value left in the option.  The other thing I could do would 
be to buy back my short leg (if JDSU were up big time) or simply 
go naked for the next four weeks.    

Well it was a rocky week.  JDSU went down to 220 on Tuesday and 
closed there.  I knew I was on thin ice, but I kept telling myself 
that because the volume was dropping with the price, we were 
running out of sellers and JDSU would bounce off this very 
strong support level. I did however, light a candle that night.  
Fortunately for me, I was not available for the first half hour 
of trading on Thursday morning.  JDSU went through support and 
down to the 210 area!  By the time I got back the stock turned 
around on increasing volume and found support back above 220 and 
closed above 225.  Phew!  JDSU continued up up and away.  Once 
it broke above 245 on big volume I bought some stock at 245-1/4.    
The next strong resistance was at 250.   Then I wrote a December 
250 call for $4.50 with only one day to expiration.  I wanted to 
own this stock for my Christmas vacation strategy which I will 
explain next.  Worst case, I would get called out of the stock 
and make 9-1/4 points in one day or I would own the stock, keep 
the 4-1/2 points and implement my Christmas Vacation Strategy. The 
last hour on Friday was one heck of a roller coaster ride.  I didn't 
even watch.  Fortunately for me I had errands to run and I knew I 
was set either way.  JDSU dropped from 252 to 242 in the last hour.  
I wasn't called out so I got to keep the 4-1/2 points AND the stock. 

Now for my Christmas Vacation Strategy.  

The strategy is really quite simple and one that you are aware of, 
but most people don't do it on the type of stocks that I choose.    
I like to buy highly volatile, good quality, split or rumored split 
stocks and write January calls on them.  Unfortunately, the stocks 
are usually expensive.   Fortunately, the options are grossly 
overpriced so I write the calls on these stocks and watch the time 
value melt away over Christmas and New Years.  I devote my entire 
short term trading portfolio capital (not margined) so that I'm not 
tempted to get in there and day trade during Christmas Vacation.    
The first reason I implement this strategy is so that I can go and 
do my Christmas shopping, spend some time with my 13 year-old 
daughter who is now out of school, and visit that old aunt I haven't 
seen for "how long has it been?" (7 years).   The second reason is 
because of the January effect.  These stocks will fly, I will get 
called out, or if they don't I've locked in a tremendous profit.  
The third is for tax reasons.   I am able to postpone a sizable 
gain until the next century! My intention is to get called out of 
these stocks.  When I am ready to start trading in January, I have
my entire appreciated equity to margin until expiration.  After 
expiration, I am loaded for bear (no pun intended).

The specifics are as follows: I will write the JDSU JAN 260 calls 
for about 23 points.  I bought this stock for 245-1/4.   I also 
implemented this strategy on YHOO, which I bought for $322 on 12/9 
and wrote the Jan350 call for 18-1/4 points at that time. Also 
included in my Christmas stocking is CMGI, which I bought for 
198-1/4 on 12/15 and wrote the December 230 call for 5-3/4 points.  
I didn't get called out of  the December calls and got to keep the 
5-3/4 points on CMGI and the 4-1/2 points on JDSU.  On Monday I 
will write a January 230 call on CMGI for about 25 points.  My last 
stocking stuffer is QCOM, which I bought for 400-1/2 on 12/10.  
I immediately wrote a Jan450 call for  21-1/2 points. I fully 
expect to receive a total of about 200 points on the expired 
premiums and the gains on the stocks (up to the strike price 
written) on expiration date in January.  I'll then be able to 
pay for all the lovely Christmas presents I charged in December. 
Merry Christmas to all and to all a good NITE (Trimark).  

Lynda Schuepp


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only. The information provided herein is not to be construed 
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The Option Investor Newsletter              12-19-99  
Sunday                        2 of 5


I got two nice Christmas presents this week. 

Nextlink was added to the Nasdaq 100, and CMGI went up another 
24 points after earnings and a split announcement. I bought  
Nextlink a couple of weeks ago at 54, and watched it hit a high 
of 74 this week. On Monday when the news came out that the stock 
was being added to the Nasdaq 100 I bought NXLK Jan 70 calls at 
6.5, and sold them at 7.75 the next day. I am considering 6 month 
options on Nextlink This is a very volatile stock because it isn't 
profitable and they have a significant amount of debt, which means 
the price can fluctuate highly with interest rate fluctuations.  
Additionally I bought Nortel June 85 calls at 18. This is a 
relatively long term play (long term can mean a month in options 
versus a lifetime in a stock) This is a 6 month option, and it is 
only about 20% higher than the price of the stock, which is a very 
dynamic growth company in a rapidly expanding industry.  On Monday 
I considered buying Qcom calls in a spread, Dec 380 and selling 
the 400 but I couldn't seem to pull the trigger. By the time I 
decided to do it the darn thing had jumped up another 20 points 
and it was too late. I may consider  this strategy in January, as 
the odds of Qualcom being above 380 in Jan are very high. However, 
I think the call premiums are ridiculously inflated.

 Sometimes you just have to trust your gut instinct as a trader, 
if the play doesn't feel right, don't do it. I didn't break the 
rule of not holding options over earnings with CMGI, I sold my 
options and took half the profit and put it in the stock. I was 
glad I did, although I didn't make as much as I would have in an 
option. The risk with a stock is that it will go down and possibly 
go back up. The risk with holding an option over earnings is that 
it will go down and never come back up, and in worst case scenarios 
go down to zero..

How many times have you heard the following phrases in the last 
couple of weeks "The Nasdaq is over valued, it has to correct"  
"We are looking for a 10% correction in the Nasdaq" If your 
listening to market news programs its probably every 15 minutes.  
The market doesn't have to do anything, it does what it wants. 
However, at some point this market is going to correct, nobody 
really knows when, but markets always correct. There will always 
be irrational exuberance and speculative froth on the upside just 
as there will always be panic selling on the downside. One of the 
frustrating aspects of trying to predict and time the market is 
that there are too many things going on internationally we don't 
know about and have no control over. Remember in the summer of 
1998 the market corrected 20% and the Nasdaq hit 1000. A lot of 
people claim to have called this, but most were taken off guard 
by catalyst events which occurred in the Asian and Russian 

Right now the Nasdaq is defying the bears and the grumpy 
curmudgeons at the Fed. Thing s look unbelievably good in the 
U.S., we have the combination of relatively low inflation, low 
interest rates, high productivity, and we lead the rest of the 
world in corporate profits, innovation and achievement.What 
could possibly go wrong?  Well, the US is not isolated, we 
depend on other countries for inventories as well as export sales, 
some of the big US multinational companies get as much as 50% of 
their revenues overseas. While the US is floating in an oasis of 
prosperity, the rest of the international situation doesn't look 
quite as promising.  

The main function of the SEC in the US is to protect the investor 
from fraud. They do a very good job considering the number of 
people in the securities industry and the number of companies 
which have gone public in the 1990s. If shares of foreign 
companies stocks are  American Depository Receipts then they 
have to file with the SEC also. If you read the balance sheet 
or annual report of an American company  or an ADR you can be 
reasonably certain that what they say is true, for example if 
they say they are earning one dollar a share it's almost certainly 
true. However, there is little protection in certain overseas 
countries from fraud, which means if people buy shares of stock 
on foreign stock exchanges it is possible that they could be 
buying fraudulent or non existent assets.This was one of the 
contributing factors to the crash of 1998. Bluntly put, the 
Japanese banking system hadn't really been updated since the  
feudal era and Russia's overnight conversion to capitalism was 
really a conversion to crime and chaos. Now we hear things like 
the "global economic recovery " is well underway. Thanks to the 
work of the US Fed, IMF, and the US Treasury we were able to 
bail them out of collapse and prevent them from taking the US 
down with them.

But global economic recovery is a vague and vast term which 
encompasses too much to be accurate. We don't know exactly what 
is going on everywhere else because some of the other countries 
don't want the US involved until they need our money. Some of 
their turbulence and instability can sneak up on us while we 
least expect it. We know, for instance that the Japanese are 
recuperating from the recession because they are ordering more 
computers. We can see the reported estimates of growth in Gross 
Domestic Product in other countries. But do we know for sure if 
reforms in their banking systems have actually taken place? As 
demonstrated by the World Trade Organization's disorganized 
summit in Seattle, other countries don't want to follow our laws 
and regulations as far as child labor and human rights are 
concerned. What makes you think they are willing to obey our 
laws and regulations regarding banking and securities? With the 
Russians laundering 10 billion of stolen IMF money through the 
Bank of New York, what type of securities regulation do they 
have over there?

For example, there have been a number of articles and studies 
on reforms and changes in the Japanese society from an industrial 
monoculture which stifles individualism and innovation to a freer, 
more competitive society like ours, but this type of change doesn't 
happen over night.When people are forced to change and adapt to 
survive in a new environment they will, but it can take a  
generation to change an entire culture . In the meantime, problems 
in the overseas markets may have a ripple effect on our markets. 

We live in a very exciting era. The internet is crossing borders, 
opening opportunities and breaking down old barriers. We can't 
even begin to predict where it will take us in the next century, 
but many oppressive governments may be overthrown,  old systems 
of business will be overhauled and all of this is going to happen 
comparatively faster than previous changes due to the technological 
revolution However along the road there are going to be stumbling 

Most people who survive trading long term hedge their bets to a 
certain degree. No matter how carefully you plan your trades, 
something can always happen You can hedge a bet by playing both 
sides of the market at the same time, keeping half your money in 
cash, using some conservative stocks like utilites to offset 
potential losses in technology stocks, or by using more 
sophisticated heding techniques involving derivatives and 

Mary Redmond


All I want for Christmas is one more year like this one.

Well on second thought, I could do without that little mistake 
between May and September. I promise Santa, I will never leave 
your presents alone again, with honey on them, while I go out 
and play. I promise to bring them in and stick them in a drawer 
(account) somewhere, so they will be safe from Mr. Bear. 

I know there are a lot of other people who need your attention 
and presents, more than I do this week. Thank you for giving me 
mine early. This is why I'd like to use most of my wishes on next 
year's present. Please be good to Steve Case (AOL), Timothy Koogle 
(YHOO) and Irwin Jacobs (QCOM). They were VERY nice to me this 
year. Other people were nice too, but they were exceptionally nice 
and invited me to several parties. Because of them, I had the BEST 

I guess I should also thank Alan Greenspan. I really like him a 
lot, but he made me mad this year and hurt my feelings for several 
months. I don't like it when he tries to just scare me like a bully. 
I stay upset everyday, not knowing if he's going to hit me or not. 
He's been really nice to me lately, so I don't want to complain. 
Just please make him realize that we can all play together, share 
and grow and no bullies are needed.

I hope your health stays good, Santa. If you grant me my wish for 
next year, I promise to write even a bigger check to Toys for Tots. 
And Santa, just one more teeny tiny thing. Would you please keep 
that Y2K guy at home the next two weeks? We have a big party 
scheduled on January 3rd and we are going to be practicing a lot 
before hand with mini parties and the band & such. We don't like 
him and he scares our friends off. Some of our friends take all 
their toys and run, hide and won't share. This isn't fair at 
Christmas. We want to play with everyone else's toys and share in 
the fun. Besides Santa, some of our friends are afraid to party 
with us until after New Years day because he is threatening to 
crash our party at the stroke of midnight. I think he's all talk, 
but just in case, please LOCK HIM UP!!

Thank you Santa. I love you. Tell Rudolf, "Hi" for me. Oh, I 
almost forgot, Frito, Smash & Sunshine promise not to bother 
you this year. 

Give Mrs. Clause a kiss, a hug and a nice big present for me. 
God Bless you all! 

On to business.

First, let me apologize for the way the charts turned out in my 
last column. I promise, they did not appear that way from my end. 
I have a jpg (picture) file of both charts. If you would like to 
receive these by email, drop me a note. They take a couple of 
minutes to download, but the charts are easily readable. I'll 
figure out a better process before adding further charts in the 
future. Also, to clarify, I use the directional movement indicator 
for both short term and long term plays. The lines are less 
volatile when looking at the daily chart, which I extrapolate 
into my daily trading. The smoothing line is more important to 
me on the daily chart. I use entry signals with DM, in conjunction 
with stochastic's over bought and over sold indicator. 

Also, if these indicators give me buy or sell signals while the 
stock hits an upper or lower Bollinger Band with heavy volume, 
this confirms my play. With 1 minute charts on high flying stocks 
like YHOO, you can see the day traders pounce on trades when the 
stock hits a Bollinger Band. The stock volume immediately goes up 
and will die back down as the stock come off the band. Finally, I 
use MACD as a lagging indicator, which gives me a feel for the 
consolidated strength and overall movement of the stock. These 
things do not take long to learn. A picture is worth a thousand 
words. For more information on momentum indicators and Directional 
Movement consider: Technical Analysis from A-Z  by Steven B Achelis. 
Check the OIN bookstore. 

Secondly, I will be buying on the volatile dips the next two weeks, 
adding to my QCOM & YHOO. With profits taken on Friday, I will buy 
buyable dips for other POTENTIAL split plays, which I expect 
announcements on in January. I will churn short-term plays for the 
next two weeks and probably load for January 3rd, if the market 
holds. My plays are all working better than expected. 

Thirdly, as we approach the end of the year, I'd like to discuss 
a little bit about profit taking. I had a chill run down my spine 
last week, as a new friend of mine said he is reinvesting 100% of 
his profits so it would all keep growing. (Dave, sorry to pick on 
you, but I know you are not the only one thinking this way.) I 
would like to share my first hand experience from this year on 
this topic with some ideas for all to ponder. Harrison- with his 
Stockaholic article (in the Thursday's edition of Trader's Corner 
with a Woman's World typo. Ha, ha, ha), Janar- who talked about 
putting all his money into one play and Dave, seemed to make the 
timing of this discussion imminent.

As I have mentioned previously, the first quarter was very good 
to me. I had roughly a 145% gain before I left for an option 
conference with open positions in AOL as it ran into earnings. I 
had done so well in AOL, that I loaded just about all my trades, 
for that play going into earnings. Just to be safe, I had also 
loaded with July calls. At the conference, they said if you 
consistently made 60% profit a year trading options, you could 
consider yourself doing very well. I was puzzled because every 
year that I've traded options they've returned a much, much higher 
percentage. These were Masters - VERY successful and VERY respected 
traders, well known in the industry, so I was confused. One of them 
offered to review my trades and account, via my laptop computer. 
What he said shocked me. At the time, he said my successes were 
far greater than his (in April), but that he did not take the risks 
that I did. (Does anyone remember the story of the tortoise and the 
hare?) He then proceeded to advise me on how to do things 
differently, in order to protect myself. He did not give me much 
time to ask questions, so I had to "learn" some of his advice in 
real life.

Upon reviewing my trades, open positions and daily account balance 
swings, he said that I was a much higher risk taker than he was. I 
had huge swings in my account, on a daily basis. I had to admit 
that these swings were getting much bigger, as my account grew and 
they were starting to concern me. Sure, the upside felt good, but 
those downside swings hit my stomach. I had begun to feel, like 
things were getting out of hand, because I was doing too well and 
I wasn't sure I knew how to handle it. I had begun to tell close 
friends, that I was afraid I did not know how to protect myself 
when the inevitable correction came. 

I did not appreciate his words of wisdom, until summer. It would 
be shortly after this visit, that I would LOSE all of my first 
quarter gains, and then some. (The fact that I held long stock 
from Blow & Go, actually salvaged my account.)

Our discussion was enlightening. He trades several instruments 
but we'll stick with options here. He starts the year with a 
predetermined balance in an option trading account. For him, that 
is around $100K even though he is worth millions of dollars. Clean 
slate. He does this every year. Only a small portion of his net 
worth is at risk in options. All other option gains and profits 
have been put into other non-financial investments, ie; real estate, 
businesses, personal, etc. He said the worst thing one could do, 
is continue to trade 100% of their profits, which I had been doing. 
When a downturn occurs, it can wipe you out much faster than you 
made it. One year, he had to borrow money from his mother to survive, 
before he figured out the game and learned how to protect himself...
from HIMSELF. Down turns may last days, weeks, months or years??? 
One never knows ahead of time. 

He advised to take profits routinely... weekly, monthly or quarterly, 
to protect profits. Also, as Jim emphasizes all the time, he advised 
me to quit holding all of my plays too long. Churn plays by scalping 
25% over and over and over again. This generates huge cash flow, 
protects your profits and allows you to let a few big winners run 
into the stratosphere. Most importantly he said to exit plays that 
go against you, immediately. Take your loss and move on because your 
money could be better spent on a play that will win. Don't wait for 
a recovery, which may not ever come due to time decay. This was what 
was causing my huge swings because I was ignoring any stop loss I 
considered. I had faith in my positions. I would marry myself to an 
option and put way too much faith in its profitable return to the 
upside. Looking back, that was really dumb!

The last thing he said is that if it were his account, he'd exit all 
the AOL contracts and go to cash. He said the markets didn't look 
good to him. I baulked at this because I had loaded for the tried, 
tested & true, AOL earnings run. The next day, AOL dropped 24 points 
and continued not only a downhill slide into earnings, but almost a 
50% correction to its lows. Remember those July contracts I ALSO 
had????? I have baggage now. I will never trust a stock that much, 
ever again!!!

Unfortunately, the hit came fast before I could do anything about 
it, but now I do things differently. I am now up about 540% from 
my lows. I get out quick on bad plays, churn my account and only 
hold a few contracts for those skyrocketing plays for Blow & Go. 
Now I am a much more disciplined trader not only because of his 
discussion, but the immediate impact of lessons learned. I am 
grateful for both learning the lessons AND the loss because I have 
recovered now and I know I will never take my profits for granted 
again. I believe in learning from the masters, for they have already 
stepped in the puddles in front of me.

So as we all sit here in exuberant glory, basking in our new found 
profits, consider the old saying, "If it looks too good to be true, 
it usually is." Although Harrison (in Trader's Corner) was being 
humorous and entertaining, being a true "stockaholic" is the 
ultimate in uncontrollable high risk. Being in medicine, there are 
clear signs of additive personalities. With all these gains, you 
should be asking yourself some serious questions. Can you part with 
some of your gains or will you justify keeping them all invested in 
more high-risk investments? I had to dry out. What about you? Can 
you learn from other's mistakes? The only way you can protect 
yourself is by making a profit withdrawal from your account and use 
those funds on other things. Reward yourself. Leave less money at 
risk. Learning to be a good churner, will replenish the profits over 
and over and over again. What do you think the chances are, that you 
actually ARE the next Bill Gates or Warren Buffet?

Here are some rewarding ideas to consider. You will be glad you 
did something, if your account goes down with a correction. Now 
when is that due? January???

Pay off your mortgage 
Pay off your car
Pay off all credit cards and school loans
Invest in your education with more financial seminars
Do something for your parents
Open a savings account with your profits and set up an auto-deduct 
system for your routine monthly expenses and taxes
Set up an IRA account for your child and deposit the maximum per 
year (check with CPA, different brokers have varied rules)
Set up an account to tax deposits...and keep you hands off that money!!
Write a check or make a payment, for someone less fortunate than you. 
Pay (anonymously) their electricity or gas bill.
Get debt free
Do something that makes you smile, laugh and giggle....and something 
that makes others laugh too.
Spend some money on learning how to "smell the flowers" and how 
type B personalities enjoy life. 

....and as always, be kind to strangers. That punk kid with baggy 
pants, a ring in his nose and stringy long hair, may have just 
sold his company for a billion dollars!!!

Have a Merry Christmas everyone!!



I've got a mission for you!

After a hectic year of trading, I picked 9 of my strongest 
players to carry the ball past the Y2K goal line. Often in 
the Marines, I would assign the most difficult tasks to my 
best Marines, solid individuals that I knew would think on 
their feet, use their resourcefulness, and take advantage of
opportunities when presented with them. So too, I am now in 
a personal lock down mode -- of course, I watch the market, 
but, today is the first of about 10 trading days when I have 
already decided to do exactly nothing. 

The conventional wisdom among traders is to take profits now 
and be ready for dips leading up to Y2K. I take an opposite 
view that the market will remain fairly stable, albeit possibly 
affected by low volume day traders, and generally trade 
sideways to up through the new year, when we get another jolt 
of liquidity, culminating a meltup to this unusually sustained
uptrend. At worst, if a pullback occurs, I think it will be met 
by buying... if not by mutual fund managers, then by their 
assistants who have a wish list and lots of cash to get into 
positions on the biggest, best positioned tech companies. Does 
this strategy make me nervous? Sure. But, just like a platoon 
commander looking into the eyes of a man you can trust to do 
the job, I feel comfortable when I look at my current positions,
which, in my ST portfolio include January calls on the following 

QCOM. My biggest position, and the biggest gaining stock on my 
play list today! This was the topic of my last piece. It is a 
Gorilla and we are in the tornado phase of the adoption of CDMA 
technology, not just in handsets, but also in all types of 
wireless products. Stock splits 4:1 just before the New Year. 
Sale of handset division pending, which, as one local club
member notes, will make QCOM a fabless semicondutor; the market 
assigns an even higher valuation to fabless semiconductor 
companies. Undervalued at 455? How about undervalued at 114 
(or 125... or 130...) after its split in a few weeks? LEAPS and 
Jan Calls on this one.

NOK. Bouncing back smartly from 150, the biggest PC manufacturer 
(advanced wireless phone handsets) in 2001? Benefitting from 
Wireless Access Protocol (WAP) leadership, which is related to 
CDMA, but without the same revenue power. I drive by the new NOK 
building in Silicon Valley's highway 101, and I rest assured that 
good things are going on. Every fund manager will have to own 
this one for 2000. Look out above. LEAPS and Jan Calls on this 
one too.

GE. Announced a 3:1 split as predicted -- nice pop! The thing 
to watch here is that GE is a net company too, just like WMT. 
The difference is that GE makes all of the stuff that companies 
want to sell over the net. So, instead of letting other companies 
sell the stuff over the net, GE can choose to execute a Internet 
strategy itself... and still have some of the most efficient 
manufacturing and organization of any company. (thanks to my
friend Dave for a bit of this analysis) LEAPS and Jan Calls on 
this one. 

INKT. Split in a few weeks, right before Y2K. My entry on this 
was not the best, which is part of why I chose to execute a 
simple strategy for the rest of the year. Nice bounce back from 
the 155-160 level. Dominant in the search engine space. Jan Calls.

MSFT. Can't hold a good gorilla with $20 billion in cash down. 
I played this one successfully in July, when I watched my Jul95 
Calls sprout from less than 1 to almost 5 in value on expiration 
day. The massive open interest in that contract helped to ensure 
that once MSFT broke above 95 on that day, it would quickly blast 
up to almost 100. (Check out the OI on Dec100, Dec105, and Dec110 
as Mister Softee crushed those strikes this week! Hedge that!) I 
also recall MSFT hitting 100 3/4 on Monday, 7/19, when I closed 
Aug MSFT Calls, switched to OEX puts on a sweet call by Jim Brown, 
and tracked Mister Softee for the intervening 5 months while dozens
of tech stocks saw appreciation of several hundred percent. So, 
when I saw MSFT break 100 3/4 on Wed, I made a instinctive decision 
to get in on the play. I bought Jan100 calls at 5 3/4, sold half 
of them at 8 1/8, and am keeping the rest of them. It is hard to 
say enough good things about MSFT, but the main thing is cash, 
cash, cash. Cash on the balance sheet. Cash from a new product 
cycle (Win2K). Huge margins. Now that this one has broken out, 
it is hard to say exactly how high it can go.

SUNW. Already up strongly this year, this is a real company with 
a huge infrastructure (compared to many 'net companies), massive 
institutional knowledge in the hottest sector of the economy, and 
multiple partnerships with leading companies. If you are running 
Joe's Very Excellent Large Cap High Tech Growth Fund, you have to 
own this one for 2000. Got into it yesterday around 72, already 
back at 75. Jan Calls.

AOL. Ran up to 95 on the AOL/ WMT news, dipped back to 82 (a 
great entry point, which I did NOT nail... part of the reason 
I am backing away from trading). I bought too soon at about 92. 
Down on the play, but confident that this will keep moving as 
eHoliday season goes into overdrive. Preliminary reports of 
ecommerce are already very strong, and I expect them to get 

PHCM. Supplies the operating system for internet access on 
wireless phones. Got into it yesterday when it bounced after 
consolidating for a few weeks. If fund managers and the market 
realizes just how central to the expansion of wireless 
communications this company's products are, this could see 
Red Hot like appreciation.

JDSU. Maybe a object lesson in why not to buy and hold options, 
this stock rocketed out of the gates on Friday to 262, but 
dropped to 240 before the close. However, I bought this when 
the stock was at 225-230 a few days ago, and the stock is 
splitting right before the new year. I did take profits on
part of this play at 10% and 25% gains. 

One of the way to value options is with a binomial pricing 
model in which you envision a stock going to one of two prices 
over a certain period of time, then calculating the amount of 
the stock and bonds that you need on hand to hedge the contracts 
you have written. The time period can be minutes, days, or weeks. 
The Black-Scholes pricing system is an advanced mathematical 
application of this binomial pricing model utilizing formulas
that Fischer Black finally found over in the rocket science 
department at MIT. I've made my plan to hold the above options
based on a gut call analysis of where the prices of those stocks 
will be over the next 2.5 week period. They could be higher or 
lower, and I think they will be higher, indeed, high enough to 
overcome the time decay on the premiums of the options I am 
holding. I have also made the decision because I do not want
to devote my attention to target shooting the dips that will 
occur over the next two weeks. I could dial back into the market 
on, say, 12/29 and then start target shooting, but I think that, 
on balance, most of those stock prices will be much higher, 
especially the ones that are splitting. I know the Fed is meeting 
next week, and even if they tighten the bias, I think the market 
will be generally stable. This plan might get me in trouble with
Jim for not following exact instructions, but in this situation, 
I think this is the most profitable strategy. Anyway, that is 
one trader's plan to skin the Y2K problem.

Good Luck.

Janar Joseph Wasito

Sunday, December 19, 1999


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


Greetings from Toronto

We have had a remarkable month. Our last traders Club meeting was 
on November 27 and we had a great turnout. There were 8 members 
who were able to attend. It is so good to see everyone making 
money using DIFFERENT strategies. One used just put plays. Others 
use covered calls, or called on volatile stocks( qcom, yhoo ) 
while others still buy those blue chips and turn around and get a 
nice steady income from them selling calls and are satisfied with 
5-7% a month.  I doubled my money in just 5 weeks!!! We all had 
some good news and also were able to share some not so nice 
trades and learn from each others mistakes.

We all came from different parts of the city, and are all looking
forward to the next meeting.  The trades we still like are NT, 
QCOM, YHOO, RHAT, RIM (Toronto) and AOL. We will meet again in 
the New Year since we do have a life outside of options trading. 

All the best (trades)

Thomas - tabass@execulink.com

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.



We can all remember when we started trading and the numerous 
things we had to learn. The markets are difficult enough that 
simple things like placing orders or managing risk should not 
be difficult. The basics of money management and having a 
trading plan hopefully have become second nature. If you have 
not yet developed your own trading discipline at least you have 
been lucky enough to survive mentally as well as financially.

Make your life easier and trade more consistently without 
expensive mistakes by sticking to your plan. If this column 
seems similar to ones I have written before, it is because 
but traders' reactions continue to be based on the classic 
fear and greed emotions. Every day stocks are going to move 
but your trading opinion should not vary with every news 
story or analysts view. Have a plan and act on it, not react 

In this volatile trading environment created by the increased 
market liquidity discipline will separate you from the masses 
chasing their own tails. As a broker, I am still amazed by the 
panicked phone calls I receive from otherwise successful people 
that whip themselves into an emotional frenzy and come unglued 
when an individual stock moves dramatically. People have become 
more afraid to miss something than the substantial risk of buying 
too little time on options or entering a market AFTER a substantial 

As you learn from your trading battles, either you develop the 
discipline or the market humbles even the brightest of men and 
women. We as option brokers do not know where the market is going 
but know how to use options to increase our likelihood of success. 
More importantly we know what usually is not a profitable trading 
strategy... buying options with one week left until expiration, 
buying options because they are cheap? And buying options after 
you must be prepared when things do go your way to take profits 
or when it doesn't to get out. Place the profit order and your 
stop loss when you get into the market and try not to participate 
in the everyday trading frenzy that has caused many sleepless 

My best traders feed on the fear of the common man and have 
learned to scoop up options on good companies when others are 
panicking out. Successful trading is all a matter of perspective 
and the foresight to recognize the opportunity when it occurs. 
trading discipline I may get a frantic call to "Sell all of my 
Microsoft options immediately because the government is going 
after them". When emotional decisions are made they are usually 
wrong and regretted later.

We as option brokers try to encourage traders to balance the 
ideal amount of time until expiration and strike price variables 
to increase your probability of success. As you learn trading 
discipline our job becomes easier and hopefully we are all 
closer to the goal of helping you make money. Without financial 
success you are not going to continue to trade and we will be 
out a customer. If we can instill the proper trading habits we 
are all better off.

Alan Knuckman and Andrew Aronson
LaSalle St. Securities
Chicago, Il 60604
Toll Free 888-281-9569


Daily Results

Index       Last   Week
Dow      11257.43  32.73
Nasdaq    3753.06 132.82
$OEX       773.93  10.44
$SPX      1421.05   4.01
$RUT       466.21  -0.50
$TRAN     2918.42  43.48
$VIX        23.01   2.09

Calls              Week

QCOM       455.00  63.50  $63.50 last week, any complaints?
BVSN       129.00  21.63  BVSN delivers the breakthrough
NSOL       239.94  21.19  Settles down for a gain of $21!
SONE        84.00  19.25  New, breaks out of consolidation
DCLK       204.94   8.94  Something is up! Rumors abound...
INSP       166.69   8.63  New, goes for a stock split!
VRTS       117.47   8.41  VRTS tags another new 52-wk high
VIGN       149.94   8.06  New, a full month of excitement
NXLK        72.00   7.88  Good news and strong technicals
TTN         34.44   5.94  Investors show carnivorous zeal
CLS         91.63   4.88  What a nice recovery for CLS!
TERN        69.94   4.69  New, looks to have the momentum
GE         151.50   4.06  Dropped, 3:1 stocking stuffer
INKT       171.06   3.31  2:1 split to end the millennium
TMX        112.75   2.63  Momentum run in our midst!
NT          90.44   2.19  Could there be a split for NT?
STM        139.00   2.19  The Semiconductor sector is hot!
NOK        168.50   0.50  Hello upside surprise!
VOD         49.25  -0.50  Dropped, but on our radar screen
JDSU       240.94  -3.31  Lots of opportunity for profits
YHOO       350.00  -3.50  New, earnings January 11th
GLW        112.50  -4.50  New, momentum is in high gear
AOL         85.00  -6.50  Looking for holiday momentum
SUNW        75.13  -6.75  Dropped, the sun ain't shining
MACR        80.00  -6.88  Dropped, MACR's upside shifts
NTAP       144.69  -9.19  Dropped, splits on Monday


PWAV        49.00 -15.25  New, the tide moves out for PWAV
KIDE        36.38  -8.31  Stubs its toe on the way up
ETYS        37.56  -7.56  Nobody wants to play with ETYS!
WB          66.00  -7.13  New, WB investors not too happy
BMY         62.13  -6.13  New, potential lack of growth
LTR         59.94  -1.81  New, fells the dual-edged pain
GT          27.06  -1.69  GT's tires must be balding!
GILD        38.13  -0.88  New lows against sector highs



GLW  - Corning Inc 
INSP - InfoSpace.com 
TERN - Terayon Communications
VIGN - Vignette Corp.
SONE - Security First Technologies
YHOO - Yahoo! Inc. 


BMY  - Bristol-Myers Squibb Co.
WB   - Wachovia Corporation
PWAV - Powerwave Technologies 
LTR  - Loews Corporation


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.


MACR $80.00 (-6.88) The trading for option traders on MACR 
was good for three weeks.  This past week we began to be cautious 
on the shares of MACR, because of the sluggish volume, and weak 
price increases.  The normal pattern of aggressive moves, 
pullbacks, and then another aggressive move, continued to 
fizzle to the point where we were down almost 7 points for 
the week.  The bias to the upside has shifted, and this recent 
consolidation seems to be getting weaker as the shares now
currently sit at the $80 level.  On Friday the volume continued 
to be lower than average, and any attempt at a normal rally 
could not hold up to the selling pressure.  Although there are 
possibilities to make more money in MACR, the risk reward has 
narrowed.   The clear trading picture of weeks past has become 
blurry.  We have had a good run in MACR, and now it is time to 
move on to more attractive opportunities.  

NTAP $144.69 (-9.19) We're exiting our quick split play ahead 
of the ex-date on Tuesday.  If you got into the play near the 
support level ($150) you were rewarded with a 10+ point gain 
by Friday afternoon as NTAP topped at $162.25 intraday.  
Unfortunately after that nice peak the stock suffered profit 
taking.  Remember, if you have any positions open at this point 
you should consider having them closed by tomorrow.  Most 
stocks will typically suffer a post-split depression.

GE $151.50 (+4.06) Time to exit this profitable call play.  
GE's board spread the holiday cheer and gave shareholders 
everything they were looking on Friday.  A 3-for-1 split, a 
17 percent dividend increase and a $5 billion share buy back 
program.  The buy back program was a bit of a surprise 
considering that GE is looking to increase acquisitions of 
other companies next year.  The split still needs shareholder 
approval.  The vote is not scheduled until April 26th.  It 
might as well be in 2010, as far as momentum investors are 
concerned.  With the holiday doldrums approaching and with all 
of the news already out,  GE's stock price will probably just 
wander around.

VOD $49.25 (-0.50) We are going drop our play on VOD for now.
The soap opera saga between VOD and Mannesmann continues
to drag on.  We believe that VOD will eventually be successful
in its efforts to merge with Mannesmann.  Friday VOD did secure
$30 billion in credit from a consortium of banks, not to sweeten
its bid, but to use in case Mannesmann's credit lines are cut 
off if and when the deal goes through.  The telecom sector had 
a better day Friday and VOD continued to struggle.  We are 
dropping VOD as a play for now but will continue to monitor 
the negotiations or lack there of, between VOD and Mannesmann.

SUNW $75.13 (-6.75) Leave it Steve Ballmer, Microsoft's President, 
to mess up a perfectly good play.  Well, not really but his 
announcement that in February, Microsoft would release its 
Windows 2000 server platform, reportedly its most tested and 
most stable platform ever, put a chill on the SUNW.  SUNW builds 
servers that run on competing UNIX systems.  With the announcement, 
the spotlight currently belongs to Microsoft and has put a damper 
on the SUNW play.  We're not saying SUNW is a lousy company 
with completely changed fundamentals.  However it hasn't 
performed as well as we'd like since Ballmer's announcement, 
and we can re-deploy the capital elsewhere for better use.  
SUNW will likely be a play again sometime in the future - just 
not now.


No dropped put plays this weekend.


Current Split Candidates
DCLK - DoubleClick
NOK  - Nokia
STM  - STMicroElectronics
BVSN - BroadVision
GLW  - Corning Inc.
YHOO - Yahoo!
VRTS - Veritas Software
NSOL - Network Solutions
Split candidates that are not current plays
SNE  - Sony Corp.
QLGC - QLogic
CHKP - CheckPoint
HGSI - Human Genome
BRCM - BroadCom
MEDI - MedImmune

Recent announcements we predicted
GE   - General Electric (most recent pick)
CMGI - CMGI Inc. (most recent pick)


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

Symbol - Stock          Splits/Date  
IDPH - IDEC Pharma      2:1 12-20-99 ex-date 12-21
BEAS - BEA Systems      2:1 12-20-99 ex-date 12-21
NTAP - Network Appliance2:1 12-20-99 ex-date 12-21
MRCY - Mercury Computer 2:1 12-20-99 ex-date 12-21
PPRO - PurchasePro.com  3:2 12-20-99 ex-date 12-21
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
QCOM - Qualcom          4:1 12-30-99 ex-date 12-31 est
INKT - Inktomi          2:1 12-30-99 ex-date 12-31
INSP - Infospace        2:1 01-04-00 ex-date 01-05
CCBL - C-COR.net        2:1 01-06-00 ex-date 01-07
FDRY - Foundry          2:1 01-07-00 ex-date 01-10
INAP - InterNAP         2:1 01-07-00 ex-date 01-10
MAPS - MapInfo          3:2 01-10-00 ex-date 01-11
TXCC - TranSwitch       3:2 01-10-00 ex-date 01-11
AVTC - AVT Corp         2:1 01-10-00 ex-date 01-11
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
NVLS - Novellus         3:1 01-15-00 ex-date 01-17
KLAC - KLA-Tencor       2:1 01-18-00 ex-date 01-19
PRGS - Progress Soft    2:1 01-21-00 ex-date 01-24
TMX  - Telmex           2:1 02-01-00 ex-date 02-02
PCS  - Sprint PCS       2:1 02-04-00 ex-date 02-07
HRL  - Hormel           2:1 02-15-00 ex-date 02-16
TQNT - Triquint         2:1 02-22-00 ex-date 02-23
SILI - Siliconix        3:1 02-28-00 ex-date 02-29
MGG  - MGM Grand        2:1 03-01-00 ex-date 03-02

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


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

Call plays of the day:

NOK - Nokia $168.50 (+0.50)(+11.94)(+9.31)(P3W +30.88)

See details in sector list

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


DCLK - DoubleClick $204.94 (+8.94)(+26.63)

See details in sector list

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

Put play of the day:

ETYS - eToys Inc. $37.56 (-7.56)(-8.69)

See details in put list

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


Tired of waiting on trades to execute? 
Does your broker offer Stop Losses on Options?  

Trade instantly with Stop Losses at Preferred Capital Markets
Stop Losses based on the option price or the stock price.
Move your trading into the next millineum with Preferred Capital

Anything else is too slow!



The Option Investor Newsletter          12-19-99  
Sunday                        3 of 5


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

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

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

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

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

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

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.


CLS - Celestica Inc. $91.69 (+4.88)(+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.  

What a nice recovery for Celestica last week.  The leader in 
Celestica's industry group, Solectron threw a wrench in the 
spokes of the rally of the major electronics manufacturing 
companies.  A funny thing happened on the way to the exits.  
Many investors seemed to realize that what may be a problem for 
one is not necessarily a problem for all.  Specifically it was 
announced last week that Solectron was experiencing a shortage 
of key components and that fact contributed to a shortfall in 
their revenue report last week.  After the panic,  at least 
two analysts of Celestica's shares re-iterated their bullish 
outlooks for CLS.  The analyst at Bank of America specifically 
said that CLS is not experiencing the same component problems 
that Solectron is suffering from, and furthermore sees a 
continuation of significant revenue and earnings increases for 
CLS.  It seems that CLS has put that issue behind and investors 
can now concentrate on the upcoming 2:1 split on Dec 22nd.  
What did all of last week's action mean technically?  The shares 
of CLS actually accomplished a very important event last week 
by closing a "gap".  Some technical theorists surmise that all 
gaps must be closed through a retracement in price before a 
stock can resume its trend.  If this theory is true than CLS 
is heading for new highs.  On Wednesday CLS closed the gap by 
trading below support of $80 taking the stock all the way down 
to $75.38.  The past two days have seen an impressive rally back 
to the highs.  Despite a steep selloff in shares at the close 
of Expiration Friday, CLS managed to close only 0.50 off of its 
intraday high.  If CLS can trade above it's old high of $93.25, 
aggressive investors can buy calls in the anticipation of 
continued rallying till the split.  If you do buy in new high 
ground, make sure you put in a stop because the breakout could 
fail and you do not want to be hurt too bad if the market turns. 
If the stock pulls back on Monday, it might be wise to allow 
it to test support at $84.50 before going long.  Make sure you 
close out your positions ahead of the split.

The stock of this Canadian based issue has already split on its 
home exchange in Toronto.  Another major player in the same 
group as CLS, Jabil Circuits, reported earnings on Thursday.  
Despite excellent results and price target increases by Merrill 
and Soundview the shares pulled back a bit.  

BUY CALL JAN-85 CLS-AQ OI=123 at $12.00 SL=9.50
BUY CALL JAN-90*CLS-AR OI=126 at $ 9.13 SL=6.75
BUY CALL JAN-95 CLS-AS OI= 12 at $ 6.75 SL=4.75 low OI

Picked on Dec 12th at    $86.75    P/E = 163
Change since picked       +4.94    52-week high=$93.25
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


NXLK - Nextlink Communications $72.00 (+7.88)

Nextlink delivers broadband communications services to 
businesses over fiber optic and broadband wireless facilities.  
The Company currently provides these services in 41 markets 
across the U.S..  Nextlink is the largest holder of fixed 
wireless spectrum in North America, with licenses covering 95 
percent of the population in the top 30 markets in the U.S.  
Additionally, Nextlink has acquired exclusive rights to a 
16,000 mile high-speed, IP-centric fiber optic backbone network 
that will connect over 50 cities in the United States and 
Canada.  Completion is expected by the end of 2001.

Good news and strong technicals drive our interest in this 
stock.  Nextlink made its first new high of the week on Monday 
when it was announced that it would be placed in the NASDAQ 
100 Index. Companies that are new to this index are introduced 
to a wealth of new investors, particularly institutional ones 
who only concentrate on the elite of the NASDAQ.  After breaking 
out to another new high on Tuesday to just under $74, Nextlink's 
shares cooled off for a couple of days to catch its breath.  
A resistance level of $72 was taken out on Friday.  The resulting 
rally was impressive all the way to just under $77.50 before 
succumbing to end of the day expiration Friday selling pressure.  
The buying interest in NXLK has been very impressive whenever 
it takes out resistance.  If NXLK starts moving up on Monday 
you can go long any pullbacks.  If the stock takes out Friday's 
high of $77.44 the shares of this momentum stock could really go.  
The first support level for NXLK is $70 a pretty good place to 
buy if the market opens weak on Monday.  If support at $70 
doesn't hold, look for the stock to pullback to the $65-$67 
range where it may need to consolidate for a couple of days 
before moving up again.  

On December 8th, the investment company of Forstman Little 
stated it will invest approximately $850 million into Nextlink 
via convertible preferred stock with a conversion price of 
$63.50.  Conversion prices on private equity deals can prove to 
be very powerful support levels for the long-term.  Nextlink 
will be closing the acquisition of 50 percent of INTERNEXT LLC 
early next year.  Nextlink enjoys certain advantages if the 
share price of NXLK is above $64.20 at the time of the closing.
On Friday CIBC Worldwide Markets initiated a Strong Buy rating 
on NXLK.

BUY CALL JAN-65 QNF-AM OI= 314 at $10.88 SL=8.50
BUY CALL JAN-70*QNF-AN OI=1734 at $ 7.63 SL=5.75
BUY CALL JAN-75 QNF-AO OI= 274 at $ 5.13 SL=3.25

SELL PUT JAN-65 QNF-MM OI= 120 at $ 3.13 SL=5.00
(See risks of selling puts in play legend)

Picked on Dec 14th at   $66.69    P/E = N/A
Change since picked      +5.31    52-week high=$77.44
Analysts Ratings     9-5-2-0-0    52-week low =$11.19 
Last earnings 11/99 est= -1.40    actual= -1.27 
Next earnings 02-23 est= -1.45    versus= -1.04
Average Daily Volume =   985 K 
Chart = http://quote.yahoo.com/q?s=NXLK&d=3m


TTN - Titan Corporation $34.44 (+5.94)

The Titan Corporation is a leading provider and integrator 
of state-of-the-art information technology, satellite 
communications systems and services, and medical product 
sterilization and food pasteurization products and services, 
for commercial and government customers worldwide.  Titan has 
made substantial changes recently by moving from a defense 
communications company to an information systems and services 

Titan gets a mighty giant lift from the government.  In a big 
news item last week, the USDA approved an irradiation technology 
to kill deadly bacteria on raw meat.  Titan owns a patented 
technology and a processing plant that will utilize Surebeam 
that destroys food-borne pathogens in seconds using electricity.  
Surebeam has been approved by the FDA for meat irradiation uses, 
and the processing facility will immediately begin pasteurizing 
meat.  In the past year Titan has entered into several exclusive 
multi-year agreements with most of the nation's largest poultry 
and beef providers to handle their irradiation business.  Titan 
has nearly 75% of the ground beef and 50% of the poultry markets 
locked up under these agreements.  It is a headline grabbing 
news item and investors are snapping up shares of Titan with 
carnivorous zeal.  Titan has not offered any revenue or profit 
projections due to the new business.  After the announcement 
shares of TTN rose over $3.50.  After breaking above resistance 
at $31,  TTN had a nice follow through all the way to $36.50.  
Yesterday the trading range contracted with a higher-low and a 
lower-high.  If the stock trades below $33.69, a retracement 
to $31, the breakout point, would not be out of the question.  
If we have a weak market next week, $31 could prove to be an 
excellent entry point for the next advance into new high ground.  
If the shares of TTN do not pullback, a good entry point would 
be when the stock trades above Thursday's high of $36.50.

Other news items concerning Titan include an announced 
acquisition of Internet commerce company, Assist Cornerstone 
Technologies through Titan's e-business solutions subsidiary 
Cayenta.com.  Assist's technology provides a complete front to 
back-end solution to companies focused on conducting business 
over the Internet.  Titan also recently announced the 
acquisition of Advanced Communication Systems, a leading 
government information technology services company.

BUY CALL JAN-30*TTN-AF OI=2797 at $6.63 SL=4.75
BUY CALL JAN-35 TTN-AG OI= 607 at $3.88 SL=1.75
BUY CALL JAN-40 TTN-AH OI= 480 at $2.19 SL=1.00

Picked on Dec 16th at  $35.00    P/E = 73
Change since picked     -0.56    52-week high=$36.50
Analysts Ratings    5-0-0-0-0    52-week low =$ 4.75 
Last earnings 10/99 est= 0.13    actual= 0.13
Next earnings 02-17 est= 0.15    versus= 0.13
Average daily volume =  693 K
Chart = http://quote.yahoo.com/q?s=TTN&d=3m


STM - Stmicroelectronics $139.00 (+2.19)(+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.

This past week a hot item of Wall Street was Semiconductor 
stocks and the Semiconductor sector.  Upgrades, price targets
were increased, earnings estimates were raised, the revenue 
growth outlook for the sector is looking higher than previously 
expected for next year, and there will be accelerated global 
demand.  That is just a few of the many key items being 
discussed that had the $SOX index rolling back from the low's 
on Tuesday of $587.99, to end the week at $639.34.  This ended 
the week at the high end of the range up 51.35 points from the 
bottom.  STM continues to mirror the $SOX reaching a high for 
the week of $143, re-establishing the uptrend before settling 
in to close at $139 after the late day sell-off on Friday.  
Trailing stops should have allowed for a nice profit at this 
point and we want to keep stops tight since STM closed at the 
low end of Friday's range.  The uptrend has been established,
but the volume has not followed.  A move above $141, backed 
by strong volume, would be a nice conformation of the trend 
and be tough to resist for an new play. 

In the news, STM completed its purchase of Arithmos, a California
based developer of flat panel displays, integrated circuits and
personal computers.  Also, STM and Hewlett-Packard have joined
forces to research and develop a computer chip that will be used
in applications like cell phones and printers.  This news could
provide a spark in the shares of STM in the trading days to come.
This kind of technology is contributing to change the face of 
the computer hardware industry.

BUY CALL JAN-135*STM-AG OI=155 at $15.88 SL=12.63 
BUY CALL JAN-140 STM-AH OI= 98 at $13.00 SL=10.50 
BUY CALL JAN-145 STM-AI OI= 17 at $10.25 SL= 7.75 low OI 

Picked on Nov 30th      $125.06    P/E = 83
Change since picked      +13.94    52-week high=$145.00
Analyst Ratings      12-2-2-0-0    52-week low =$ 35.69
Last earnings 10/99  est=  0.43    actual= 0.46
Next earnings 01-25  est=  0.56    versus= 0.42
Average daily volume = 1.07 mln 
Chart = http://quote.yahoo.com/q?s=STM&d=3m


INSP - InfoSpace.com $166.69 (+8.63)

InfoSpace.com provides content and commerce solutions for 
Web sites and Internet appliances.  Their focus is on real-
world content such as yellow pages, maps, classified ads, real-
time stock quotes, sports and other information.  InfoSpace.com 
is a leading global Internet information infrastructure 
company.  They provide their services to consumers, merchants 
and wireless devices.  InfoSpace.com's affiliate network 
consists of more than 2,100 Web sites.  Major affiliates 
include AOL, Microsoft, Disney, Lycos and Doubleclick, Dow 
Jones and ABC LocalNet among others.

INSP joined the ranks of Internet companies splitting their 
shares.  On November 30th, INSP announced a 2-for-1 and has 
been rallying ever since.  We have time to jump on this split 
play with a payable date on the 4th of January.  InfoSpace is 
not simply content to cheer investors with a split.  They have 
also announced 2 strategic acquisitions.  One a wireless service 
provider the other an e-commerce company for $750 million in 
stock.  They have also received a long-term Buy recommendation 
from Merrill Lynch.  After reaching an intra-day high of $181 
on December 8th, the shares of INSP had a very healthy pullback 
all the way down to $135 last week were it successfully tested 
support.  The selloff was healthy because it washed out the 
short term traders and found some new investors who may try and 
drive the stock into new high ground.  There are two possible 
entry points for this play.  If INSP trades above Friday's high 
of $169 it may indicate a run to the old high of $181.  If 
there is general weakness in the Internet sector early next 
week (which is possible considering the run out on Friday) be 
patient and attempt to go long on INSP at support in the $153-
$155 area.

In other news it was announced on Friday that InfoSpace.com has 
formed InfoSpace.com Venture Capital Fund to make investments 
in start-up Internet companies that are synergistic to INSP's 
business.  Can you say CMGI?

BUY CALL JAN-165 OHY-AM OI= 42 at $29.00 SL=22.62
BUY CALL JAN-170*OHY-AN OI=190 at $26.25 SL=20.48 Better OI
BUY CALL JAN-175 OHY-AO OI= 22 at $24.50 SL=19.11 low OI
BUY CALL JAN-180 OHY-AP OI=120 at $22.13 SL=17.26

Picked on Dec 19th at   $166.69    P/E = N/A
Change since picked       +0.00    52-week high=$181.00
Analysts Ratings      6-4-0-0-0    52-week low =$  9.75 
Last earnings 10/99   est=-0.03    actual= 0.06 
Next earnings 02-04   est=  N/A    versus=-0.04
Average Daily Volume = 1.07 mln 
Chart = http://quote.yahoo.com/q?s=INSP&d=3m


TERN - Terayon Communications $69.94 (+4.69)

The company's TeraComm system speeds up and helps improve the
quality of two-way data transmissions over the cable so that 
cable providers can offer enhanced Internet access.  Terayon
Communications systems located in Santa Clara, California is 
in the broadband business in a big way.  TERN has some big 
customers as well, including Shaw Communications a Canadian
cable firm, U.S. cable provider Cablevision, and their 
distributor in Japan, Sumitomo.  They compete with some of 
the biggest and best in the industry including 3Com, Motorola,
and Samsung.  Cisco Systems holds a six percent stake in the 

TERN joins our list of plays for several reasons.  After 
making a new high in mid-November at $74, TERN is rapidly
approaching that level again. The communications equipment 
company appears to have the momentum necessary to move higher.
The communications and technology sector made a strong move 
yesterday as well setting new highs.  Earlier this month 
legislation in Brazil opened up the numerous opportunities in 
the broadband market.  News came out Thursday that a company 
named Globo Cabo S.A(GLCBY) announced the launch of its 
high-speed Internet access service in Brazil.  TERN seems to 
have positioned themselves to take advantage of the increasing 
broadband opportunities in Brazil and as well as those in the 
U.S. markets.  The cable modems chosen by Globo Cabo will be 
provided by Terayon.  The news got investors attention on Friday.  
TERN gained over $6 on strong volume of 900K, nearly twice its 
norm.  After making its November high TERN has traded mostly in 
an $8 range between $68 and $60.  Friday TERN broke out of that 
range and appears to be on the move.  TERN closed right on an 
intraday support level near $70.  The next area of support is 
found at $68.  We would look for continued strength as an 
opportunity to buy calls.  If we see a pullback let TERN bounce 
off of a support level prior to entering a new play.  The lack 
of liquidity in the upcoming week could be a problem for traders 
wanting to enter plays.  Assess your risk profile and select 
your entry points carefully.

No other news at this time. 

BUY CALL JAN-60 TUN-AL OI=720 at $13.13 SL=10.50
BUY CALL JAN-65*TUN-AM OI=477 at $ 9.88 SL= 7.50
BUY CALL JAN-70 TUN-AN OI=370 at $ 7.38 SL= 5.75
BUY CALL JAN-75 TUN-AO OI=243 at $ 5.38 SL= 3.75

Picked on Dec 19th at   $69.94     P/E = N/A
Change since picked       0.00     52-week high=$74.00
Analysts Ratings     2-3-1-0-0     52-week low =$25.75
Last earnings 10/99  est=-0.22     actual=-0.08 surprise +63.6%
Next earnings 01-18  est=-0.19     versus=-0.33
Average Daily Volume =   517 K
Chart = http://quote.yahoo.com/q?s=TERN&d=3m


VIGN - Vignette Corp. $149.94 (+8.06)

Vignette provides Internet Relationship Management software
products and services.  They offer two server platforms, the 
StoryServer and the Syndication Server, which allow customers
the ability to build and manage customer relationships online.
The StoryServer software enables businesses to post information
on their Web sites without reprogramming.  It also generates 
reports on Web site traffic and can customize private Web 
pages with data for individual clients.  Located in Austin,
Texas VIGN competes in the market place with BroadVision, 
Allaire, and Inso.

Vignette Corp has already had a full month of excitement.
Their stock split 2:1 on December 1st.  Several brokerage
firms had reiterated their views of the company and on Dec 9th
they announced a secondary offering.  Oh, and by the way, did
we mention the price of their stock has risen almost 50 percent
since the split as well.  Not a bad month.  On Dec 10th VIGN 
announced that it was pricing a secondary public offering of
2.9 million shares of stock, at $139.88.  Immediately after the
announcement shares of VIGN fell back to $129 but then promptly 
began its ascent to new highs.  Friday VIGN made a new split 
adjusted high of $153.  The volume behind the move was strong 
with over 1.5 million shares exchanging hands.  VIGN closed at 
$149.94, +9.94 for the session.  The strength of the move would 
indicate there is more room to go on the upside.  One other item 
that might lead us to believe in the strength of VIGN stock is 
a reiteration of a Buy rating from analyst, Manuel Royo at
Southwest Securities.  He raised his price target for the 
software company from $120 per share to $220 in the next twelve
months.  At the rate the company's stock has been moving lately
it may see $220 sooner than 12 months.  Friday's move took out
a resistance level of $146 experienced earlier in the week.
Should we see a pullback in shares of VIGN, intraday support
would be seen near $146 and $140.  A bounce off support would
provide a good entry point for our play.  Remember it is 
a holiday week and the liquidity in the markets will be slim.
Due to the recent volatility of the stock the option premiums
are inflated, so this play may not be for those with a weak 
heart.  As always assess your risk profile as well as the 
potential profit prior to entering any new play.
Tuesday Oberon Software, a privately held, provider of software
that enables e-business through rapid integration with customers
announced that its e-Enterprise integration platform will soon
integrate with VIGN's flagship e-Business applications.  VIGN
also announced this week that Great Entertaining an online 
party supplies company had selected Vignette's StoryServer 4
software platform.

BUY CALL JAN-140*UOJ-AH OI=152 at $25.50 SL=20.15
BUY CALL JAN-145 UOJ-AI OI= 73 at $22.63 SL=17.75 low OI
BUY CALL JAN-150 UOJ-AJ OI=340 at $20.25 SL=16.00

Picked on Dec 19th at  $149.94     P/E = N/A
Change since picked      +0.00     52-week high=$153.00
Analysts Ratings     9-4-0-0-0     52-week low =$ 18.63
Last earnings 10/99  est=-0.10     actual=-0.09 surprise=+10.0%
Next earnings 01-19  est=-0.08     versus= N/A
Average Daily Volume =   959 K
Chart = http://quote.yahoo.com/q?s=VIGN&d=3m


SONE - Security First Technologies $84.00 (+19.25)

S1, the pioneer of Internet banking, is today's leading global 
provider of innovative Internet-based financial services 
solutions.  S1 offers a broad range of applications that empower 
financial organizations to increase revenue, strengthen customer 
relationships and gain competitive advantage by meeting the 
evolving needs of their customers across various lines of 
business, market segments and delivery channels.  Through its 
professional services organization, S1's applications can be 
implemented in-house or outsourced to the S1 Data Center. 

SONE broke out of its consolidation phase on December 2, and 
hasn't stopped to look back since.  Driving the move is renewed
interest in the internet and specifically B2B e-commerce.  SONE
continues to make strategic alliances as they strengthen their
market position, (see news below).  Since the breakout, shares 
of the company have only once touched the 5-dma (currently at 
$76.19).  Nothing moves up in a straight line to be sure, but 
barring a significant correction in the broader markets, we may
have to content ourselves with an entry on an intra-day dip.
Price swings of $6-10 are common, which should give the alert 
trader good entry opportunities.  SONE has almost doubled in 
price since the first of the month, so there is a lot of air that
could be let out by any negative news or market events.  Remember
the FED meeting this week; investor concern before the meeting
could be just what we need to get a good entry into this high-
flyer.  In the event of a correction (Oh please!), look for a 
bounce near $70, which is just above the 10-dma (currently at 
$68.33).  This can be a volatile issue, so confirm direction 
and continuing strong volume before opening a new position.

VerticalOne Corporation, a wholly-owned subsidiary of SONE,
announced on December 13 they have been selected to provide
their one-stop personal account aggregation service to
iVillage.com's vast audience of 7.1 million women visitors.
On Wednesday, the company announced a joint venture with Zurich
Financial Services to develop a new European-based subsidiary 
of SONE.  Zurich will invest $15 million in exchange for a 
minority stake in the new venture.

BUY CALL JAN-75 QFB-AO OI=484 at $14.63 SL=11.00 
BUY CALL JAN-80*QFB-AP OI=267 at $12.25 SL= 9.25 
BUY CALL JAN-85 QFB-AQ OI=40  at $ 8.88 SL= 6.50 Low OI!
BUY CALL JAN-90 QFB-AR OI=7   at $ 8.00 SL= 6.25 Low OI!

Picked on Dec 18th at  $84.00     P/E = N/A
Change since picked     +0.00     52-week high=$85.00
Analysts Ratings    6-2-0-0-0     52-week low =$13.94
Last earnings 11/99 est=-0.05     actual=-0.03
Next earnings 02-01 est=-0.06     versus=-0.19
Average Daily Volume =  735 K
Chart = http://quote.yahoo.com/q?s=SONE&d=3m


YHOO - Yahoo! Inc. $350.00 (-3.50)

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

Let's see...recently added to the S&P 500...up $130 within 
five days of the announcement...$40 sell-off following the 
addition...why is it that we'd play this again?  Earnings 
scheduled for release on January 11, of course.  A high 
probability of a split announcement is part of the play too.  
Expect the two to coincide since they have in the past three 
split announcements.  YHOO has never split 3:1.  Historically, 
the ratio has most recently been 2:1.  However, there are 900 mln 
shares authorized - plenty for a 3:1 with only 263 mln 
outstanding.  Plenty of companies have great earnings, but don't 
make the play list.  What makes YHOO so special?  Aside from 
being a brand name leader on par with AOL in the Internet 
business, YHOO has handily beaten previous earnings estimates and 
enjoyed a healthy run-up into the announcement.  It's highly 
likely history will repeat itself.  Technically speaking, YHOO's 
support is at $315, $320, and $332.  Those are places to start 
target shooting.  However, in Friday's final minutes, YHOO 
successfully tested $345, then bounced up from there.  It just 
might hold on the "old resistance becomes new support" theory.  
Play it according to your own risk profile, and recognize that 
you still have plenty of time to take a position, so don't 
chase it.  Wait for the pullbacks.  Low volumes indicates a 
consolidation, thus it may be more profitable to wait until 
the volume returns before getting on the train.

If you hadn't already heard the news, Yahoo! will partner with 
SoftBank and Kmart to launch a new online shopping site.  Looks 
like the specials will no longer be relegated to 10 minute time 
slots on isle 38.  While an initial expense increase to K-Mart, 
YHOO benefits.

With the big premiums, you may want to consider covered call 
positions too.

BUY CALL JAN-340*YUU-AH OI= 895 at $39.13 SL=30.50
BUY CALL JAN-350 YUU-AJ OI=3213 at $34.75 SL=27.00
BUY CALL JAN-360 YUU-AL OI=3013 at $30.13 SL=23.50

Picked on Dec 12th at   $350.00    P/E =1364
Change since picked       +0.00    52-week high=$357.50
Analysts Ratings    14-14-4-0-0    52-week low =$ 94.75
Last earnings 10/99   est= 0.14    actual= 0.10 surprise=+40%
Next earnings 01-11   est= 0.15    versus= 0.11
Average Daily Volume =  9.0 mln
Chart = http://quote.yahoo.com/q?s=YHOO&d=3m


NSOL - Network Solutions $239.94 (+21.19)

Network solutions is the leading Internet domain registration
services provider worldwide.  At one time NSOL was the only 
registrar of Internet addresses ending in domains .com, .org,
. Net, and .EDU.  In 1999 the U.S. government opened the market
To competition.  By registering Internet domain names the company
enables businesses and other organizations and individuals to
establish an Internet identity.  NSOL has registered more than
4 million .com Web addresses representing businesses around the
world.  Network Solutions received competition in 1999 from
AOL, France Telecom and others pursuing the .com registration 
business.  NSOL is now marketing its network engineering and
security services. 

NSOL had quite a week.  Shareholders of NSOL stock experienced 
gains of over $56 before the Internet domain registrar finally
settled at $239.94, +21.19 for the week.  Monday it was 
announced that NSOL would join a new group of stocks to be
added to the prestigious Nasdaq 100 index.  In addition, NSOL
will also be included in the Nasdaq 100 Tracking stocks, which
includes securities representing ownership in the Nasdaq-100
Trust.  The $4 billion trust holds a portfolio of equity 
securities that compose the Nasdaq 100 index.  Since being
added to our list of plays NSOL has gained over $67.75.  Although
it has been a fantastic play in the last three days, it is
not one that everyone would be comfortable considering.  Notice
the implied volatility in the price of the options listed below.
It is a play that has offered exceptional rewards, and we
believe will continue to do so.  The volatility in Friday's
session was obvious with NSOL making a new 52-week high at
$274.75.  NSOL closed near its low of the day at $237.  A range 
of over $37 for one day, is volatile, however seems to becoming
more common in many of the Internet issues recently.  Volume 
Friday was strong at 1.99 million shares.  NSOL lost $8.06 for
the day Friday, but spent most of the day declining from its high
early in the session.  Should we see NSOL and the Internet sector 
retreat further next week, support can be seen near $225.  A 
bounce off support, accompanied by strong volume would signal 
an opportunity re-enter this play.  As we mentioned this is not
a play for everyone, and the lack of liquidity in the markets 
this week will make it imperative that you stick to your guns 
when entering a play.

Friday Network Solutions announced the release of a new enhanced 
version of the dot com directory.  The dot com directory is a 
comprehensive source for consumers to find online businesses 
they are looking for.  Remember NSOL joins the Nasdaq 100 index 
at the start of trading on Monday.


BUY CALL JAN-220*JNU-AD OI=403 at $46.63 SL=36.75
BUY CALL JAN-230 JNU-AF OI= 45 at $40.63 SL=32.10
BUY CALL JAN-240 JNU-AH OI=125 at $37.00 SL=29.25

Picked on Dec 14th at   $207.00    P/E = 386
Change since picked      +32.94    52-week high=$274.75
Analysts Ratings      7-6-0-0-0    52-week low =$ 47.00
Last earnings 10/99   est=-0.19    actual= 0.21 surprise +10.5%
Next earnings 01-27   est= 0.23    versus= 0.11
Average daily volume = 1.06 mln
Chart = http://quote.yahoo.com/q?s=NSOL&d=3m


BVSN - Broadvision $129.00 (+21.63)

Broadvision provides integrated software application systems.  
These systems enable users to create applications for marketing
and selling their services on the World Wide Web.  Broadvision's
software is designed as a platform to conduct e-commerce 
transactions, offer online financial services, and deliver 
information to customers.  Their One-to-One software enables 
venders to tailor their marketing efforts directly to each 
visitor based on a set of business rules.  Thus making it 
easier for both parties to interact.

We began playing BVSN on Thursday because we thought that BVSN 
was poised to break through its newly set 52-week high of $135.  
Breakthrough it did!  BVSN traded all the way up to $139.88 the 
very next day!  BVSN spent the majority of Friday's session 
flirting with $137.50 before the rather voracious profit-takers 
moved in for the kill near the end of the day, dragging BVSN all 
the way down to close at $129.  This is just the kind of 
opportunity we like to see on a solid call play.  A quick sell-
off backed by holding support and a reclamation of positive 
momentum.  BVSN is resting on support of its 5-dma of $128.50.  
This level should evolve into nice support and we look for it 
to continue doing so in the future.  BVSN made a nice bounce 
here on Friday and closed on the road to recovery.  This could 
be a good area to make a new entry should BVSN continue Monday 
where it left off.  BVSN has additional support at $120, if 
needed.  BVSN may encounter some resistance at $130, though 
the resistance is the new 52-week high.  Watch for established 
support to hold and a continued reclamation of BVSN's positive 
momentum run.  Also, remember to take advantage of BVSN's wide 
intra-day trading ranges for possible entry points.

There is no new news that we believe will really have an affect
the share price.  BVSN makes an occasional appearance in an 
article related to the booming business-to-business industry, 
which never hurts.  We are still keeping our ears open to catch 
any news on the possibility of a split (we mentioned in last 
Thursday's write up that BVSN does have enough shares authorized 
for another split).

BUY CALL JAN-125*BDV-AE OI=587 at $19.63 SL=15.25
BUY CALL JAN-130 BDV-AF OI=427 at $17.25 SL=13.50
BUY CALL JAN-135 BDV-AG OI=376 at $15.50 SL=12.00

SELL PUT JAN-110 BDV-MH OI=237 at $ 7.63 SL=10.00
(See risks of selling puts in the play legend)

Picked on Dec 16th at   $131.69     P/E = 878
Change since picked       -2.69     52-week high=$139.88             
Analysts Ratings     5-16-2-0-0     52-week low =$  9.00                 
Last earning 10/99    est= 0.04     actual= 0.05                            
Next earning 01-27    est= 0.06     versus= 0.03                            
Average Daily Volume = 1.92 mln
Chart = http://quote.yahoo.com/q?s=BVSN&d=3m


DCLK - DoubleClick $204.94 (+8.94)(+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.

The outlook for DCLK continues to look positive and they are 
being recognized as the leader in the Online Ad space.  We 
are still hearing rumors that the stock split for DCLK is 
just around the corner and, the newest rumor, is a possible
addition to the Nasdaq 100.  Remember these are rumors, but
it looks as though traders were buying into the rumor mill near 
the close of trading on Friday as the stock broke-out sharply
in the final hour of to close at the high end of the range 
$204.94, up over 15 points for the day.  Friday's trading
pattern was unlike previous sessions, volatility calmed until
the 3pm price surge.  Something is UP!!  That unusual move was
not just a coincidence.  Let's see how it plays out.  Well the
adventurous traders who took a chance and hung in there around
$190 should be in profitable positions or have already taken
profits.  Previous resistance at $200 has been shattered.  DCLK 
now sits at a 52-week closing high $204.94.  It is blue sky 
territory is above $209.38.  We continue to like DCLK at these 
levels and are bullish short-term.  A retrace to $200 would make 
for a nice entry but DCLK will likely gap on the open Monday.  
Maybe we will get some fresh news by then.  

We will keep watching for more news or rumors to fuel DCLK.

BUY CALL JAN-200 TDU-AT OI=1929 at $26.00 SL=20.00
BUY CALL JAN-210*QTD-AB OI= 268 at $21.38 SL=18.13
BUY CALL JAN-220 QTD-AD OI= 555 at $17.25 SL=14.00
BUY CALL JAN-230 QTD-AF OI=  88 at $14.25 SL=11.50 

Picked on Dec 9th  at   $197.00    P/E = N/A
Change since picked       +7.94    52-week high=$209.38
Analyst Ratings      11-7-1-0-0    52-week low =$ 17.88
Last earnings 10/99  est= -0.14    actual= -0.13
Next earnings 01-19  est= -0.10    versus= -0.13
Average daily volume = 2.60 mln 
Chart = http://quote.yahoo.com/q?s=DCLK&d=3m


AOL - America Online Inc $85.00 (-6.50)(+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.  

We added AOL to our call list on Dec 2nd as a holiday momentum 
play.  Since its inception at $79.88 we've seen the share price 
climb to a new all-time high at $96 during Monday's trading 
session.  However the rest of week we've been waiting patiently 
as AOL consolidates at an $85 support range.  At this point we 
expect $85 to hold and if it doesn't we'll kill the play.  Look 
for a strong bounce off the 10-dma ($86.32) with a show of 
volume for confirmation.  

Some of highlights this week were the cross marketing deal 
between AOL and Wal-Mart (WMT) which includes a broad range 
of initiatives such as a co-branded ISP.  And on Friday, AOL 
announced it now has more than 20 mln subscribers in 15 
countries and has plans to add services in Mexico and 
Argentina next year.

BUY CALL JAN-80 AOO-AP OI=44368 at $11.25 SL=9.00
BUY CALL JAN-85*AOO-AQ OI=45512 at $ 8.88 SL=6.75
BUY CALL JAN-90 AOO-AR OI=37947 at $ 6.63 SL=5.00
BUY CALL JAN-95 AOO-AS OI=21846 at $ 4.88 SL=3.25

SELL PUT JAN-80 AOO-MP OI=17941 at $ 5.63 SL=7.50
(See risks of selling puts in the play legend)

Picked on Dec 2nd at     $79.88    P/E = 251
Change since picked       +5.13    52-week high=$96.00
Analysts Ratings    23-16-3-0-0    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 = 20.0 mln
Chart = http://quote.yahoo.com/q?s=AOL&d=3m


INKT - Inktomi Corp $171.06 (+3.31)(+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.

Nine trading days left for this split run!  INKT is splitting 
its stock 2:1 on December 30th and will go ex-div on New Year's 
Eve.  The Board of Directors announced the stock on December 3rd 
and INKT surged on the news.  The company has 300 mln shares 
authorized and 50 mln outstanding, therefore shareholder approval 
was not required.   

This has been a great week to play INKT if you had the stomach 
to whether its ups and down.  On Monday it set another 52-week 
record peaking at $185 intraday providing a hefty profit for 
players who entered in the vicinity of support ($160).  Share 
prices were bid up by the news that Microsoft had reopened its 
doors to the search provider.  Inktomi's award-winning Search 
Engine would once again be the search provider for all of MSN.  
But then YIKES! INKT swiftly fell back to the $160 support level 
by Wednesday morning.  The good news is the back fill was a 
blessing of an entry point after all.  INKT has slowly regained 
its position above the 10-dma ($166.93) and this is a positive 
sign.  Although trading activity was sluggish and we'd like to 
see volume levels pick back up and signal another powerful 

BUY CALL JAN-165 KYQ-AM OI= 580 at $23.75 SL=18.50
BUY CALL JAN-170*KYQ-AN OI=1170 at $20.50 SL=16.00
BUY CALL JAN-175 KYQ-AO OI= 296 at $19.13 SL=15.00
BUY CALL JAN-180 KYQ-AP OI= 801 at $17.25 SL=13.50

Picked on Dec 9th at    $166.94    P/E = N/A
Change since picked       +4.13    52-week high=$185.00
Analysts Ratings      7-6-3-0-0    52-week low =$ 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 = 1.97 mln
Chart = http://quote.yahoo.com/q?s=INKT&d=3m


VRTS - VERITAS Software $117.47 (+8.41)(+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 (CWX) started Friday's session trading higher
and drifted lower for the balance of the day.  VRTS Gapped up at
the opening bell, fell back and gained momentum as the day went 
on, finishing the session +4.47 at $117.47.  VRTS finished the 
week with a nice gain of +8.41.  Technically, VRST not only broke 
out of the recent trading range this week, but more importantly 
made a new 52-week Friday at $120.25, which should give VRTS 
the momentum to continue higher.  VRTS is popular with the big 
players, with over 80 percent of its outstanding shares owned
by over 568 institutions.  The company is well positioned in the 
storage business, and connected to most of the major players in 
the industry.  Friday, analyst Kevin Buttigieg, from PaineWebber 
initiated coverage of VRTS with an Attractive rating, with a 
12-month target of $127.  Where do we go from here?  If the 
software sector can't regain its momentum, VRTS may have to try 
to go it alone.  We would look for VRTS to continue to climb as 
the volume behind Friday's move was solid with over 5.1 million 
shares exchanging hands.  As for a new play, VRTS has intraday 
support at $117, $114 and $110.  A bounce off any of those levels
could provide a good buying opportunity.  Continued strength
would also be viewed as a chance to enter this play, however we
would suggest looking for a pullback to enter.  As we head into 
a holiday week the liquidity will be thin and could produce
wild swings in the markets.  Assess your risk profile prior to 
entering any new plays this week.

Earlier in the week VERITAS announced they had broadened their
strategic relationship with NEC Corporation.  The agreement
expands a partnership announced in mid-September.  Terms of the 
agreement call for VERITAS NetBackup to be bundled with NEC'S
backup server, and for VERITAS Backup Exec to be bundled in
NEC's entry-model servers. 

BUY CALL JAN-105 VUQ-AA OI=337 at $21.50 SL=17.00
BUY CALL JAN-110 VUQ-AB OI=649 at $18.50 SL=14.50 
BUY CALL JAN-115*VUQ-AC OI=248 at $15.63 SL=12.25
BUY CALL JAN-120 VUQ-AD OI=713 at $13.63 SL=10.75

Picked on Dec 12th at   $109.06    P/E = N/A
Change since picked       +8.41    52-week high=$120.25
Analysts Ratings     6-14-2-0-0    52-week low =$ 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 = 2.50 mln
Chart = http://quote.yahoo.com/q?s=VRTS&d=3m


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The Option Investor Newsletter             12-19-99  
Sunday                        4 of 5


NT - Nortel Networks $90.44 (+2.19)(+8.06)(1.50)(P4W +19.75)

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.

Not much changed since Thursday's update, which is to say that 
following the breakout early last week, NT remained fairly flat 
in the $89 to $92 range.  As the largest provider of Optical 
networking equipment ahead of Lucent, and anticipating $10 bln 
in sales of optical equipment alone in 2000 (which could account 
for up to 30% of NT's business), NT expects this segment of its 
business to grow more rapidly than any of its other divisions.  
Compared to its peers, it's still reasonably priced too, which 
has fund managers salivating (evidenced by strong volume above 
the ADV of 4.3 mln shares).  20% growth rate and increasing 
margins don't hurt either.  Support is currently mild at $90 and 
gets stronger in descending $2 increments ($89, $87, and $85).  
If it drops below $85, it will likely do so with strong volume 
since that's where the most recent breakout occurred, in which 
case you may want to make an exit or stand aside.  Feel free to 
target shoot to your comfort level.  Just make sure there is 
volume in the issue - weak with descending price is OK; strong 
and descending indicates institutional selling.  Weak volume, 
but ascending price should prepare you for the exits; average 
to strong volume and ascending price is ideal.  Resistance is 
$92.50; breakout occurs at $94.  We suggest target shooting in 
the $80's or waiting for the breakout.  Also, despite the 30% 
greater return for every $1 NT gains, we are dropping the Clarify 
(CLFY) strikes because they are so thinly traded and the spreads 
eat up the profits.  NT is also a split candidate at these 
levels.  A likely announcement date would be with earnings 
tentatively scheduled for January 25.

In the news, NT agreed to purchase Qtera, a company developing a 
technology that will allow an optical signal to travel further 
without regeneration.  Purchase price: $3.5 bln.  NT also took 
a position in a small DSL provider (Log On America) for $5 mln.  
NT will sell them $47 mln worth of DSL equipment for starters.

BUY CALL JAN-85*NT-AQ OI=1269 at $10.00 SL=7.50
BUY CALL JAN-90 NT-AR OI=1724 at $ 7.00 SL=5.25
BUY CALL JAN-95 NT-AS OI=1102 at $ 4.75 SL=3.00
BUY CALL MAR-90 NT-CR OI= 671 at $10.88 SL=8.50
BUY CALL MAR-95 NT-CS OI= 534 at $ 8.63 SL=6.50

Picked on Nov 7th at    $68.81     P/E = 563
Change since picked     +21.63     52-week high=$94.00
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 = 4.3 mln
Chart = http://quote.yahoo.com/q?s=NT&d=3m


NOK - Nokia $168.50 (+0.50)(+11.94)(+9.31)(P3W +30.88)

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?

NOK traded down to $150 this week, so how come we're so excited 
about it?  One word: sandbag.  When the Chairman announced 3 
weeks ago that they were upping their growth rate forecast from 
the 25-35% range to the 30-40% range and announced that they 
would sell 1 bln handsets a year ahead of schedule, we think 
that's conservative.  Since the old schedule was by the end of 
2003, with the new schedule by the end of 2002, it doesn't take 
a rocket scientist to see that cramming 3 years of anticipated 
revenue into 2 years is actually a 50% growth rate.  Hello 
upside surprise!  We look for the first one to be at earnings 
tentatively scheduled January 20.  As a corporate officer or an 
analyst, you don't want to let out the whole line at once, thus 
you surprise a little in each successive quarter to build a great 
earnings history, which will really pump up the multiple and the 
price.  The odds of an upside surprise get even higher if NOK 
announces a split BEFORE earnings - the theory here is that 
management would not announce a split if there were going to be 
any glitches in their numbers.  Just meeting current expectations 
won't do.  Get ready for an earnings run to begin after the new 
year.  Technically, NOK has moved up back to the middle of the 
trading channel, but we need volume to get back to those highs 
of $179.  Having said all that, keep your guard up for profit-
taking since volume has fallen back to the ADV.

In the news, NOK signed an equipment provision agreement with KG 
Telecom, a wireless provider in Northern Taiwan, valued at $250 
mln.  A deal a week - that's all we ask!  It's also possible we 
could get an announcement on Monday that NOK is purchasing QCOM's 
handset business (just a hunch on our part)

BUY CALL JAN-160 NAY-AL OI=4051 at $17.75 SL=13.75
BUY CALL JAN-170*NZY-AN OI=1951 at $12.88 SL=10.50
BUY CALL JAN-180 NZY-AP OI= 940 at $ 9.00 SL= 6.75
BUY CALL APR-170 NZY-DN OI= 430 at $24.00 SL=18.75
BUY CALL APR-180 NZY-DP OI= 370 at $19.75 SL=15.50

Picked on Nov 14th at  $122.25     P/E = 74
Change since picked     +46.25     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 surprise=9.6%
Next earning 01/20   est= 0.66     versus= 0.58
Average Daily Volume = 3.2 mln 
Chart = http://quote.yahoo.com/q?s=NOK&d=3m


QCOM - Qualcomm Inc. $455.00 (+63.50)(+7.06)(P3W +28.31)

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 OmniTRACSŪ 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.

Uummm...+$63.50 for the week...any complaints?  By now we've 
all had the opportunity to pump our fists while breaking out the 
party hats and horns.  In fact, QCOM has tacked on $125 since we 
picked it, and it closed at a new all time high on Friday with 
volume at 92% of its ADV.  Want more?  QCOM shareholders' vote on 
Monday on a proposal to increase the authorized shares in order 
to effect the 4:1 split, tentatively scheduled for December 30.  
We would expect the run to continue into and perhaps past the 
split.  However, Monday's vote has become an event unto itself 
and investors may have been buying in anticipation of this date 
too.  If the "buy the rumor; sell the news" theory holds, it's 
possible that we could see a brief sell-off after the 
announcement.  Nonetheless, the possibility exists that they 
could also announce the sale of their handset division (the hunch 
is Nokia), which would tend to support the price.  We're not 
saying to bail out - just keep a watchful eye on the action, or 
set a trailing stop to protect profits.  We suggest waiting for 
the news of the shareholder meeting before taking any new 
positions at this level.  This is a good time for profit-taking 
and others may see it that way too.  Strong support is way back 
at $410, followed by progressive $10 (roughly) increments at 
$415, $425, $435,and $445.  $455 could be resistance (short-term 
likelihood), but a big news based boost could set it up as 
support after a breakout.  As we said, wait for the news, then 
consider target shooting.  Congratulations to those who've made 
a bundle so far on this play.

As a refresher, CDMA technology is the future and is being 
adopted for use in the newest telecom systems in the world.  Hard 
wired systems under construction as little as one year ago have 
already been abandoned in favor of the CDMA wireless solution.  
QCOM is going to become instrumental in developing the last mile 
where copper dinosaurs form data bottlenecks, and where fiber is 
currently too expensive to reach.

With these huge premiums, covered calls can work well here too.

BUY CALL JAN-430 AAF-AW OI=1580 at $56.38 SL=44.00
BUY CALL JAN-440*AAF-AZ OI= 727 at $50.63 SL=39.50
BUY CALL JAN-450 AAF-AK OI=1387 at $46.00 SL=36.00
BUY CALL JAN-460 AAF-AM OI= 672 at $41.75 SL=33.25
BUY CALL JAN-470 AAF-AO OI= 323 at $37.13 SL=29.50

Picked on Nov 16th at   $330.00    P/E = 319
Change since picked     +125.00    52-week high=$456.00
Analysts Ratings      6-8-4-0-0    52-week low =$ 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 =  5.5 mln
Chart = http://quote.yahoo.com/q?s=QCOM&d=3m


JDSU - JDS Uniphase $240.94 (-3.31)(-6.94)(P3W +52.19)

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.  Effectively 
they do for light what Intel does for electrons.  Their 
components are critical to the development of optical networks.  
Since Wednesday when JDSU (the reprobate) dropped like a rock to 
$210, it managed to spring back all the way to $262 at Friday's 
opening before falling back to $247 in amateur hour.  After 
hanging around the $252 level for most of Friday, it again took 
a nosedive with 35 minutes left to go into the close, shedding 
roughly $10 on increased volume (not acceptable behavior - kind 
of makes us want to pinch Junior's ear to get his attention.)  
While JDSU hasn't been the ascending barnburner we'd hoped for, 
it has provided drastic intraday movements, leaving us lots of 
opportunity for profits.  With the exception of Wednesday's 
hiccup, the lows are still getting higher - a good sign.  
Nonetheless, Friday's sell-off concerns us, even though $238-$240 
is a decent level of support for the stock in the ascending 
channel.  If there is going to be any salvation for JDSU, it's 
going to have to begin its 2:1 split run prior to the ex-date of 
December 30.  Volume needs to pick back up again too while its 
making its move to convince us that it's for real.  More support 
is at $233.  Target shoot to your level of comfort, then note 
some strong resistance building at $262.  After that, breakout 
occurs at $274.

Well, you wouldn't know it by Friday's sell off, but JDSU has 
plans to build more facilities and hire 2400 more workers in 2000 
to meet demand.  That's great news and makes the long-term 
prospects all the more attractive.  Remember too that following 
the split, shares will trade under the new symbol, JDSUV.

Time premiums are high.  Consider covered calls as well.

BUY CALL JAN-230 UQD-AF OI=2435 at $37.13 SL=29.00
BUY CALL JAN-240*UQD-AH OI=1793 at $32.13 SL=25.00
BUY CALL JAN-250 UQD-AJ OI=2726 at $27.75 SL=21.00
BUY CALL JAN-260 UQD-AL OI=1294 at $23.63 SL=17.75

Picked on Nov 21st at  $213.81    P/E = N/A
Change since picked     +27.13    52-week high=$273.62
Analysts Ratings   13-13-0-0-0    52-week low =$ 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


GLW - Corning Inc $112.50 (-4.50)

Corning is a global communications technology company that 
operates in three primary business segments: Telecommunications, 
Advanced Materials, and Information Display.  They are the 
world's top producer and pioneer of fiber-optic cable, which it 
invented over 20 years ago.  Corning also owns the well-known 
crystal maker, Steuben Glass.  The company operates 40 
manufacturing plants in 10 countries.

After Corning came out on December 6th with a positive growth 
outlook, the momentum kicked into high gear.  The company cited a 
24% increase for 1999 from the previous year and a 20-25% added 
increase for 2000.  Merrill Lynch put in its vote of confidence 
the following day and started GLW with an Intermediate-Term 
Accumulate and a Long-Term Buy rating, stating that "Corning has 
developed a deep offering of optical modules and components, 
where we think growth will be 50 percent-plus in 2000".  Share 
prices climbed to an all-time high of $120.75 on Monday before 
being abruptly knocked off the pedestal.  There was scuttlebutt 
and fears that such companies like Qtera (who is being bought 
by Nortel) could reduce the demand for certain fiber optic 
components.  Many analysts believe this concern is unfounded and 
suggest quite the opposite.  After dipping to an intraday low of 
$100.63 on Wednesday, GLW is recovering nicely.  Once again it's 
advancing above near-term support of $105 to $110 and has moved 
off the 10-dma ($110.93) confirming direction.  Remember this 
is a pure momentum play.  Pay close attention to the news and 
market sentiment.  A conservative player will look for another 
bounce for better confirmation before opening a position.

This week the Corning and Oak Industries proposed merger 
resurfaced.  Oak Industries' stockholders vote on the proposal 
at a Special Meeting on January 28th.  If approved the closing 
is expected to occur that same day still subject to regulatory 
approval.  Recently on November 14th both companies signed a 
definitive agreement to merge in a transaction that would 
ultimately strengthen Corning's position as a global leader in 
optical communications.  Under the terms, GLW will exchange 0.83 
shares of its common stock for each share of Oak Industries 
common stock.  In other news, GLW announced Lucent has extended 
their optical amplifier contract through June 2001.  

BUY CALL JAN-110*GLW-AB at $11.00 OI=798 SL=8.75
BUY CALL JAN-115 GLW-AC at $ 8.25 OI= 80 SL=6.50
BUY CALL JAN-120 GLW-AD at $ 6.25 OI= 29 SL=4.50
BUY CALL FEB-115 GLW-BC at $11.25 OI= 51 SL=9.00
BUY CALL FEB-120 GLW-BD at $ 8.88 OI= 45 SL=6.75

Picked on Dec 19th at   $112.50    P/E = 58
Change since picked       +0.00    52-week high=$120.75
Analysts Ratings      6-3-1-0-0    52-week low =$ 41.93
Last earnings 10/99   est= 0.53    actual= 0.54 surprise=+1.9%
Next earnings 01-25   est= 0.48    versus= 0.40
Average daily volume = 1.25 mln
Chart = http://quote.yahoo.com/q?s=GLW&d=3m


TMX - Telefonos De Mexico $112.75 (+2.63)(+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. 

Telmex shareholders approved a 2:1 stock split on December 6th 
to boost trading activity and scheduled a pay date for Feb 1st.  
Accordingly the ADR traded on the NYSE would be affected as 
well.  An investor would receive 2 ADRs or every 1 they owned.  
Now in all reality it may be too early for a split run 
considering the stock split is still six weeks away.  However 
there was no doubt a momentum run in our midst when we added 
the play last weekend.   

This week near-term support well established itself at $105 
as TMX consolidated at this higher level.  To follow up the 
bombardment of analyst recommendations that hit the press last 
week, Dresdner Kleinwort Benson Securities reiterated a Buy 
rating and issued a $126 target price for TMX on Monday.  By 
Wednesday the ADR started to show signs of life again fueled 
by a resurgence in the Mexican bank stocks.  Traders cited the 
Mexican Budget approval and a separate $505 mln World Bank loan 
for the re-capitalization of Mexico's banking system as major 
factors in the rally.  On Friday TMX hit broke through overhead 
resistance  at $110.50 demonstrating the momentum was intact as 
it powered higher with the tech sector.  The newest 52-week 
high record ($113.81) was attained in a steady climb throughout 
Friday's session in moderate trading.  Look for near-term 
support to evolve above the 5-dma ($108.06) next week.

BUY CALL JAN-105 TMX-AA OI=1031 at $11.88 SL=9.50
BUY CALL JAN-110*TMX-AB OI=1955 at $ 8.50 SL=6.50
BUY CALL JAN-115 TMX-AC OI=2907 at $ 6.25 SL=4.50
BUY CALL FEB-110 TMX-BB OI= 645 at $10.88 SL=8.75
BUY CALL FEB-115 TMX-BC OI= 242 at $ 8.75 SL=6.75

SELL PUT JAN-105 TMX-MB OI= 190 at $ 4.13 SL=6.00
(See risks of selling puts in the play legend)

Picked on Dec 12th at   $110.13    P/E = 23
Change since picked       +2.63    52-week high=$113.81
Analysts Ratings      1-3-5-0-0    52-week low =$ 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 = 1.54 mln
Chart = http://quote.yahoo.com/q?s=TMX&d=3m


The LEAPS portfolio continues to grow and so do the profits.  
This bull market has the optimism for the future growing almost 
daily and it is increasing our LEAP premiums.  It is never 
too early to take profits, especially if you have some more 
Christmas shopping to do.  The point of our investments is 
to increase the quality of our lives.  Another congratulations 
to those who were successful in the new ADBE play from last 
week.  With the solid support at $60, excellent earnings from 
fellow software maker Oracle, and the sector heating up with 
Microsoft breaking new highs; this wasn't a difficult play 
to find.  There will be lots of factors playing in to the 
market as we approach the year-end.  Remember, we are looking 
for volatile days to help with entry points so we can nibble 
on some more contracts.  The VIX stands at 23.01.  

Current Plays


EMC     11/07/99  JAN-2001 $80  ZOH-AP at $31.25   $15.38  103.19%
                  JAN-2002 $90  WUE-AR at $35.13   $19.00   84.90%
DELL    11/07/99  JAN-2001 $50  ZDE-AJ at $ 9.25   $ 7.00   32.14% 
                  JAN-2002 $50  WDQ-AJ at $13.88   $11.25   23.38%
GPS     11/07/99  JAN-2001 $40  ZGS-AH at $13.38   $ 5.75  132.70%
                  JAN-2002 $45  WGS-AI at $15.50   $ 7.88   96.70%
IBM     11/07/99  JAN-2001 $100 ZIB-AT at $24.50   $13.63   79.75%
                  JAN-2002 $110 WIB-AB at $28.00   $16.50   69.70%
WMT     11/07/99  JAN-2001 $70  ZWT-AN at $ 9.88   $ 6.50   52.00%
                  JAN-2002 $75  WWT-AO at $13.75   $ 9.75   41.03%
LU      11/14/99  JAN-2001 $80  ZEU-AP at $17.38   $12.88   34.94%
                  JAN-2002 $90  WEU-AR at $20.38   $16.13   26.35%
CSCO    11/14/99  JAN-2001 $80  ZCY-AP at $31.88   $19.13   66.65%
                  JAN-2002 $90  WIV-AR at $34.50   $22.00   56.82%
SLR     11/14/99  JAN-2001 $85  ZSR-AQ at $19.50   $21.75  -10.35%
GE      11/21/99  JAN-2001 $150 ZGR-AU at $26.50   $16.25   63.08%
                  JAN-2002 $150 WGE-AU at $36.38   $25.50   42.67%
GTW     11/21/99  JAN-2001 $90  ZWB-AR at $14.50   $17.75  -18.31%
                  JAN-2002 $100 WGB-AT at $19.50   $22.50  -13.33%
NT      11/28/99  JAN-2001 $75  ZOO-AO at $30.63   $22.25   37.66%
                  JAN-2002 $75  WNT-AO at $38.88   $30.25   28.53%
VOD     12/05/99  JAN-2001 $50  ZAT-AJ at $10.88   $10.75    1.21%
                  JAN-2002 $50  WHV-AJ at $15.13   $15.00    0.87%
KM      12/05/99  JAN-2001 $10  ZKM-AB at $ 3.63   $ 2.50   45.20%
                  JAN-2002 $15  WKM-AC at $ 2.69   $ 1.75   53.71%
ADBE    12/12/99  JAN-2001 $65  ZAE-AM at $17.25   $15.00   15.00%
                  JAN-2002 $70  WAE-AN at $21.50   $20.38    5.50%
TXN     12/12/99  JAN-2001 $110 ZTN-AB at $19.25   $22.25  -13.48%
                  JAN-2002 $120 WGZ-AD at $25.13   $28.50  -11.83%

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

New Plays

NXTL - Nextel Communications $90.06

This company is evolving as one of the future giants amongst 
the wireless providers to Internet access.  Nextel provides 
an integrated digital wireless communications service to 
customers in and around major metropolitan population centers 
throughout the country.  NXTL's stock was falling on big 
volume this week as word that NextWave, a major competitor in 
building the infrastructure for the Internet, received $1.6 
billion dollars which would help build its advanced wireless 
network.  NXTL was hoping to capitalize on NextWave's bankruptcy 
and buy their licenses for a minimal amount.  In was not to 
be though, and their competition is back up and running.  We 
view this as a buying opportunity.  With the Internet explosion, 
both companies have room to be successful.  A short-term low 
may have occurred on Friday as NXTL plummeted to $85 before 
bouncing back to close above $90.  This appears to be support.  
Worst case scenario, NXTL could fall to the 100-dma at $77, 
where it would make a great entry point.  Watch for an opening 
to buy in and for more news on the story.

BUY LEAP JAN-2001 $ 90.00 ZFU-AR at $23.50
BUY LEAP JAN-2002 $100.00 WFU-AT at $27.25



SUNW - Sun Microsystems $75.13

It was only a matter of time before Sun showed up in our LEAPS 
portfolio.  This is one of those tech companies that most 
money managers build their funds around.  One look at the 
chart for the past 5 years will tell you why.  They have been 
integral in building the backbone of the Internet with their 
high-powered servers, workstation computers and storage devices.  
We finally got a pullback after SUNW had been immune to any 
sell-off for the past two months.  This is partially due to 
the 2:1 split which took place in early December.  Now we have 
the chance to open a position as the stock is consolidating in 
the mid-70s.  Any bounce off $70-$71 would be buyable as well.

BUY LEAP JAN-2001 $80.00 ZJX-AP at $17.63
BUY LEAP JAN-2002 $90.00 WJX-AR at $22.00



As you know, sell too soon according to your own goals.  But, 
for now we will hold our current plays until the market shows 
signs of reversing.  The beauty of LEAPS is that we have time 
watch for these reversals.  


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 $36.38 (-8.31)(-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.

There is nothing like waking up in a good mood and stubbing 
your toe as your feet hit the floor.  The day just kind of 
goes downhill from there.  Sure, you may have a few moments in 
the day where things start looking up again but the mood for 
the day has already been set, and you submit to grumbling your 
way through a bad day.  And thus is a day in the life of KIDE.  
We have mentioned before that KIDE's mini rallies are getting 
smaller and shorter.  Take a look at KIDE's intra-day chart for 
last Friday and you will see what we mean.  Gone are the days 
of the $10 gain, for now anyway.  There simply does not seem to 
be enough investor interest to get KIDE in the mood to play.  
Though KIDE did have a positive day on Friday, if you look at 
the chart you will see that for the majority of the session, KIDE 
was headed south.  Therefore a good portion of the volume can be
attributed to the sellers.  $35.50 has held as KIDE's support 
up to this point and we would like to see a drop below this level
backed by good volume to convince us that KIDE is still content to 
roll downhill.  Resistance looks to be holding right around $40 
with KIDE's 10-dma of $42 serving as backup.  If KIDE is able to 
make a move up and re-enlist its 10-dma as support, it may be time 
to take the money and run.  Keep an eye out for KIDE's morning 
rallies met with maintaining resistance for possible points of 
entry.  We are still looking for a drop to $30.
BUY PUT JAN-40*IUK-MH OI=771 at $9.00 SL=6.75
BUY PUT JAN-35 IUK-MG OI= 90 at $6.00 SL=4.25

Average Daily Volume = 1.49 mln
Chart = http://quote.yahoo.com/q?s=KIDE&d=3m


GT - Goodyear Tire and Rubber $27.06 (-1.69)(P3W -8.25)

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.

GT's tires must be balding as Goodyear just keeps right on 
sliding downhill.  We mentioned last Thursday that we thought 
we were reaching the bottom of our put play on GT.  The bottom?  
GT came right back to let us know it wasn't done declining just 
yet.  GT dropped yet another $1.06 while posting higher than 
average volume and closing right at the low for the day.  Could 
this be the bottomless put play?  Not likely, but it is starting 
to feel that way!  GT continues to find resistance looming 
overhead at its 5-dma of $28 and the 10-dma (currently at 
$28.75) is moving down to help keep the lid on.  Should GT 
manage to breakthrough here, it still has to make it through $30, 
which will require a lot more momentum than GT seems to possess 
right now.  We are most likely going to see more selling, as 
investors look to dump their losers for the year.  Once everyone 
has cut their losses, GT could find itself at long last on the 
road to recovery, so be aware and start thinking about locking 
in profits.  Confirm direction and watch for the GT mini-rallies
for potential points of entry.  Desperate for any kind of buoyant 
news to help their stock rise, GT announced that six Goodyear 
Blimps will be used in six different time zones to bring live 
coverage of the events on New Years Eve.  I would imagine GT 
is anxious for this not so good year to be over. 

BUY PUT JAN-35 GT-MG OI=489 at $8.13 SL=6.25
BUY PUT JAN-30*GT-MF OI=685 at $3.63 SL=1.75
BUY PUT JAN-25 GT-ME OI=786 at $0.88 SL=0.00 High Risk!

Average Daily Volume = 1.04 mln
Chart = http://quote.yahoo.com/q?s=GT&d=3m


GILD - Gilead Sciences Inc. $38.13 (-0.88) 

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.

It is never a good sign when a stock is making new lows while 
its industry group is making new highs.  This is the story of 
Gilead Sciences.  GILD has been having problems ever since 
November 1st, when the USFDA advisory panel recommended the FDA 
not approve GILD's HIV drug.  It was a devastating blow for 
Gilead, despite efforts to keep the HIV research trials alive 
in Europe.  The drug is not dead yet, but Gilead will need 
some positive developments concerning their HIV drug or one of 
their other research possibilities before investors will be 
interested in the stock.  In the meantime the stock just keeps 
drifting lower.  Further selling pressure on the stock could 
also come in the form of tax-loss selling.  Mutual Funds do not 
want to show that they are holding a loser in their portfolios 
and investors who want to take some of their spectacular gains 
from other biotechs off of the table might be willing to sell 
GILD to offset capital gains.  One could buy a put if GILD 
opens on Monday below Friday's high of $39.25.  The stock would 
have to trade above $41.25 to break its downtrend.  Therefore 
$41.25 would be a good place to put a stop.  If the downtrend 
continues, look to take profits at the long term support price 
of $31.75.

BUY PUT JAN-40*GDQ-MH OI=554 at $5.00 SL=3.25
BUY PUT JAN-35 GDQ-MG OI=220 at $2.44 SL=1.00
Average Daily Volume = 866 K
Chart = http://quote.yahoo.com/q?s=GILD&d=3m


ETYS - eToys Inc. $37.56 (-7.56)(-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.

Nobody wants to play with eToys anymore.  Regardless of what
happens, positive press or upgrades, ETYS seems destined to
continue south.  Consumers continue to rate the company at
the top of the e-tailer heap, and Goldman Sachs upgraded ETYS
to a Buy with a $65 price target on Monday.  The net result
was a bounce off of resistance at $50 and an uninterrupted slide
through support at $46, and then $40.  This will likely be short
term weakness as analysts like ETYS going forward as they have a
solid e-business model.  The problem is concern over valuations
relative to its peers.  On Friday, ETYS resumed its fall on more
than double the ADV, closing at $37.56, near the low of the day.
The $40 support level has become resistance and our next level 
of support, at $36, is rapidly approaching.  Use caution going
forward, as ETYS has moved down quickly and has left all the
moving averages far behind.  Also, Stochastics has moved deep
into oversold territory and RSI isn't far behind.  Look for in
intraday bounce to the vicinity of $40 and then enter as the
sellers return.  Should the $36 level be broken, we may be
cleared for a run all the way to the 52-week low near $28.50.
As always, if you have profits on the table, tighten up those 
stops.  It would be a shame to give them back on such a nice
play; especially so close to Christmas.

BUY PUT JAN-45 ETU-MI OI=792 at $10.00 SL=7.50
BUY PUT JAN-40*ETU-MH OI=370 at $ 6.63 SL=4.75
BUY PUT JAN-35 ETU-MG OI=255 at $ 4.25 SL=2.75

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


BMY - Bristol-Myers Squibb Co $62.13 (-6.13)

Bristol-Myers is best known as a leader in the personal care 
industry as a producer and distributor of familiar items such 
as Clairol and Excedrin.  However the company focuses its 
primary efforts on pharmaceuticals which comprise about 70% 
of its total sales.  Cardiovascular treatments, anticancer, 
and anti-infective drugs top their research-development list.  
Through divisions and subsidiaries they also make baby formula, 
nutritional products, and medical devices.

Concerns about possible Medicare reform accompanied by drug-
pricing regulation and whether the drug makers can keep the 
pipeline full next year with enough blockbusters drugs are 
driving down share prices in the sector.  In others words, 
investors are worried that earnings growth will be curtailed.  
The general downtrend started in mid-November but really came 
into its own for BMY on December 6th as it slipped under its 
200-dma ($69.27) likely in response to a downgrade by SG Cowen 
to a Buy from a Strong Buy.  2 days later Dain Rauscher Wessels 
started BMT with a Neutral rating citing the stock is "fully 
valued at current levels" however "patent expiration could limit 
revenue growth to 7-8% through 2002".  The revenue expectations 
really hit home since investors were anticipating numbers in the 
mid-teens for next year.  On Thursday and Friday of this week, 
BMY broke down even farther shedding $4.50, or 6.8% on more than 
double the normal trading activity.  This performance caught our 
attention and prompted us to add BMY to our put list.  Support 
is firm at $66, but if the trend stays intact for the next few 
days you may have to look intraday for an entry.  In other news, 
Bristol-Myers and OXiGENE Inc (OXGN) entered into a joint 
venture to develop and sell anti-cancer treatments.  

BUY PUT JAN-65 BMY-MM OI=5027 at $5.00 SL=3.25
BUY PUT JAN-60*BMY-ML OI=2300 at $2.31 SL=1.25
BUY PUT JAN-55 BMY-MK OI=1358 at $1.00 SL=0.00

Average Daily Volume = 3.2 mln
Chart = http://quote.yahoo.com/q?s=BMY&d=3m


WB - Wachovia Corporation $66.00 (-7.13)

Wachovia Corporation is a leading interstate financial services 
company with dual headquarters in Atlanta and Winston-Salem, 
N.C., serving the southeastern, national and international 

Wachovia has been spending time lately watching over it's 
declining share price!  Could this be because of the Y2K paranoia, 
which is plaguing the banking sector?  Are investors concerned 
regarding the possible long-term effects of rate increases?  
Whatever it is, WB investors are not too happy about it.  WB 
has been in a steady decline since the beginning of November 
and on Friday, WB worked down to tag a new 52-week low of $65.94.  
WB closed just pennies above the low for the day with double the
average daily volume positioning us well heading into this week.  
As we near the end of the millennium, and more specifically this 
year, we will most likely see a lot of sellers emerge for WB as 
they look to unload the losers in their portfolio.  WB has some 
resistance overhead at $70.  WB's 10-dma is trying to keep up 
with the decline, but so far has had no luck and is currently 
providing resistance at $71.  Support?  Well, that is a little 
harder to peg, as support has meant nothing to WB for some time 
now.  You would have to go back to 1998, the last time that WB 
was trading this low, to find any kind of pre-established 
support.  Therefore, WB is relying on the psychological levels 
of support, i.e., next stop $60.  Good points for new entries 
shouldn't be too hard to come by.  WB typically gaps down 
slightly to open right around the high for the day before 
continuing downhill.  Therefore, if you are looking to make a 
new entry, try and time your entries on the early side or near 
the close of the day (this way you can take advantage of the 
following days gap and decline).  WB received an "honorable 
mention" in a recent article, noting that it was one of the 
banks that is now offering the banking/brokerage package.   

BUY PUT JAN-70*WB-MN OI=366 at $3.88 SL=2.25
BUY PUT JAN-65 WB-MM OI= 10 at $1.81 SL=0.75

Average Daily Volume = 438 K
Chart = http://quote.yahoo.com/q?s=WB&d=3m


PWAV - Powerwave Technologies $49.00 (-15.25)

Powerwave TechnologiesŪ designs, manufactures, and markets 
advanced radio frequency (RF) power amplifiers for use in 
wireless communications networks worldwide.  Powerwave has 
one of the broadest and most diverse product offerings of 
any independent supplier in our industry. Powerwave's products 
continue to set new standards for performance, service, and 
price while carving out a rock solid reputation for 
reliability.  Their production released products cover all 
major global air interface standards in all major frequency 
bands.  They are used in cellular, Personal Communications 
Services (PCS), and Wireless Local Loop (WLL) base stations 
in both digital and analog networks. 

The tide looks to be moving out for PWAV.  Powerwave was riding 
high, trading up to $80 back in November before losing some 
ground and struggling for the remainder of the month.  December 
brought out the bulls and once again PWAV was living the high 
life.  This time, PWAV only made it up to $72.50 before the 
bears decided it was time go surfing once again.  PWAV has been 
in a steady decline for nearly two weeks.  PWAV ended Friday's 
session at the low for the day with three times the average 
daily volume, both bearish indications to carry us into this 
week.  Powerwave, proved to be just that as it crashed through 
it's 100-dma, and closed below $50, both levels that should have
provided support.  PWAV spent a good deal of time trading right 
around $45 back in September backed by support of it's 5 and 
10-dma's.  This level is now considered price level support and 
could hold going forward though we are betting that PWAV has 
picked up too much negative momentum to be stopped just yet, 
and could be headed down to $40.  PWAV has immediate resistance 
overhead at $50 and $52 (100-dma) with further resistance at 
$60.  A cautionary note for our put play on PWAV, we have yet 
to see any negative news materialize to back the recent, rapid 
decline.  Therefore, it is important to enter with caution, use 
your stops and keep an eye on PWAV.  Last week, we were dealing 
with triple witching, which may very well have been a factor 
here.  Somebody is definitely selling.  Looking at an intra-day 
chart, you are able to see the definite tops when the stock has 
the flat steps downward, and as we mentioned above, we have the 
volume backing the decline.  PWAV is scheduled to announce 
earnings on January 19th and to avoid falling victim to an 
earnings run, we will definitely want to proceed with caution as 
we approach this date.  PWAV typically opens at the high of the 
day and descends for the remainder of the session, so once the 
negative momentum looks to be confirmed for the day, it is 
probably best to make new entries toward the early part of the 
Note:  There was very big volume on the Jan-60 contracts last 

BUY PUT JAN-55 VFQ-MK OI=10 at $9.63 SL=7.00
BUY PUT JAN-50*VFQ-MJ OI=14 at $6.13 SL=4.25

Average Daily Volume = 478 K
Chart = http://quote.yahoo.com/q?s=PWAV&d=3m


LTR - Loews Corporation $59.94 (-1.81)

Loews Corporation is a diversified holding company whose main
interest is insurance, through publicly traded subsidiary CAN
Financial.  Other holdings include subsidiary Lorillard Tobacco
Company, 15 hotels in the US, Canada, and Monaco (through
subsidiary Loews Hotels), watchmaker Bulova, and contract
oil-drilling subsidiary Diamond Offshore Drilling.  The company
also owns a minority stake in fiber optic company Global Crossing.

Sliding down the razor blade of life, LTR is feeling the dual-
edged pain of tobacco litigation and investor concern over the
possibility of Y2K-related insurance claims.  Rising interest 
rates are also pressuring the insurance industry, and LTR is no 
exception, providing evidence that a rising tide (broad markets) 
doesn't necessarily float all boats.  Adding to the company's 
woes is the rejection on Thursday of the tobacco industry's 
attempt to dismiss a lawsuit filed in California.  The suit, 
filed on behalf of more than 100 union health and welfare trust 
funds, seeks to recover money spent to treat smoking-related 
illnesses.  According to a lawyer for the plaintiffs, "The 
ruling is that they cannot use the national settlement to bar 
individual lawsuits, at least in California".  Since this slide 
began in mid-October, the 30-dma (currently $64.38) has provided 
impenetrable resistance, and a bounce near this level would 
provide an ideal entry.  We may not get this lucky though, as
forays above the 10-dma (currently $61.65) have become shorter 
and less frequent over the past six weeks.  Volume has been 
strong throughout the decline, averaging 25% above the ADV of 
303K as LTR has continued to set new lows.  LTR had a slight 
recovery Friday afternoon, allowing the issue to close near the 
daily high.  Going forward, open new positions on continued 
weakness or a southward bounce from resistance at the 10-dma.  
Be sure to confirm that further price moves are accompanied by 
strong volume; a drop in volume may be our first indication 
when LTR finds that elusive support level.

BUY PUT JAN-65 LTR-MM OI=15 at $5.75 SL=4.25 low OI!
BUY PUT JAN-60*LTR-ML OI=7  at $2.25 SL=1.50 low OI!
BUY PUT JAN-55 LTR-MK OI=0  at $0.00 SL=0.00 New Strike!!

Average Daily Volume = 303 K 
Chart = http://quote.yahoo.com/q?s=LTR&d=3m

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The Option Investor Newsletter             12-19-99  
Sunday                        5 of 5


Conservative Entry/Exit Techniques...

The majority of covered-call positions that we recommend in the
newsletter are 'in the money' plays. We favor this conservative 
strategy as it provides new investors with a relatively stable, 
annualized return even in a bearish market. We try to construct
positions that utilize over-valued option premiums to provide a
reasonable profit with adequate downside protection. Our extensive
research exposes stocks that have a high probability of finishing
above the sold strike at expiration, and whose premium provides a
final cost-basis (the break-even price) that is near the current
technical support or trading range.

A BUY-WRITE order can be a useful method to establish the overall
profit/loss position when opening a new covered-call play. This
technique involves placing a combination order with the broker.
The exact phraseology is not important but a specific net-debit
must be given when the trade instructions are delivered to the
agent. The floor broker or clearing-house will fill the order if
the net-debit can be achieved through any combination of stock
and option prices.

One of the advantages of this technique is that it prevents the
possibility of losses when the premium in the target call falls
on heavy selling pressure. This happens frequently to the plays
we list as many are opened in the first hour of trading. If too
many calls are sold without any buying pressure, the bid premium
drops quickly towards intrinsic value and the ITM play becomes 
unfavorable. Traders who attempt to leg-in to these positions,
(buying the stock to sell the call later) are often surprised to
see the overvalued premiums disappear before they can write the
options that complete the play.

Using the BUY-WRITE technique, a position can be established at
an acceptable risk/reward ratio without the possibility of loss
during the transaction. The stock does not have to be monitored
during the day's trading as the order will be executed only when
the appropriate net-debit is achieved. This type of trading works
well with low volume issues and provides the market-maker with an
opportunity to fill the request based on other orders in the pits.
It can also be used with volatile stocks that new investors might
otherwise avoid when utilizing the conservative, covered-writing


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

EMIS   16.88  20.88   DEC  15.00  3.38  *$  1.50  11.1%  16.1%
FSII   10.44  11.25   DEC  10.00  1.81  *$  1.37  15.9%  13.8%
ITIG   10.00  26.19   DEC  10.00  1.25  *$  1.25  14.3%   8.9%
ALGO   15.25  13.75   DEC  12.50  3.75  *$  1.00   8.7%   7.6%
WSTL    8.00  10.31   DEC   7.50  1.06  *$  0.56   8.1%   7.0%
BTOB   18.38  15.75   DEC  15.00  4.63  *$  1.25   9.1%   6.6%
SATH   12.44  11.88   DEC  10.00  3.00  *$  0.56   5.9%   6.4%
AND     8.38   8.69   DEC   7.50  1.38  *$  0.50   7.1%   6.2%
CYCH    8.38   9.94   DEC   7.50  1.44  *$  0.56   8.1%   5.8%
AWEB   12.25  12.50   DEC  10.00  2.63  *$  0.38   4.0%   5.7%
CRUS   13.94  12.50   DEC  12.50  2.19   $  0.75   6.4%   5.5%
PILT   18.50  17.63   DEC  15.00  4.38  *$  0.88   6.2%   5.4%
RRRR   14.75  32.56   DEC  12.50  3.25  *$  1.00   8.7%   5.4%
WAVX   13.19  12.75   DEC  10.00  3.88  *$  0.69   7.4%   5.4%
DRIV   22.75  35.13   DEC  20.00  4.25  *$  1.50   8.1%   5.0%
DIGE   14.44  18.50   DEC  12.50  2.75  *$  0.81   6.9%   5.0%
PILT   15.94  17.63   DEC  12.50  4.25  *$  0.81   6.9%   5.0%
LTXX   16.00  18.00   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  12.38   DEC   7.50  2.75  *$  0.44   6.2%   3.9%
JDAS   11.63  15.19   DEC  10.00  2.13  *$  0.50   5.3%   3.8%
MESG   17.63  14.38   DEC  15.00  3.63   $  0.38   2.7%   2.9%
PRGY   25.38  21.69   DEC  22.50  4.50   $  0.81   3.9%   2.4%
MESG   17.88  14.38   DEC  15.00  3.50   $  0.00   0.0%   0.0%
ONEM   19.94  16.25   DEC  17.50  3.25   $ -0.44  -2.6%   0.0%
FLAS   10.75   6.88   DEC   7.50  3.63   $ -0.24  -3.4%   0.0%
MOGN   13.44  11.00   DEC  12.50  1.63   $ -0.81  -6.9%   0.0%
DGII   13.56  10.94   DEC  12.50  1.69   $ -0.93  -7.8%   0.0%
ICGX   20.50  15.00   DEC  17.50  3.88   $ -1.62  -9.7%   0.0%

BIDS    5.13   5.25   JAN   5.00  1.00  *$  0.87  21.1%  13.1%
EMIS   19.88  20.88   JAN  17.50  4.50  *$  2.12  13.8%  10.0%
WSTL   10.75  10.31   JAN  10.00  1.88  *$  1.13  12.7%   9.2%
CBIZ   10.31   9.38   JAN   7.50  3.63  *$  0.82  12.3%   8.9%
FSII   10.69  11.25   JAN  10.00  1.94  *$  1.25  14.3%   8.9%
LGND   11.69   9.88   JAN  10.00  2.75   $  0.94  10.5%   7.6%
AWEB   12.13  12.50   JAN  10.00  3.00  *$  0.87   9.5%   6.9%
SCOC   17.88  27.00   JAN  15.00  4.13  *$  1.25   9.1%   6.6%
ONHN   10.25   9.69   JAN   7.50  3.38  *$  0.63   9.2%   5.7%
TTWO   16.31  14.88   JAN  12.50  4.63  *$  0.82   7.0%   5.1%
PILT   20.25  17.63   JAN  15.00  6.38  *$  1.13   8.1%   5.1%
RNBO   20.00  22.00   JAN  15.00  6.13  *$  1.13   8.1%   5.1%
AGY    16.88  15.38   JAN  15.00  2.75  *$  0.87   6.2%   4.5%
SATH   12.69  11.88   JAN  10.00  3.38  *$  0.69   7.4%   4.0%
VUSA   12.50   9.44   JAN  10.00  3.63   $  0.57   6.4%   4.0%
MESG   16.63  14.38   JAN  12.50  4.88  *$  0.75   6.4%   4.0%
BNYN   15.81  16.63   JAN  12.50  4.13  *$  0.82   7.0%   3.8%
MCRE    7.56   6.25   JAN   7.50  1.31   $  0.00   0.0%   0.0%

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

Comments/Observations on Open Positions:

Time to evaluate any December positions not called away. Consider
the value of rolling to January (or later) series verses moving
your capital to more lucrative positions. Ligand (LGND) appears 
to be suffering the "sell on news" effect; consider closing the 
position if it breaks $9.00 (closing basis). Value America (VUSA)
broke support (the December position was closed) and continues to 
weaken - consider exiting early. Metacreations (MCRE) warned about
next quarter as it restructures - support at $6.00 appears to be 
holding - consider an early exit. The January position of Summit
(BEAM) may warrant further consideration. The VISX upgrade helped
BEAM rise over $1 in after-hours trading Friday; possible follow
through next week.

Positions Closed: Able Telecom (ABTE), Cyberian Outpost (COOL) 
both at break-even. Summit (BEAM) - unable to recover from the
VISX damage. Value America (VUSA) - broke support at $11.00.

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

BAMM    9.81  JAN  7.50  QMZ AU  2.75  20     7.06   6.2%   6.2%
BIDS    5.25  JAN  5.00  BDU AA  0.94  1491   4.31  16.0%  16.0%
MWHS   15.06  JAN 12.50  MQR AV  3.25  60    11.81   5.8%   5.8%
NETS   28.00  JAN 22.50  NTU AX  6.63  311   21.37   5.3%   5.3%
NFO    14.38  JAN 12.50  NFO AV  2.94  51    11.44   9.3%   9.3%
PILT   17.56  JAN 12.50  PTU AV  5.88  148   11.68   7.0%   7.0%
SPLH    8.44  JAN  7.50  QRX AU  1.81  277    6.63  13.1%  13.1%
TSCM   15.75  JAN 12.50  YTQ AV  3.88  23    11.87   5.3%   5.3%

Company Descriptions

BAMM - Books-A-Million  $9.81   *** Stage I Base ***

Books-A-Million is principally engaged in the sale of books, 
magazines and related items through a chain 182 stores in 17 
states and via its web site. The company operates four distinct 
store formats, including large superstores operating under the 
names Books-A-Million and Books & Co., traditional bookstores 
and combination book and greeting card stores, both operating 
under the name Bookland, and Joe Muggs Newsstands. BAMM's net
loss narrowed last quarter with increasing sales. The chart has
slowly been improving as investors accumulate the stock. Strong
support above our cost basis makes for favorable speculation. 

JAN 7.50 QMZ AU Bid=2.75 OI=20 CB=7.06 RC=6.2% RNC=6.2%

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


BIDS - Bid.Com  $5.25 *** Takeover Speculation ***

Bid.Com is one of e-commerce's leading international online sales
and marketing organizations. The company offers a compelling, 
entertaining and cost-effective method of selling a wide array
of goods and services over electronic distribution channels. In 
recent weeks, BIDS has surged to highs near $7 on rumors that 
online auction giant eBay (EBAY) was preparing to buy the Toronto 
based firm. The technical picture has steadily improved and with
investors buying into the dips, a breakout appears likely. We 
favor the strong support near our entry point.

JAN 5.00 BDU AA Bid=0.94 OI=1491 CB=4.31 RC=16.0% RNC=16.0%

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


MWHS - Micro Warehouse  $15.06   *** What's Up? ***

Micro Warehouse is a specialty catalog and online retailer and
direct marketer of brand name personal computers, computer
software, accessories, peripheral and networking products to 
commercial and consumer customers. MWHS markets its products
through frequent mailings of distinctive, colorful catalogs and
dedicated telemarketing account managers who focus on corporate, 
education and government accounts. Forget about last quarter's
earnings, what about next? Or is it a deal with Amazon, AOL, or
some merger? Who cares when you can obtain a cost basis below
four months of consolidation. The deep-in-the-money time premium
created by call-buying speculators makes this a favorable play!

JAN 12.50 MQR AV Bid=3.25 OI=60 CB=11.81 RC=5.8% RNC=5.8%

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


NETS - YouthStream Networks  $28.00 *** New High ***

Network Event Theater (or YouthStream Media Networks) publishes
mybytes.com, the premier online community for the large college
market and the leading media gateway to the young adults, with a
strong emphasis on the high school/college audiences. YouthStream
delivers the most extensive range of customized, fully integrated
media and marketing services for this age group. NETS recently
announced acquisition of sixdegrees.com, an online community of
nearly three million members, creating the largest Internet site
targeted to young adults and college students. NETS continued its
up-trend with a new high Monday on heavy volume. We favor the
strong support near the sold strike.

JAN 22.50 NTU AX Bids=6.63 OI=311 CB=21.37 RC=5.3% RNC=5.3%

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


NFO - NFO Worldwide  $14.38 *** New Trend? ***

NFO Worldwide is a leading provider of research-based, marketing 
information and counsel to the worldwide business community. With
13,000 employees operating in 35 countries; in-depth expertise in
all research methodologies and marketing experience in multiple
market sectors, NFO provides clients with trusted insight into the 
behaviors, attitudes and opinions of customers around the globe. 
Interesting speculation on a research/marketing stock as we head 
into an election year. A new automated web site, InsightExpress, 
provides online market research services. The stock price moved
above the recent consolidation area on heavy volume. This play 
offers good speculation with a cost basis near technical support.

JAN 12.50 NFO AV Bid=2.94 OI=51 CB=11.44 RC=9.3% RNC=9.3%

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


PILT - Pilot Network Services  $17.56 *** New Entry Point ***

Pilot Network Services, the Security Utility pioneer, is the only 
e-business network service provider of highly secure subscription
based e-business services. For companies of all sizes, in every 
industry, Pilot enables secure e-business by providing a wide 
range of services with built-in security to protect enterprise 
networks.  Pilot announced it is instituting a Y2K Alert Center to
proactively warn and protect-as well as respond to-any security 
threats during the changeover to Year 2000. The recent sell-off is 
offering a re-entry into Pilot Network at about a 50% retracement
from the recent run-up. The technical outlook is still bullish 
though we favor the support near the cost basis.

JAN 12.50 PTU AV Bid=5.88 OI=148 CB=11.68 RC=7.0% RNC=7.0%

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


SPLH - Splash Technology  $8.44 *** Strange Moves! ***

Splash Technology produces color servers that transform printing 
engines into powerful networked printers. Splash's innovative 
technology is easy to use and enables high-quality, accurate, and
consistent color printing from virtually any desktop computer and 
application. Splash ships color servers on both Intel and PowerPC
platforms. No recent news and Splash is making waves, rising 100%
in one month on heavy volume. Is this the break-out of the year 
long base? We favor the strong support above the cost basis (until
the reason for the move is known).

JAN 7.50 QRX AU Bid=1.81 OI=277 CB=6.63 RC=13.1% RNC=13.1%

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


TSCM - TheStreet.com $15.75  *** What's Cramer Saying Now? ***

TheStreet.com is a web-based provider of original, timely and 
comprehensive financial news, commentary and information aimed
at helping readers make informed investment decisions. Hmmm, a 
web site geared towards investors...now where have I seen that
before? Coverage recently initiated by First Union and several
positive technical divergence's portend a future upswing in
price. TSC's leadership in the industry is well known and their
web-page is the focus of many research forays. A very favorable
speculation play with a basis below the recent support at $14.
That is, of course, only until the OIN goes public..

JAN 12.50 YTQ AV Bid=3.88 OI=23 CB=11.87 RC=5.3% RNC=5.3%

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


Conservative Investing Alternatives...

This week we received a question regarding convertible securities.
These unique financial vehicles offer worthwhile opportunities for
investors who need current income, yet want to invest in companies
that will benefit from the bullish market trends. Although this
category of investing is not well known, it can offer favorable
annual returns along with potentially high rewards for those that 
choose to learn the fundamentals of the strategy.

Bonds and preferred stock that can be exchanged for common stock
are the most conventional types of convertible securities. These
instruments provide the necessary means for companies to raise
capital for growth and ongoing operations. Most corporations fund
their future activities through bank loans or the sale of bonds or
common stock. Bondholders are reimbursed for their investment with
interest added but inflation can erode their profits. Shareholders
can benefit from appreciation of the stock's value but they have
no guaranteed income from the investment. Convertible bondholders
enjoy the best of both worlds as they receive a specific rate of
interest, are virtually assured a return of their principal, and
also have the right to exchange or convert the bond into a fixed
number of shares of common stock.

Convertible preferred stock is a similar financial instrument. In
this case however, the investor receives a regular distribution or
dividend rather than an interest payment. Unlike convertible bonds,
the distribution is usually not guaranteed. This type of issue can
be exchanged or converted into a fixed number of shares of common
stock but it will not be redeemed at the end of a specific term;
it simply exists as preferred stock until physically converted. 

When a company's stock grows in value, the convertible bondholder
can exchange his holdings and participate in the appreciation of
the issue. It the company fails to perform in the short-term, at
least the investor gets paid a good rate of interest for waiting.
It's a well-known fact that most of the technology companies pay
little or no dividend however, convertible instruments on the same
issues generally offer attractive yields, plus the opportunity for
future profit at a substantially lower risk.

Convertible instruments are ideal investments for IRA's and other
qualified plans. The distribution income can often be deferred or 
sheltered and the growth of the common stock will protect against
losses from inflation and higher interest rates in other vehicles.
Regular premium bonds have only a small yield advantage over most
convertibles and the risk/reward ratio favors the profit potential
inherent in the future growth of the underlying equity. In most
cases, convertible instruments will provide a conservative and yet 
competitive method to participate in the growth of the current
bull market.

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


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

MAIL   21.88  19.56   DEC  17.50  0.56  *$  0.56  11.3%  24.6%
ELON   12.50  13.00   DEC  10.00  0.31  *$  0.31  11.0%  24.0%
HRBC   18.69  26.56   DEC  15.00  0.38  *$  0.38   9.1%  19.8%
NSPK   18.56  19.13   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  27.00   DEC  12.50  0.31  *$  0.31   7.6%  16.5%
PILT   20.25  17.63   DEC  15.00  0.31  *$  0.31   7.1%  15.4%
ELIX   15.13  15.25   DEC  12.50  0.25  *$  0.25   6.8%  14.8%
NSPK   16.38  19.13   DEC  12.50  0.50  *$  0.50  13.2%  14.4%
RNBO   18.13  22.00   DEC  15.00  0.44  *$  0.44   9.6%  14.0%
STRX    7.63   6.88   DEC   5.00  0.44  *$  0.44  22.3%  13.9%
ZOMX   36.06  40.75   DEC  30.00  0.81  *$  0.81   8.8%  12.8%
PILT   21.31  17.63   DEC  15.00  0.56  *$  0.56  11.6%  12.6%
NPIX   37.50  40.69   DEC  22.50  0.69  *$  0.69   8.4%  12.2%
MMWW   33.00  28.88   DEC  25.00  0.38  *$  0.38   5.4%  11.8%
NSPK   15.50  19.13   DEC  12.50  0.50  *$  0.50  13.5%  11.7%
BNYN   12.75  16.63   DEC  10.00  0.38  *$  0.38  13.0%  11.3%
MSGI   16.94  18.81   DEC  12.50  0.50  *$  0.50  12.9%  11.2%
COOL    9.56  10.31   DEC   7.50  0.31  *$  0.31  14.0%  10.1%
ITVU   64.50  88.00   DEC  45.00  1.25  *$  1.25   8.8%   9.6%
NVDA   32.00  37.63   DEC  22.50  0.75  *$  0.75  10.5%   9.1%
MLTX   16.19  28.00   DEC  12.50  0.50  *$  0.50  13.4%   8.3%
XCED   31.63  40.25   DEC  22.50  0.63  *$  0.63   9.1%   7.9%
AMTD   28.19  25.38   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  34.38   DEC  15.00  0.56  *$  0.56  11.6%   7.2%
TUTS   39.69  47.75   DEC  30.00  0.81  *$  0.81   9.3%   6.7%
CMDX   65.19  86.00   DEC  40.00  0.63  *$  0.63   4.6%   6.7%
MRVC   31.00  57.06   DEC  22.50  0.38  *$  0.38   5.8%   6.3%
PDLI   40.75  48.38   DEC  35.00  0.44  *$  0.44   4.0%   5.8%
NPIX   37.44  40.69   DEC  20.00  0.50  *$  0.50   6.3%   5.4%
LTXX   18.56  18.00   DEC  15.00  0.31  *$  0.31   7.4%   5.4%
FLAS   10.06   6.88   DEC   7.50  0.75   $  0.13   4.7%   3.4%
MAIL   25.75  19.56   DEC  20.00  0.31   $ -0.13  -2.4%   0.0%
HEPH   16.50  11.63   DEC  12.50  0.38   $ -0.49 -13.3%   0.0%
DGII   14.88  10.94   DEC  12.50  0.50   $ -1.06 -26.0%   0.0%

AND     9.25   8.69   JAN   7.50  0.44  *$  0.44  18.4%  13.3%
SATH   12.94  11.88   JAN  10.00  0.56  *$  0.56  17.8%  12.9%
CCUR   17.75  15.25   JAN  12.50  0.50  *$  0.50  12.3%   8.9%
SCOC   17.88  27.00   JAN  12.50  0.44  *$  0.44  10.9%   7.9%
PRRC   23.56  23.38   JAN  17.50  0.56  *$  0.56  10.6%   7.7%
INSO   32.13  32.63   JAN  20.00  0.75  *$  0.75  10.4%   7.6%
EGRP   35.56  30.06   JAN  25.00  0.56  *$  0.56   7.3%   5.3%
MMWW   37.38  28.88   JAN  22.50  0.50  *$  0.50   6.3%   4.5%

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

Comments/Observations on Open Positions:

On positions that will be assigned, consider the value of rolling
to January (or later) series verses selling the stock and moving
your capital to more lucrative positions.

Positions Closed: Cdnow (CDNW), Cheap Tickets (CTIX), Egghead.Com

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

CS     28.50  JAN 20.00   CS MD  0.56  1633  19.44   8.9%
DAVX   23.75  JAN 17.50   VQ MW  0.56  0     16.94  10.5%
EMIS   21.00  JAN 15.00  MTQ MC  0.50  0     14.50  10.6%
IUSA   12.13  JAN  7.50  BQU MU  0.31  3      7.19  11.3%
MSGI   19.00  JAN 12.50  UMS MV  0.38  15    12.12   9.1%
NETS   28.00  JAN 20.00  NTU MD  0.50  4     19.50   8.2%
RNBO   21.94  JAN 17.50  BQO MW  0.81  10    16.69  15.6%
WAXS   20.50  JAN 15.00  WXQ MC  0.38  276   14.62   8.5%

Company Descriptions

CS - Cabletron Systems  $28.50   *** Own This One! ***

Cabletron Systems develops, manufactures, markets, installs and
supports a wide range of standards-based local area network and
wide area network connectivity hardware and software products
including intelligent switches and hubs, remote access devices,
and sophisticated management software. CS products address the
full range of networking technologies, including Ethernet, Fast 
Ethernet, Gigabit Ethernet, token ring, fiber distributed data 
interface, asynchronous transfer mode (ATM), integrated services
digital network and frame relay. A bullish chart with technical
support above the cost basis.

JAN  20.00  CS MD  Bid=0.56  OI=1633  CB=19.44  ROI=8.9%

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


DAVX - Davox  $23.75   *** On The Move! ***

Davox is principally a software and systems integration company
which develops, implements, and supports management systems for
call center operations. These centers conduct credit/collections,
customer service, telephone sales, and fund raising. Its systems
help calling operations integrate voice and data systems, manage 
outbound/inbound calling applications and focus on improving the
quality/quantity of customer contacts. IUSA's recent adoption of
Davox technology demonstrates their potential as a supplier of
customer interaction solutions for electronic business. Markets
for this service are expected to grow exponentially. Also rumors
of a deal with Kana Communications (KANA).

JAN  17.50  VQ MW  Bid=0.56  OI=0  CB=16.94  ROI=10.5%

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


EMIS - Emisphere  $21.00   *** New Drugs ***

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. Received FDA approval
to advance clinical trials of the anticoagulant heparin and plans
to have a marketing partner in place for the drug by the second
quarter of 2000. A good premium for target-shooting an entry point.

JAN  15.00  MTQ MC  Bid=0.50  OI=0  CB=14.50  ROI=10.6%

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


IUSA - InfoUSA  $12.13  *** A Big Rally! ***

InfoUSA is a leading provider of business and consumer marketing
information products and data processing services in the United
States and Canada. Nearly two million customers use the products
and services for direct and telemarketing, new leads, sales and
planning, customer analysis and credit reference. ABN AMRO said
Thursday it raised its rating on InfoUSA to "buy" based on high
expectations for a strong fourth quarter. The price target is $17
and the Sands Bothers "strong buy" rating last Monday appears to
have merit. A low risk entry at the cost-basis near $7.

JAN  7.50  BQU MU  Bid=0.31  OI=3  CB=7.19  ROI=11.3%

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


MSGI - Marketing Services Group  $19.00   ***  Where To Now? ***

Marketing Services Group provides database management, custom 
telemarketing/telefundraising and other direct marketing services
to a diverse group of clients located in the North America. These
services include customer/market data analysis, database creation
and analysis, data warehousing, merge/purge, predictive behavioral
modeling, list processing, brokerage/management, data enhancement,
and other direct marketing information services. The recent merger 
announcement between MSGI's Mazescape, a B2B solution provider in
the Internet recruitment industry, and either Breckenridge Group
or Claybrooke Associates has caused confusion among investors. It
appears the stock is back in gear and the entry point is favorable.

JAN  12.50  UMS MV  Bid=0.38  OI=15  CB=12.12  ROI=9.1%

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


NETS - YouthStream Networks  $28.00   *** What's In A Name? ***

Network Event Theater (or YouthStream Media Networks) publishes
mybytes.com, the premier online community for the large college
market and the leading media gateway to the young adults, with a
strong emphasis on the high school/college audiences. YouthStream
delivers the most extensive range of customized, fully integrated
media and marketing services for this age group. NETS recently
announced acquisition of sixdegrees.com, an online community of
nearly three million members, creating the largest Internet site
targeted to young adults and college students. Solid support near
the cost basis.

JAN  20.00  NTU MD  Bid=0.50  OI=4  CB=19.50  ROI=8.2%

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


RNBO - Rainbow Security  $21.94   *** Going For The High! ***
Rainbow provides Security Solutions for the Information Age. The
company is a leading developer, manufacturer and supplier of 
software protection solutions, and a leading provider of network 
license management, Internet and information security. Rainbow
continues to develop new products for the state-of-the-art online
security and authentication solutions and they are expected to 
become one of the leading players in this growing industry. The
technical outlook remains bullish and we favor the move above a
recent consolidation area near $20. Support exists at $15-16.

JAN  17.50  BQO MW  Bid=0.81  OI=10  CB=16.69  ROI=15.6%

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


WAXS - World Access  $20.50   *** Watch This One! ***

World Access provides wholesale, international long distance
services and designs a broad range of wireline and wireless
telecommunications solutions for service providers worldwide,
from single products to comprehensive network solutions. These
solutions include intelligent multiplexers, digital microwave
radio systems, digital switches, billing and network management
systems, cellular base stations, fixed wireless local-loop and
engineering services. On Friday, WAXS said it would buy Long
Distance International (LDI) in a deal worth $180 million to
establish itself in the European retail market. World intends
to utilize LDI's customer development and retention programs as
a basis for further retail account growth but the stock price
may suffer briefly on the news. We are looking for a favorable
entry point on this issue. Premiums may be higher on Monday.

JAN  15.00  WXQ MC  Bid=0.38  OI=276  CB=14.62  ROI=8.5%

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


Blue-Chips Compete For Top Honors..

Friday, December 17

Growing strength in cyclical stocks and frenzied buying in leading
technology issues drove equity markets to record levels on Friday.
The Dow Jones Industrial Average moved up 74 points to 11,317 and
the Nasdaq composite rose 41 points to 3756. The broad market S&P
500 index was also higher at 1425. Volume on the NYSE was heavy as
869 million shares were exchanged and market breadth was positive
with advancers beating decliners 1,602 to 1,372. The benchmark 30
year Treasury bond's price closed up 5/32 while its yield eased to
6.38%, just below Thursday's two-year closing high.

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

PanamSat   SPOT   JAN45C/JAN50C   $3.00   debit   bull-call
PanamSat   SPOT   FEB45C/JAN50C   $4.00   debit   diagonal
Recoton    RCOT   MAY5C/JAN7C     $2.25   debit   diagonal 	

PanamSat bolted from the gate, opening $5 higher with the surge in
technology issues. We thought the position was long gone but soon
the stock fell back on profit-taking and by noon it was down $0.93.
The move allowed favorable entries for both our positions and the
issue eventually rebounded to close up $0.38 for the session. The
Recoton play was far less exciting, with the stock trading in a
$0.50 range throughout the course of the day. Our suggested target
was slightly out of range (on a simultaneous order basis) but a 
favorable entry debit was available.

Portfolio plays:

Companies that benefit from the cyclical nature of the market led
blue chip stocks higher after struggling earlier in the week. The
Dow powered ahead in heavy trading with support from an improving
bond market, which garnered relief from favorable housing data.
Housing starts fell 2.3% in November, below the consensus estimate
as builders broke ground on new dwellings at the slowest pace in
seven months. Rising mortgage prices caused the housing sector to
level-off and interest rates hit a 2-year high after news that the
U.S. trade deficit widened to 7.4% in October. Trading volume was
at an extreme during the triple-witching expiration of equity and
index options and futures contracts. The Nasdaq continued to soar
on the wings of hardware issues and analysts say there is little
chance the trend will reverse before year's-end.

While tech issues remain strong, today's trading saw a rotation
into some of the more beleaguered industries and our most recent
consumer cyclical, Navistar (NAV) was one of the portfolio's big
winners. The issue climbed $4.50 to a midday high near $46.50
as investors continued to speculate on a possible buyout from one
of the major auto conglomerates, Volvo or Paccar. The stock price
eventually closed at $44.75, just below our sold (short) strike
and a perfect price for the roll-out to January options. Our new
bull-call position is JAN40C/JAN45C at $0.62. A number of other
issues in the diagonal spread portfolio finished at the optimum
prices and one of the biggest surprises was Autoweb (AWEB). The
stock jumped $2 to close at $12.50 (our sold strike) after news
of a strategic e-commerce alliance with Saturn Corporation. The
participation of all Saturn retailers strengthens Autoweb.com's
Member Dealer network and enhances Saturn's sales opportunities.
Autoweb.com customers now have Saturn representation in every
state and based on location, consumers on Autoweb.com can choose
from the retailers to whom they want to send a purchase request.
The rally provided a $1.50 credit for the move to January options
in our bullish diagonal spread. The new position is MAY10C/JAN12C
at $0.88 debit. This play also offered a $1.00 profit for early
exit at the end of November.

Technology stocks have yet to be outdone and our recent addition
to the LEAPS portfolio, Adobe Systems (ADBE) made the headlines.
Shares of the software giant rallied to a midday high near $72
after the company reported better-than-expected earnings for the
fifth consecutive quarter. Adobe, which makes products to design
publications and Web pages, earned $0.46 per share in its fourth
quarter, up from $0.39 per share in the year-ago period. Analysts
had expected Adobe to earn $0.42 per share. Our bullish calendar
spread position at $85 will be profitable in January and the long
option is currently trading for $3.50 more than the cost basis.

Another well known computer company made the news in our spreads
portfolio today. Micron Electronics (MUEI) bounded $2.06 to close
at $12.12 as investors piled on to the pre-earnings rally. Micron
will report its first-quarter results next week and it should be
interesting considering the PC maker blew-away analysts' numbers
last quarter. In its previous quarter, Micron earned $0.14 cents
a share, on sales of $333 million and the First Call consensus is
again centered at $0.14. Our bullish calendar spread profited from
the move and our new position, APR12C/JAN12C has credit of $0.50.
This play now has zero risk and three months of profit potential,
all from a stock that has moved less than $4 in 180 days. That's
one unique advantage of spread trading.

When it comes to neutral calendar spreads, there is one stock that 
dominates our portfolio and the issue is Bell Atlantic (BEL). For
the sixth consecutive month, the stock price closed near the $65
strike. Our neutral position, APR65C/JAN65C has a credit of $2.00
with no risk and four more months of profit potential. Again, this
type of position benefits from a small trading range and favorable
option premiums. BEL is an great example of those characteristics.
Other issues in that category are performing well and our newest
play on Southwest Bancorp (SWBT) is off to a fine start. The stock
price finished at $19.75, just $0.25 below our target price. The
credit for the move to January options is $1.31 and our cost basis
in the current position, MAY20C/JAN20C is $0.93. Unisys (UIS) and
Zoltek (ZOLT) rounded out this incredible group. Zoltek closed at
$9.88 with a premium of $1 for the JAN-$10 option and UIS ended at
$30.50, providing a credit of $2.25 for the move to January. Our
new spread is APR22C/JAN30C at $4.88 debit. The alternate Unisys
play (DEC25C/DEC27C) also closed at maximum profit.

With the recent bullish market environment, directional plays have
far outperformed neutral positions and in our case, the debit and
diagonal portfolios have led this portion of the newsletter. The
ratio of (closing) winners in the debit section was 11 for 13 with
total monetary gains outpacing losses by 90%. The diagonal spreads 
portfolio has actually performed better but the majority of plays
have yet to be closed, thus a numerical outcome can not be listed.
The LEAPS/Covered-call section has provided some excellent returns
but unfortunately, many of the gains were limited by the strategy
itself. Stocks such as Sun Microsystems (SUNW) and Motorola (MOT)
would have been better played as simple call options, but who can
say when an issue is going to perform as well as they have. Other
strategies contributed winners to this month's success including
the incredible Lycos (LCOS) straddle and (bullish) credit spreads
on Etek Dynamics (ETEK) and InterVu (ITVU). We would like to claim
another 100% profitable month in the "bull-put" portfolio, but we
did not formally recommend closure of the Verity (VRTY) position
when the exit debit shrunk to pennies. However, we have monitored
the position extensively since Wednesday's debacle and recorded no
less than three profitable exit opportunities in the $10 move. In
today's session, Verity climbed almost $7 to $33.38 on optimism it
will fix problems that caused second-quarter revenue to fall short
of forecasts. The shares initially fell after Verity said that it
failed to close three large sales, prompting the company to report
revenues below expectations. VRTY said two of the three contracts
have been completed since the quarter ended on November 30 and the
third is expected to close soon. 

Our most interesting issue during the month has been Delta & Pine
Land (DLP). We started with two bearish positions and one neutral
credit-strangle. One of the plays returned a nice profit of $1.50
while the other was exited for a small ($0.12) loss. The strangle
closed at $1.18 debit but as suggested on Thursday, we decided to
accept delivery of the stock. Today's sale of the JAN-$17 covered
call provided a new cost basis of $16.00. Obviously, we expect the
issue to rebound in the near future. DLP's board of directors met
today to decide the fate of the infamous Monsanto merger and those 
officials close to the negotiations said they are doing everything
in their power to consummate the deal. Reports suggested that both
parties are still very committed and that all possible avenues are
being explored. At the same time, Pharmacia & Upjohn and Monsanto
are also rumored to be in merger discussions. From this viewpoint,
it appears that any deal is far from ensured and the new pact is
just one option MTC's board is considering as a means of boosting 
shareholder value. The good news is that DLP officials also said
they would explore strategic alternatives. They spoke with other
parties before agreeing to the MTC deal and rumors of a $30 cash
bid have been heard on the Street. As one trader said, "Wouldn't
that be a great end to this soap opera." We concur..

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


VOD - Vodaphone Group PLC  $49.25     *** LEAPS/Covered-Calls ***

Vodafone Group provides telecommunications services and operates
the Vodafone network. The company's services include cellular
radio, wide area paging, trunked private mobile radio, packet
radio and value added network services. Vodafone offers its
services in the United Kingdom, Europe and around the world.

Vodaphone's ongoing takeover attempt of Mannesmann has dominated
the telecom sector headlines and with any luck it will soon come
to a close. When the company first launched the bid, officials
said the deal would generate cost savings of $800 million in 2003
and provide enhanced growth prospects and superior value for the 
shareholders of both companies. If completed, the telecom giant
would control majority stakes in both mobile and fixed telephony
in a large part of Europe. Vodafone currently holds controlling
stakes in cellular-phone operators Mobilfunk in Germany, Omnitel
in Italy and Orange in the United Kingdom. Vodafone has minority
holdings in both Mobilfunk and Omnitel, and the two are partners
in the French market through SFR/Cegetel. It was Mannesmann's $33
billion bid for Orange (ORNGY) that was the driving force behind
Vodafone's move on Mannesmann. The Mannesmann-Orange pact gave
the German group a solid foothold in Vodafone's home market and
made Mannesmann Europe's biggest provider of cell-phone services.
Now Vodaphone wants to be the king.

The potential for a favorable outcome increased on Friday as VOD
reasserted its bid with a new $30 billion credit line to conclude
the deal. Regardless of the merger, Vodaphone is still a valuable 
company with incredible potential for growth. A small disparity
in option premiums will help us open the play at a discount.

PLAY (conservative - bullish/diagonal spread):

BUY  CALL JAN01-45 ZAT-AI OI=191  A=$13.00
SELL CALL JAN00-50 VOD-AJ OI=8651 B=$2.75

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


NEM - Newmont Mining  $24.43     *** Inflation Hedge ***

Newmont Mining is engaged, directly and through its subsidiaries
and affiliates, in the production of gold, the development of
gold properties, the exploration for gold and the acquisition of
gold properties worldwide. Newmont produces gold from operations
in Nevada and California, as well as in Peru, Indonesia and the
Central Asian Republic of Uzbekistan.

Gold stocks lost their luster in late November after the Bank of 
England's auction turned bearish but a Y2K rally is expected to
boost bullion prices before the end of the year. Precious metal
stocks offer a partial hedge against inflation and the sector now
appears to be in a favorable position for bullish speculation. In
the case of Newmont, a number of positive divergences exist in the
near-term pattern and a significant increase in the Time-Segmented
Volume indicates a new interest in the issue. Our position offers
a conservative risk/reward outlook with solid technical support
near the cost basis.

PLAY (conservative - bullish/debit spread):

BUY  CALL JAN-20.00 NEM-AD OI=5011 A=$5.00
SELL CALL JAN-22.50 NEM-AX OI=4135 B=$2.93
INITIAL NET DEBIT TARGET=$1.88 ROI(max)=32% B/E=$21.88

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


ONHN - OnHealth Network  $9.69     *** Internet Speculation ***

OnHealth Network Company is a leading Internet health information 
and services resource that empowers consumers with integrated 
solutions to effectively manage their health and well-being. In
association with leading medical institutions, ONHN's seasoned
health journalists and medical contributors offer unbiased and
trusted health resources via reference guides, up-to-date news
feeds, deep research, personalization and interactive tools.

The award-winning site was recently named "Best Health & Medicine
Web Site" by U.S. News & World Report and won three gold medals 
including "The Best Consumer Healthcare Portal" at the November
eHealthcare World Awards. Over 500 different sites drive traffic
to OnHealth.com through various strategic alliances and recently,
the OnHealth Network destination was ranked as the single largest
health site on the Web. According to the figures reported by PC
Data, OnHealth has reached two new benchmarks in terms of traffic
and overall ranking. Unique Users increased 87% in October and
monthly overall rankings place OnHealth.com as the 83rd largest
website on the Internet.

Technically, OnHealth is moving out of a saucer bottom on steady
volume and the recent spike to $13 has produced some new interest
in the short-term call options. A bullish brokerage upgrade and
favorable option premiums provide the necessary impetus for the

PLAY (conservative - bullish/diagonal spread):

BUY  CALL APR-7.50  OUN-DU OI=30  A=$3.88
SELL CALL JAN-10.00 OUN-AB OI=559 B=$1.43

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


These plays are based on the current price or trading range of
the underlying issue and the recent technical history or trend.
The probability of profit from these positions is also higher
than other plays in the same strategy based on disparities in
option pricing. Current news and market sentiment will have an
effect on these issues. Review each play individually and make
your own decision about the future outcome of the position.


BCR - C.R. Bard  $49.00     *** Back For More! ***

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

Our old friend is back and open interest in the December call
options continues to be excellent even in the wake of the recent
slump. No news ever surfaced on the merger rumors and the stock
has fallen back into its old trading range near $47. The medical 
equipment sector is in a slump and traders that were speculating
on the take-over have left the scene. We favor the probability of
profit in this play based on the small premium disparities in
January's option prices.

PLAY (conservative - bearish/credit spread):

BUY  CALL JAN-65 BCR-AM OI=89  A=$0.56
SELL CALL JAN-60 BCR-AL OI=105 B=$0.93

- or -

PLAY (aggressive - bearish/credit spread):

BUY  CALL JAN-65 BCR-AM OI=89  A=$0.56
SELL CALL JAN-55 BCR-AK OI=479 B=$2.00

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


TDS - Telephone Data Systems  $122.12     *** Going South? ***

Telephone and Data Systems is a diversified telecommunications
service company with well established cellular telephone, local
telephone and radio paging operations and developing personal
communications services (PCS) operations.

Not much news on this issue but the rally appears to be over for
now. TDS has broken a three month trend-line indicating a major
change of character. The swiftness of the decline dropped the
price below the 30 dma and indicates a very bearish, short-term
outlook. This week's failed rally has created new resistance near
$127 and any major recovery should be halted in the near-term by
selling at the previous highs near $135.

PLAY (conservative - bearish/credit spread):

BUY  CALL JAN-150 TDS-AJ OI=0   A=$1.38
SELL CALL JAN-145 TDS-AI OI=505 B=$1.81

- or -

PLAY (aggressive - bearish/credit spread):

BUY  CALL JAN-150 TDS-AJ OI=0   A=$1.38
SELL CALL JAN-140 TDS-AH OI=17  B=$2.62

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


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