Option Investor

Daily Newsletter, Thursday, 12/23/1999

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The Option Investor Newsletter            Sunday  12-26-99  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 12-24         WE 12-17         WE 12-10         WE 12-03
DOW     11405.76 +148.33 11257.43 + 32.73 11224.70 - 61.48  +297.27
Nasdaq   3969.44 +216.38  3753.06 +132.82  3620.24 + 99.61  + 72.82
S&P-100   795.56 + 21.63   773.93 + 10.44   763.49 -  3.99  + 13.91
S&P-500  1461.44 + 40.39  1421.05 +  4.01  1417.04 - 16.26  + 16.68
RUT       477.94 + 11.73   466.21 -   .50   466.71 +  2.13  +  5.64
TRAN     2887.70 - 30.72  2918.42 + 43.48  2874.94 - 53.86  + 19.64
VIX        23.12 +   .11    23.01 +  2.09    20.92 +   .10  -  2.13
Put/Call     .47              .43              .45              .49

A different kind of triple witch, 
record closing highs on DOW, NASDAQ, S&P.

I would not in my wildest dreams consider Santa Claus a witch but
after ringing the opening bell on the NYSE this morning it appeared
the markets were under his spell. The three major indexes, DOW, S&P
and Nasdaq all closed at record highs after a flood of economic 
reports. The Dow soared intraday to a new high of 11443.07 and
closed at 11405.76, well over the previous closing high of 11326.
Only four Dow stocks failed to take part in the rally. MSFT, T, 
GE and MCD were only down fractionally while previous Dow under 
performers HWP, AXP, JNJ, MRK and EK all scored good gains.

The S&P-500, a much broader view of the market than the Dow, also
closed at a new record high of 1461 showing a slight broadening
of the market. The Nasdaq went on another record romp and traded
briefly over the magic 4000 level. A close there was not to be
and the index sold off on profit taking just before the close.
Still the Nasdaq nailed the 13th record close for December and
the sixth consecutive in a row. The Nasdaq express will eventually
slow but the odds of stretching the string into next week are
very good. A Santa Claus rally normally begins in the last five
trading days of the year and continues for the first two days
of the next.




The rally today was different than the gains over the last
week. The advances actually beat the declines by a margin of
+1200 stocks across all exchanges. New lows were still ahead 
of new highs by 3:1 but that number is improving. Analysts
say the new lows are caused by tax selling of losers that are
already at their lows for the year. 

The economic reports today showed the economy still running
strong and consumer confidence at very high levels. The Durable
Goods orders came in at +1.2% for November with the majority
of the gains in electronics which posted a +9% gain. Personal
Income increased only +0.4% and was the slowest rate of
increase since August. Personal Spending rose +0.5% and was
inline with analyst estimates. The personal spending component
for December could be a real problem. Preliminary numbers for
December are astronomical and could dramatically impact the
Feds stance on interest rates in February. The December numbers
will be announced the day before the February Fed meeting. A
+1.0% increase would be very disconcerting to the Fed process.
Jobless claims rose by +14,000 to 281,000 and was the eleventh
week under 300,000 which is a key level for measuring unemployment.

The market took the numbers in stride and charged off at the
open even with bond yields soaring to 6.49% intraday. The market
just refuses to accept the fact that February is going to be
a real challenge to the current bull rally. That is ok in my
book as long as investors understand that storm clouds are
brewing in the future. There were many positive factors in 
today's rally. Some of the losers are starting to show signs
of life. The beaten down sectors are starting to attract money
away from the techs. Stocks like KR, CVS, GD, GDT, EK are posting
gains while stocks like EBAY, AMZN, LCOS and DCLK, which have
been strong recently are declining. This rotation is good and
welcome as the rally continues. The market continues to power
forward on the tide of liquidity. For the five days ending 12/22
more than $10.4 bln came into stock funds and this was on top of
$11 bln the previous week. Estimates for December are now over
+$25 bln and continue to be above normal. Considering the cash
still held on the sidelines by Y2K holdouts and the normal January
fund inflows there will be a lot of cash to float the market for
the next several weeks. Considering investors were more interested
about N4K (Nasdaq 4000) today than Y2K, the buying interest is
still extremely strong. The breadth widened to include computer
stocks, DELL +2.38, HWP +5.69, telecoms, WCOM +4.50, and drugs, 
WLA +2.56, BMY +3.50, MRK +2.56. Even with the +202 points for
the Dow today the index only managed a +148 for the week compared
to +216 for the Nasdaq.

For a normally light volume day the Nasdaq still managed to
trade over 1.25 bln shares and the NYSE over 938 mln. Volume  
is typically light during the pre-holiday week but this week
did not conform to the rules. Again, the buying is rampant. 
Financial companies like funds and brokerages were reported 
today to have dished out $13 bln in bonuses so far in December. 
The majority of this money justs continues to be reinvested in 
the market. In November margin borrowing rose +42% as investors 
eager to buy even more stock leveraged themselves in to larger 
positions. This broad market bullishness coupled with the 
increasing cash flow should continue into next week. The next 
challenge will be January. After the huge gains made by the 
Nasdaq this year of +80%, or +182% if you count from the October 
1998 low of 1419 last year, the chance of a quick bout of profit 
taking is very good. Funds are waiting for January to lighten up 
their positions and move the tax consequences into 2000. The 
convergence of tax advantaged selling and January cash inflows 
should make for very interesting trading. The question is not 
now will the Fed raise rates on Feb 2nd but will it be +.25% or 
+.50%. Greenspan is not prone to big increases but the pressure 
is building. Logically the markets should have a serious bout 
of profit taking before this meeting.

The Santa Clause rally, the January Effect, the Y2K melt up, 
whatever reason you give to the current euphoria the result is
the same. Increased buying with no hint of a pull back even at
grossly extended levels. More than one user sent me a lump of 
coal by email this week after I suggested spending more time 
with families, shopping and relaxing this week instead of trading
around the uncertainty of the Fed meeting. When the normally light 
volume week turned into a feeding frenzy after the Fed blessed
the rates, the critics were out in force. Complaints were in 
the vein of "how can I make any money shopping with my family 
when the Nasdaq is up +127 points". Guys and girls, as much as 
you want to depend on someone to call the market flawlessly for 
you 250 days a year, it is still your decision. If you find 
somebody that can call it correctly every day, then send me his 
address and I will follow him too. Until then, it is your job to 
read everything you can find, analyze charts, check the news, 
weigh the possibilities and then decide if you are going to 
jump out of bed in the morning ready to trade or turn the alarm 
off and go back to sleep. I stood on the sidelines Tuesday just 
like you did, amazed at the market reaction. I did not lose any 
money because I was out of the market but when we are watching 
those missed profits move into five digits it is always 
frustrating. This is not a small operation. We are not three 
guys working out of our dorm room. Almost 70 people work for 
OIN and contribute to each newsletter. We compare research, 
argue about market technicals, fundamentals, and often times 
fail to agree on the forecast. Still we strive to present this
information to you in a form that allows YOU to make a decision 
that YOU can live with the next day. When you trade, how you 
trade and what you trade is ultimately your responsibility. 
If you want to blame someone when the market disobeys the rules, 
go right ahead. We put our heart, minds and soul into producing 
the best newsletter possible and we are proud of the results. 
We hope you are too.

The letter you receive tonight will be much larger than a
regular Thursday newsletter. Surprise, that is because it is
really the Sunday newsletter two days early. Since the market
is closed on Friday we are publishing the weekend edition

I would like to take this opportunity to wish everyone a very
happy holiday. Enjoy this quality time with your family. When
you are gone they will not say "I wish they had spent more time
in front of the PC." Very seldom does the market give you a
three day vacation and after they open night trading sessions
next year you will have even less time for friends and family.
You can't store, multiply or trade for more time on this earth.
Spend it wisely.

Jim Brown

Reminder for our male readers: Shop now! Friday is the
official shopping day for males. The stores will be 
expecting you. Your wives, mothers and girl friends
have all completed their shopping and have cleared out
of the malls to make room for us. Two things I have found
to be important in the past.

1. Kitchen appliances are NOT good gifts for your spouse.
Hand tools, flannel nightgowns and beef jerky are not
normally met with enthusiasm either.

2. It is possible you mis-remembered the correct size, 
shape, color or request. Remember to keep the receipts.
Don't feel bad if they want to take your gifts back. You
actually did them a favor by giving them an excuse to shop

Y2K Renewal Offer!!!

Announcing the cheapest renewal rate available! $24.91 mo*
Only five days left to take advantage of this offer.

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.


MSTR - Jan-170 calls

MSTR never managed to mount a rally this week and I finally
closed the position for a $9,000 gain leaving me with a
substantial loss for MSTR over two weeks. I do not like to
stay in a position that is not moving up. The alternative
to up is not attractive. With the Nasdaq in full rally mode
I became concerned that the next move for MSTR would be down.
I took my licks and quit.

CLS - Jan-75 calls

CLS played out exactly like I expected. A strong move up on
Monday allowed me to sell my calls before the split for $22.88
and about a $10 profit. CLS did pull back some on Tuesday but
took off again on Thursday. The next time it pulls back I am
thinking about some longer term calls since the trend continues
to be strong.

BVSN - Naked Puts - Jan-$160

Broadvision has a great upward trending chart and pretty good
volatility. I was looking for a stock to sell deep in the money
puts for January like I did on QCOM last month. I reviewed
several Thursday night and picked BVSN for stability and return
on investment. Here were the candidates with approximate margin
requirements for each assuming 10 contracts.

JNPR $320 - JAN-$360 put @ $70.00 margin $128K % return = 54%
QCOM $485 - JAN-$550 put @ $90.00 margin $194K % return = 46%
YHOO $410 - JAN-$450 put @ $58.00 margin $164K % return = 35%
BVSN $143 - JAN-$160 put @ $27.00 margin $ 57K % return = 47%
ARBA $140 - JAN-$150 put @ $20.00 margin $ 56K % return = 35%

I felt BVSN offered the best opportunity and I could sell 30
contracts for about the same margin as 10 contracts of QCOM or 
YHOO. I did not catch it right at the open so I did not get
the $27 from the Thursday night example. I sold 10 for $24.50,
10 $24.25, 10 $23.88 for an average premium of $24.21. The low
for the day was $20.50 and it closed at $22.50 and they are only
-7 in the money now. 

SUNW - Jan-70 calls

This was simply a logic play. I was looking for something 
relatively safe so I would not have to watch it close. I 
felt that when the big money starts coming back into the 
market the large cap Nasdaq stocks would be the prime plays.
They may not move as fast as Internet stocks but they should
not correct as much either. SUNW had just corrected and was
under going consolidation. It looked like there was a good
base on Wednesday and it was trading at the upper resistance
of $76. I am expecting a breakout next week. By buying deep
in the money Jan-70 calls @ $9.00 my time premium was small,
about $2.00 and my delta was high at .75. A breakout could
run back to the previous $82 very easily and give me a $5 
gain. At least that is my theory. We will see if it plays out.


I did not get filled on any of my target shooting plays. I
spent time with my family shopping and preparing for the
holidays. I plan to enter some other positions next week
market permitting. I am going to focus on steady movers
like NT, BCE, IDC for my big positions and look for some
entry points on some Internet stocks like EXDS, INSP, INKT.

HHH - Internet trust

Last Sunday I mentioned the HHH Internet trust from Merrill
Lynch as an alternative for IRA accounts. It was not optionable.
Good news! The AMEX will start listing options on this stock
on Wednesday 12/29. This is a great way to play Internet
stocks without having to pick a specific stock. 

The 20 underlying stocks are Amazon.com (NASDAQ:AMZN), America 
Online(NYSE:AOL), Ameritrade Holding Corp. (NASDAQ:AMTD), At 
DoubleClick(NASDAQ:DCLK), E*TRADE Group (NASDAQ:EGRP), Earthlink 
Network(NASDAQ:ELNK), eBay (NASDAQ:EBAY), Exodus Communications 
Lycos (NASDAQ:LCOS),MindSpring Enterprises (NASDAQ:MSPG), Network 
Associates (NASDAQ:NETA),Priceline.com (NASDAQ:PCLN), PSINet 

I was trying to target shoot it at $165 last week and it did
not even come close. My target for this week is $170.

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

Good Luck



Sunday, December 26, 1999


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


It may not be cricket but we like this game! 

We're a group of Option investors based in the UK and we held 
our first meeting this week. Six of us attended at the bar in 
the Thistle Hotel at the rear end of Buckingham Palace. Club 
sandwiches and Guiness were the order of the day. 

We all agreed that although we may face the bowler on our own, 
it is none the less a team sport! We decided to combine our 
resources by figuring out each person's area of specialty and 
let them focus on this, feeding back to the rest of the group. 
Some people love to plough through web sites & books, others are 
superb technical analysts, others fundamental analysts. One guy 
working full time, has learned to use technology to send SMS 
messages to his mobile phone and receive email alerts with 
breaking news on the companies in his portfolio. We're all very 
new to options trading but think that use of technology in this 
way is definitely the way forward! 

We trade US stocks on the whole. Not being US residents we are 
limited to which brokers we can use. Preferred Capital Investors 
will not allow us to have an account with them (although we'd 
love to.....hint, hint!). Many other US discount brokers are the 
same. We are currently using Charles Schwab and Ameritrade. 
Please tell us, that us Brits can have access to a broker who 
caters for the UK Options trader! 

We were grinning like Cheshire cats as we realized we had Amazon 
as a call recently when OIN had it as a put. We made money! And 
Vodafone? We were already making a couple of dollars before you 
guys got it on your call list this weekend! However we openly 
discussed our bad trades as well as the good as we felt it was 
important to learn all the lessons we can as quickly as possible. 
i.e. any suggestions as to what we do with KIDE? April calls 
opened at $89. Do we hold on hoping it'll get back up there by 
April? Too late to buy puts? Anyone wanna swap?! 

By the way, Lynda Schuepp rocks! Straight down to talking options 
trading in a facts and figures kinda way. What's all this other 
touchdown and baseball stuff? Quite frankly, chaps, it just isn't 
cricket !-) 

Charles Saldanha - stockprophet@lineone.net

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.

Stock News

Tellabs Quietly Goes About Its Business
By  S.P. Brown

In the network equipment industry, acquisitions are the name  
of the game.  The bigger they are, the more the market likes 
them.  But while industry leaders like Cisco Systems (CSCO) 
and Lucent Technologies (LU) grab the headlines with their 
multi-billion dollar network equipment acquisitions, feisty 
little Tellabs, Inc. (TLAB) quietly snaps up smaller, but 
strategically important, niche companies to round out its 



There is no Ask the Analyst article this weekend.

Market Posture

As of Market Close - Thursday, December 23, 1999 

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

DOW Industrials   10,800  11,320  11,406    BULLISH  12.23 ***
SPX S&P 500        1,340   1,400   1,458    BULLISH  12.03
OEX S&P 100          700     750     793    BULLISH  12.03
RUT Russell 2000     430     450     482    BULLISH  11.12
NDX NASD 100       2,850   3,150   3,591    BULLISH  12.03
MSH High Tech      1,450   1,630   1,831    BULLISH  12.03

XCI Hardware       1,160   1,210   1,385    BULLISH  11.11
CWX Software       1,100   1,200   1,378    BULLISH   9.03
SOX Semiconductor    580     660     696    BULLISH  12.21
NWX Networking       750     800     872    BULLISH  12.03
INX Internet         600     675     751    BULLISH  12.07

BIX Banking          645     690     566    BEARISH  11.30
XBD Brokerage        410     450     421    Neutral  11.30
IUX Insurance        625     650     608    BEARISH  11.30

RLX Retail           900     935     990    BULLISH  11.23
DRG Drug             380     400     356    BEARISH  12.07
HCX Healthcare       760     790     714    BEARISH  12.07
XAL Airline          180     190     153    BEARISH   5.21
OIX Oil & Gas        290     315     295    Neutral  11.23

Posture Alert    
The Dow is starting off to a very Merry Christmas, as this 
lagging index finally broke resistance and closed into new record 
territory. Volume was above average, considering the holiday 
nature of today's trading, as the NYSE traded 734 million while 
the "other" exchange traded 1.26 billion. Leading sectors for 
Thursday include Healthcare (+2.90%), Drug (+2.66%), Airlines 
(+2.46%), and yes, the DOW (+1.80%)! Losers for Thursday were 
limited to Internet (-2.67%) and Semiconductors (-0.61%). With 
this most recent action, we have upgraded the DOW to BULLISH from 

Market Sentiment 

Thursday December 23, 1999

Dow 12,000? By Next Week!

For the first time in a long time, we can write about something 
other than the Nasdaq. Granted, the technology index did break 
another high today, and was momentarily above the 4k mark, but the 
big story heading into the holiday weekend is that the Dow finally 
broke its trading range and closed into a new record high! This 
has been long overdue, and was definitely a sign of relief for all 
the Dow theorists and owners of Dow stocks.

The sentiment for this index has been brutally bearish, and 
continues to be negative. The put/call ratio for the Dow today 
stood at 2.35, which is extremely bearish, and would indicate 
further upside potential. The overall put/call ratio for this 
index now stands at 2.19, which is extremely negative. This 
negative sentiment surrounding the Dow is very similar to the 
Nasdaq 100's sentiment several months ago!

Now, we have highlighted sentiment on many of the indexes numerous 
times, and what we currently see may be the start of a change in 
leadership. It is still too early to tell, but it is intriguing 
anyhow. Below is a quick list of the major indexes and their 
put/call ratios. Now a bearish put/call ratio, from a contrarian 
standpoint, is actually bullish, and all of these ratio's 
highlighted below are bearish. 

                       Thursday's              Overall
Index:      Symbol:    Put/Call Ratio:         Put/Call Ratio:

S&P 100      OEX          2.40                     1.71
S&P 500      SPX          2.03                     1.39
Dow Jones
Industrial   INDU/DJIA    2.35                     2.19

Nasdaq 100   NDX          0.54                     1.58

Even in the face of Thursday's gain, put buyers were lining up on 
the Dow, OEX, and SPX. As you can see, the overall put/call ratio 
for the Dow stands at a whopping 2.19, and with a 2.35 on 
Thursday, may suggest that there are some legs to this recent 
rally. We noted during the last letter how the put buyers dried up 
on the NDX, but they have been nibbling again the last couple of 
days. However, the put/call ratio on the NDX, which was over 2.0 a 
couple of weeks ago, now stands at 1.58. This is a significant 
drop, and Thursday's put/call ratio of 0.54 for the NDX suggests 
that the overall ratio may continue to drop. If this is the case, 
we may soon see a top in the NDX. We will continue to monitor this 
index and let you know of any significant changes. 

In summary, the Dow broke new highs Thursday on good volume 
(considering the holidays). The sentiment that surrounds this 
index has been bearish, and continues to be bearish. Should the 
bearish sentiment continue in the face of big gains, this may 
only help propel the index higher. From a technical standpoint, 
the rally today was important, but more importantly, we need to 
see a continuation on Monday and Tuesday. The last thing this 
index needs right now is a failed rally. However, if this index 
can hold onto Thursday's gains, we would not be surprised to see 
the Dow make a big run heading into the new millennium. Can you 
say Dow 12,000! How about 12,500? Anyway, the traders at Pinnacle 
Capital would like to wish everyone a safe and happy holiday 


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 (22.37):
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 (6.477%):
The yield continues to break new highs, and the broad market 
continues to shrug this off. Next stop for the long bond is most 
likely 6.7%.
Advance/Decline Line:
The A/D line's continual break does not serve the best interests 
of the overall market.

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

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      Tues       Thurs
Benchmark                       (12/17)    (12/21)     (12/23)

Overhead Resistance (780-800)     9.69       3.51       2.43

OEX Close                       773.93     778.86     793.16

Underlying Support (750-770)      1.10       1.34       1.57

What the Pinnacle Index is telling us:
Based on 12/23, bearish sentiment picked up steam all week, as 
the Pinnacle Index (780-800) dropped like a rock from almost 10 
to 2.4. As you can see, the increase in bearish sentiment had a 
direct correlation with the latest rally in the OEX.

Put/Call Ratio                  Friday     Tues       Thurs
Strike/Contracts                (12/17)   (12/21)    (12/23)

CBOE Total P/C Ratio             .43         .46
CBOE Equity P/C Ratio            .34         .35
OEX P/C Ratio                   1.24        1.73

Peak Open Interest (OEX)
                     Friday           Tues            Thurs
Strike/Contracts     (12/17)         (12/21)          (12/23)

Puts                 700 / 8,398     700 / 9,067      700 / 10,982
Calls                700 / 6,272     700 / 6,272      700 /  6,458
Put/Call Ratio         1.34            1.45              1.70

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 23, 1999                       22.37

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

December 23, 1999                     53.2        29.4


For the week of December 20, 1999


None Scheduled


Existing Home Sales      Nov    Forecast: 4.96M  Previous: 4.79M
Consumer Confidence      Dec    Forecast: 134.9  Previous: 135.8


Leading Econ. indicators Nov    Forecast: 0.2%   Previous: unch 


Jobless Claims           12/25  Forecast: --     Previous: 281K 
APICS Survey             Dec    Forecast: --     Previous: 52.9  
Chicago PMI              Dec    Forecast: --     Previous: 70.0 
Help Wanted Index        Nov    Forecast: --     Previous: 86   


None Scheduled

Week of 1/03

01/03 NAPM Manufacturing - Dec
01/04 Construction Spending - Nov
01/05 Factory Orders - Nov
01/05 NAPM non-manuf - Dec
01/06 New Home Sales - Nov
01/07 Employment Report - Dec
01/07 Consumer Credit - Nov

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

The Option Investor Newsletter              12-26-99  
Sunday                        2 of 5


OUCH! ... I Hate it When THAT Happens!

I felt so good Wednesday, that I left to go shopping a few minutes 
before the close. WOOPS!!! It appeared as though QCOM was waiting 
for me turn my back, before it jumped off the ledge. 

If I could trade, just two times a day, it would be at lunch and 
the last 30 minutes of the market. I've traded end of day trading 
opportunities for some time. I hate missing the close, when I'm 
working at the hospital. 

Most of us thought that selling off QCOM's least productive division 
would give the stock one more boost, but instead we got a "sell on 
the news" event. That was a little surprising but in a market such 
as this, with the incredible gains that have been made, ANY news 
could be cause for profit taking. Just as there is a reshuffling of 
stocks at the end of the year by fund managers, dumping the poor 
performers for better ones, there are individuals who want to shuffle 
their profits for tax reasons. Some will want to wait till next year 
to take profits, while others want to use the gains against losses 
incurred earlier this year. There may be more of this to come next 
week. All of us are in a market that none of us have seen before. 
Play carefully. This market is not for those prone to fainting or 
arrhythmias. A few beta blockers could come in handy.

Wednesday during the morning sell off, I was able to capture a few 
YHOO February contracts on a dip and a few more this afternoon. 
Today, I took profits on some January contracts and will leg in to 
more Februarys on dips next week. I haven't decided yet, what all 
I will be holding going into January 1st. A lot depends on the 
market next week, specifically the last 2 trading days. Both JDSU 
and QCOM split next week, so I will have more cash to save for 
bargains. The markets appear to be broadening out, which helps all 
of us in the long run. I know that's great news, but I'm about 
ready for a lengthy rest! My brain is starting to hurt and January 
earnings aren't even here yet. Perhaps the holidays will help. Well, 
on second thought....that's not working. Oh well, one more month.

Over the weekend, I had been asked how I was going to unwind my 
QCOM position. I guess I should have answered that on Tuesday. 
It doesn't help much now, but if I had been in front of the 
computer at the close on Wednesday, I would have exited my highest 
risk plays. For me, that was a few OTM contracts January 450s, 
bought during the market weakness in the morning at 31. I knew 
they were high risk when I bought them and I mentally accepted a 
higher 30% stop loss due to expected volatility.

The reason I would have sold at the close was because of the sharp 
increase in selling volume going into the close, after announcing 
the sell of their handset division. If I had been home, this would 
have been "RED ALERT" to a "selling on the news" event. I would 
have exited because I would have been afraid of a gap down on this 
morning's opening, not knowing what would happen after that. Would 
the selling stop or continue sliding? 

Luckily, most of my contracts had expired last Friday and I have 
been waiting for another entry point this week. I had a larger 
order in on QCOM yesterday, but I was only filled in one account 
on 3 contracts. I was frustrated at the failed fills when it went 
up nicely, but grateful by last evening. I do have deep ITM January 
contracts on QCOM, but many more YHOO since no split announcement 
has been made yet. I expect major momentum when their split is 

So this morning, I watched QCOM. The selling seemed to stabilize 
around the 467 level which gave me time to decide what I wanted 
to do. My stop loss came close. When it visited that area again 
about an hour after the open, I exited at 23. I did that because 
the strength of the buy program was weak and in hopes of re-entering 
at a cheaper price. I entered buy orders for 21 but was never filled. 
It had channeled within a close range, most of the day. It started 
breaking out of this channel to the upside, about 1 ½ hours before 
the close. It is clearly seen on a 1 minute chart. Due to the break 
out from a narrow channeling range all day, I entered buy orders 
getting filled at 22 3/8 as a buy opportunity for next week's split. 

Yo-Yo buying & selling occurred later into the close. Every time 
I started to sell again, it would bounce back. I finally held  
the positions, down 1 point at the close. Usually there is a post 
Christmas rally, but this year may or may not follow trend. Again, 
it's high risk, but that is part of the challenge. A safer play 
would have been waiting until next week to re-enter, but I don't 
always do everything I'm supposed to do. My real risk is a gap 
down that holds on Monday, instead of the buying I expect after 
today's weakness. This means nothing at this point, in fact it 
may work against us, but if you didn't hear it QCOM is the best 
performer for 1999 in the NASDAQ with a 1700% gain!!!! Speaking 
of a Leap!!

So, how am I going to exit? Well, I'll exit on further signs of 
strong weakness Monday or Tuesday. I may day trade those days 
depending on the market. I will exit most positions after the 
split in order to take profits for other plays. I will hold some 
going into January as I expect more buying once it splits. I will 
try to exit on euphoric highs around the split, just as I try to 
buy in sell offs like today. So much money has been made in QCOM 
that I am comfortable moving most of my attention to my other big 
player YHOO, who's potential announcement is still creating a 
buying frenzy. YHOO has a huge following by people who have made 
lots of money in it, with every earnings season. They have all 
been trying to get in line early for the January report around 
the 11th. It still has time to wax & wane getting there though, 
as it showed today.

Once my QCOM is more stable (read: up) and given the opportunity 
in the near future, I will be entering BRCM. Hopefully a nice 
split run will show up in that company too. 

I hope everyone has a wonderful, wonderful holiday this weekend 
and that you eat everything in sight that looks delicious!!! Be 
Safe, Be Kind and Be Grateful.

While shopping last evening, I found a framed piece of art by 
Brian Andreas, an artist, sculptor & storyteller. One piece 
caught my eye. It read: "I used to wait for a sign, she said, 
before I did anything. Then one night I had a dream & an angel 
in black tights came to me & said, 'You can start any time now' 
and then I said, 'Is this a sign?' And the angel started laughing 
and I woke up. Now, I think the whole world is filled with signs, 
but if there's no laughter, I know they're not for me.

Merry Christmas, Everyone.



There is no Traders Corner article this weekend.


There is no Options 101 article this weekend.


Daily Results

Index      Last    Mon    Tue    Wed    Thu   Week
Dow     11405.76  12.54  56.27   3.06 202.16 274.03
Nasdaq   3969.44  30.81 127.28  26.15  32.14 216.38
$OEX      793.16  -2.64   7.57   3.06  11.24  19.23
$SPX     1458.34  -2.96  15.34   2.56  22.35  37.29
$RUT      482.43   0.98   8.60   2.15   4.49  16.22
$TRAN    2887.70  -3.09  -3.09  -3.09  48.96  39.69
$VIX       22.37  -0.16  -0.16  -0.16  -0.75  -1.23

Calls              Mon    Tue    Wed    Thu   Week

JDSU      298.06  14.31  23.22   6.91  12.69  57.13  Splitting
YHOO      402.63   19.5  36.06  13.75 -16.69  52.63  Yahoo!!!
VRTS      143.13   7.91  -1.44  10.56   8.63  25.66  Hot sector
BVSN      153.06  -3.00  10.13   6.88  10.06  24.06  On target
PMCS      145.25   7.06   4.75   6.13   6.00  23.94  New
INKT      191.50  -8.06  18.00  -4.50  15.00  20.44  Split coming
BCE        88.75   0.56   4.94  11.88   2.88  20.25  New
INSP      186.13  -9.19  16.00  16.50  -3.88  19.44  More splits
NXLK       83.63   3.50  15.88  -5.19  -2.56  11.63  Mo'mentum  
QCOM      466.50  11.81  30.06 -11.44 -18.94  11.50  Turning over?
IMNX       99.88  -2.50   2.75   6.00   4.13  10.38  New
NSOL      250.25  18.75   8.81   4.75 -22.00  10.31  Dropped
STM       149.00   4.63   4.38  -1.13   2.13  10.00  Momentum!
TTN        43.56   3.19   4.38   3.75  -2.19   9.13  Entry point
GENZ       47.56  -0.31   3.81   1.63   3.94   9.06  New
NT         98.69   1.56   6.44  -1.25   0.69   7.44  Going north
DCLK      211.63  -3.56  15.13  -0.25  -4.63   6.69  Split run?
NOK       174.00   3.19  -2.19  -4.50   9.00   5.50  Nice day
GSTRF      28.19   2.63  -1.00   0.44   2.13   4.19  New
VIGN      150.50   4.56  -1.50   0.63  -3.13   0.56  Dropped
TERN       68.25   2.31   0.50  -1.75  -2.75  -1.69  Dropped
AOL        81.25   2.00  -0.25  -2.25  -1.50  -2.00  Entry point?
SONE       80.00   1.25   0.25  -5.19  -0.31  -4.00  Dropped


PHCM      118.25  -9.06  -0.31  -1.94  -5.75 -17.06  New
ETYS       30.94  -2.75  -1.88  -1.06  -0.94  -6.63  E-downhill!
CIEN       58.00  -2.63   1.00  -1.88  -2.00  -5.50  New
KIDE       35.44  -1.31  -1.94  -2.69   5.00  -0.94  Dropped
GT         27.13  -0.63  -0.94   1.69  -0.06   0.06  Sliding 
LTR        61.44  -0.06  -0.63   1.69   0.50   1.50  Finds a nut
EK         63.31  -1.31  -2.94   4.69   1.25   1.69  Dropped
WB         67.88   0.69   1.50  -0.63   0.31   1.88  Downward Ho!
BMY        66.69  -2.13  -1.28   3.06   3.50   3.16  Dropped
GILD       46.38  -0.88   3.38   4.81   0.94   8.25  Dropped
NSOL      250.25  18.75   8.81   4.75 -22.00  10.31  New



PMCS  - PMC-Sierra Inc
GENZ  - Genzyme General 
GSTRF - Globalstar Telecommunications 
IMNX  - Immunex Corp. 
BCE   - BCE Inc. 


NSOL - Network Solutions 
CIEN - Ciena Corp. 
PHCM - Phone.com Inc 


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


SONE $80.00 (-4.00) SONE must have been bad this year, as it was
left out of the Santa Claus rally over the past 2 days.  Traders
have been happy to allow the issue to consolidate its gains from
the past two weeks.  Volume has been on the light side the past 2
days as the price has dropped  The lack of upward movement over 
the past 2 days is disconcerting, as the bulk of the B2B Internet
stocks have had strong gains.  SONE could be just taking a
breather, but it is possible investors are moving on to other
more exciting B2B plays such as Commerce One (CMRC).  For now,
we will have to let SONE go, as there are so many superior plays

NSOL $250.25 (+10.31) We are going to drop NSOL as a call play 
because we think we've began to wear out our welcome.  NSOL hit 
a new 52-week high Wednesday at 287.75.  The Internet domain 
registrar has given us several opportunities to take some money 
off the table.  The stock split we mentioned Tuesday was 
announced Wednesday morning.  Since hitting its new high shares 
of NSOL have begun to roll over.  NSOL has pulled back over $37 
and appears to be setting up to correct further.  Be sure and 
check the Put section of our newsletter for our new plans for 

TERN $69.13 (-0.81) We mentioned our concern in the lack of 
follow through for TERN on Tuesday.  Now you can see why.  TERN 
never really got on track.  If you entered this play, you would 
have had to have break several of Jim's ten rules, in order to 
have profited from this play.  Actually when TERN fell out of 
bed in the first hour of Wednesday's session, you probably got 
stopped out.  There was no real company specific news connected 
to the decline.  TERN settled just above its 10-dma at $67.69 
and would appear to headed lower.  With the strength in the 
major indices and other sectors, there are simply to many 
other opportunities available at this time.   

VIGN $150.63 (+0.69) Since its split the first part of December, 
VIGN has had a great run.  However, it looks like someone has 
let the air out of our play.  Although the volume has been 
light VIGN appears to be preparing to either consolidate or 
retrace.  We did have a chance to make a small profit on this 
play, but the recent pullback from Monday's high at $159.50 
has made us a bit uncomfortable.  The Internet stocks didn't 
fair to well in today's Santa Claus rally.  This could be the 
beginning of a sector rotation going into Y2K.  We are going 
to let our play in VIGN go for now and stand aside.  We will 
continue to monitor the stock, for opportunities in the future.


EK $63.38 (-2.25) What we thought was just a dead cat bounce 
on Tuesday has turned into the real thing.  Hopefully, you used 
stops and the damage was not too bad.  Value investors found a 
couple of dimes to rub together and began their January buying 
early.  Some of the heavy buying in EK can be attributed to the 
announcement that EK has hired away the CFO from Unisys to be 
the new CFO at EK.  Also Kodak met with investors on Tuesday 
and emphasized their digital technologies.  Kodak has been 
accused of not focusing enough on this part of their business.  
Perhaps the recent price advance has opened the apertures wide 
enough for executives to get a clue as what investors want to 
hear before they will move money into the stock.

BMY  $69.56 (+4.44) Bristol-Meyers found the cure and it is 
called bottom fishing.  Looks like the stock has broken its 
downtrend.  Today's market was very impressive in the broadness 
of the rally.  Many "value" stocks are starting to work their 
way up with an infusion of new buyers.  It appears that the 
"January Effect" is upon us and widely held large under-
performing stocks should not be shorted.  There has not 
been any news in the past two days for BMY.

GILD $46.38 (+8.25) In the past week, Gilead Sciences has 
driven through two resistance levels that we pointed out in the 
past two updates of this put play.  If you used stops at these 
points your losses would have been minimized.  There has not 
been any specific news to drive the share price of GILD.  The 
biotechs in general have been very strong.  In this case a 
rising tide has lifted all boats, even the lifeless ones like 

KIDE $35.44 (-0.94) It seems strange that on a day when profit 
taking plagued the e-commerce stocks that KIDE rallied 5 
points.  Maybe KIDE had had enough body slamming of its shares 
and decided to rebound from its brutal punishment nearly 
unscathed like the nauseating/adorable (you pick) Pokemon toys 
it promotes.  We have had our fun with KIDE and now it is time 
to take the profits and buy something nice for the new year, 
like a momentum stock.  All kidding aside, it looks like KIDE 
is trying to break its downtrend and we do not want to be short 
if it is going to go and test resistance at $43.


Current split candidates

NOK  - Nokia
STM  - STMicroElectronics
BVSN - BroadVision
YHOO - Yahoo!
VRTS - Veritas

Split candidates that are not current plays

SNE  - Sony Corp.
QLGC - QLogic
HGSI - Human Genome
CHKP - Checkpoint
BRCM - BroadCom

Recent announcements we predicted

NSOL - Network Solutions (most recent pick)
DCLK - DoubleClick (most recent pick)


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

Symbol - Stock          Splits/Date  
XLNX - Xilinx           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
RHAT - Red Hat Inc      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
LBRT - Liberate Tech    2:1 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
ORCL - Oracle Corp      2:1 01-18-00 ex-date 01-19
PRGS - Progress Soft    2:1 01-21-00 ex-date 01-24
MWD  - Morgan Stanley   2:1 01-26-00 ex-date 01-27
CHKP - CheckPoint Soft  2:1 01-28-00 ex-date 01-31
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
EMMS - Emmis Comm       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
NSOL - Network Solution 2:1 02-28-00 ex-date 02-29
SDLI - SDL Inc          2:1 02-29-00 ex-date 03-01
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:

INSP - InfoSpace.com $186.13 (+19.44)

See details in sector list

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


BVSN - Broadvision $153.06 (+24.06)(+21.63)

See details in sector list

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

Put play of the day:

PHCM - Phone.com Inc $118.25 (-17.06)

See details in put list

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


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

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

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

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

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

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

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.


NXLK - Nextlink Communications $83.63 (+11.63)(+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.

Nextlink continues to connect its shareholders with profits. 
There is nothing like good news and being in the right sector 
to make a stock an outstanding momentum play.  It all started 
almost two weeks ago when it was announced that NXLK would be 
admitted into the NASDAQ 100 club.  Being in the NASDAQ 100 
gives a company a certain cache.  It means that the company is 
now one of the elite technology companies in the world.  
Correspondingly, this fact introduces the company to a whole 
new league of investors.  Confidence in a positive future for 
NXLK has driven its stock price and introduced the company to 
new investors.  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 equity deals 
provide excellent long term support.  Recently, NXLK has made 
a new all time high seven of the last nine trading days.  The 
slope of the uptrend is getting more steep.  On Tuesday, we 
saw an incredible rally of over 15 points into the close.  We 
wrote in the update that aggressive investors may want to take 
profits on the Wednesday opening and re-enter a position after 
a retracement of the last minute rally on Tuesday.  This 
strategy proved to be very fortuitous.  Nextlink failed to 
make a new high today.  The stock rallied to within 1 point of 
a new high before falling all the way back to the middle of 
yesterday's trading range.  A consolidation would not be out 
of the question for this stock before attempting another 
rally.  A break below $82 would indicate a drop to support at 
the $75 level, which would be a good entry point.  Aggressive 
traders could go long when the stock makes a new high above 

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.  On Monday, NXLK 
announced the hiring of Mr. Nate Davis for the position of 
President and COO.  Mr. Davis was previously an Executive Vice 
President with Nextel Communications.

BUY CALL JAN-75 QNF-AO OI= 363 at $12.75 SL=10.50
BUY CALL JAN-80*QNF-AP OI= 609 at $ 9.50 SL= 6.75
BUY CALL JAN-85 QNF-AQ OI= 178 at $ 7.13 SL= 5.25

SELL PUT JAN-75 QNF-MO OI= 100 at $ 3.00 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     +16.94    52-week high=$91.50
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 =  1.5 mln 
Chart = http://quote.yahoo.com/q?s=NXLK&d=3m


TTN - Titan Corporation $43.56 (+9.13)(+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 

Fe-Fi-Fo-Fum!  I smell the carcass of a defeated bear.  Or so 
it may seem as Titan stomped its way into new high ground.  
The shares of Titan continue to be driven by their new 
patented technology.  Last week the USFDA approved an 
irradiation technology to kill deadly bacteria on raw meat.
It is not surprising that investors are jumping on the 
headline grabbing news about a topic that has created fear in 
consumers ever since the Jack-In-The-Box poisoning.  Titan 
owns a patented technology and a proccesing plant that will 
utilize Surebeam that destroys the offending bacteria in 
seconds by using electricity.  Titan, in anticipation of the 
approval,  already had a manufacturing facility in place and 
several exclusive agreements with most of the largest meat 
producers in the country.  Investors obviously believe that 
meat irradiation can be a business that will add giant chunks 
to the bottom line.  (new profit projections have not yet been 
offered).  Also, please note that Titan is not a one trick 
pony.  They are in the very hot communications industry as 
well as making forays into the Internet sector (see news 
item).  After breaking out of a base at the $31 level, TTN 
has had an excellent run all the way to today's high of 
$48.25.  Today's low price tested yesterday's low price at 
$41.88.  This is a very important support level.  If TTN 
trades below this level be patient before adding a bullish 
position.  Wait until support is established.  If TTN can move 
above today's high then momentum traders can attempt to catch 
the next wave up.  As always, place your stops.  Especially 
since TTN closed down on a strong day overall for the markets.  
Short term profit taking is a real possibility.

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.  In yet 
another acquisition, Titan's e-business solutions company is 
buying Solutions For Growth, a billing software company.

BUY CALL JAN-35 TTN-AG OI=3012 at $10.50 SL=7.50
BUY CALL JAN-40*TTN-AH OI=1068 at $ 7.50 SL=5.75
BUY CALL JAN-45 TTN-AI OI= 549 at $ 5.00 SL=3.25

Picked on Dec 16th at  $35.00    P/E = 73
Change since picked     +8.38    52-week high=$45.88
Analysts Ratings    5-0-0-0-0    52-week low =$ 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 =  923 K
Chart = http://quote.yahoo.com/q?s=TTN&d=3m


STM - STMicroelectronics $149.00 (+10.00)(+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.

The story this week for STM was the overall momentum in the 
Semiconductor Index, $SOX.  The $SOX closed last Friday's session 
at 639.34.  As we close out this trading shortened week today, 
the $SOX tacked on 56.62 points, ending at $695.96.  The overall
sentiment for the Semiconductors continues to look very 
favorable as we approach the year 2000.  Most analysts on the
street has been raising there price targets, earnings, and 
revenue growth going forward and have been putting the money to 
work to support those increases.  STM tacked on $10 more points 
this week closing the day at $149.  The stock has been gapping 
up for sometime now at the open of trading.  This is a perfect 
scenario for trailing stops.  Stops that could have been adjusted 
daily to protect gains.  At this point we want to be cautious 
before entering new positions, the volume is slowing down.  If 
the market broadens out next week, the profit-takers may step 
up.  Support is down at the $139 level.  

Adding to the momentum in the shares of STM was the news earlier 
in the week that STM had teamed up with Hewlett-Packard to do R&D 
to develop a technology platform based on Very Long Instruction 
Word(VLIW) technology.  No additional news was reported after 
early in this week. 

BUY CALL JAN-140*STM-AH OI=128 at $15.88 SL=12.83 
BUY CALL JAN-145 STM-AI OI= 56 at $13.00 SL=10.00 
BUY CALL JAN-150 STM-AJ OI=  6 at $10.25 SL=8.00 low OI

Picked on Nov 30th     $125.06    P/E = 88
Change since picked     +23.94    52-week high=$149.63
Analyst Ratings     12-2-2-0-0    52-week low =$ 37.06
Last earnings 11/99  est= 0.43    actual= 0.46
Next earnings 01-25  est= 0.56    versus= 0.42
Average daily volume =   902 K 
Chart = http://quote.yahoo.com/q?s=STM&d=3m


PMCS - PMC-Sierra Inc $145.25 (+23.94)

PMCS designs, develops, markets and supports high-performance 
semiconductor system solutions for advanced communications 
markets.  PMCS provides customers with Internetworking 
semiconductor system solutions for high-speed transmission 
and networking systems that enable the restructuring of the 
global telecommunications and data communications infrastructure.
The company intends to achieve this by providing its customers 
with world-class products, quality, service and technical 

Since the 15th, PMCS has rebounded off their support of $105.00 
and closed off an intraday 52 week high of $148.25, settling at 
$145.25.  This is a gain of $6.00 for the day and $23.94 for the 
week.  The catalyst for this incredible run was the announcement 
that as of December 20th PMCS will be added to the NASDAQ-100 
Index.  Volume peaked after being added to the Index to over 
3 million shares but has now settled into its norms of just shy 
of 1 million share a day and the price continues to climb.  A 
pullback to $130 would be ideal but it may be unlikely unless 
the market takes a breather.  This is mainly a momentum play, 
but PMCS also has earnings in January and should continue to 
move up in anticipation of a strong report.  

Another catalyst was the upgrade from Salomon Smith Barney.  
They raised its rating on shares of PMCS to a Buy rating from 
Outperform on December 17th. 

BUY CALL JAN-135 SQL-AG OI=482 at $19.38 SL=16.00
BUY CALL JAN-140*SQL-AH OI=170 at $16.13 SL=13.25
BUY CALL JAN-145 SQL-AI OI=  0 at $13.38 SL=11.00 New Strike

SELL PUT JAN-125 SQL-MY OI=136 at $ 4.50 SL=6.25
(See risks of selling puts in the play legend)

Picked on Dec 2nd at    $145.25    P/E = 139.81
Change since picked       +0.00    52-week high=$145.25
Analysts Ratings     15-6-2-0-0    52-week low =$ 30.06
Last earnings 10/99   est= 0.24    actual= 0.25 surprise=+4.17%
Next earnings 01-20   est= 0.27    versus= 0.30
Average Daily Volume = 1.80 mln
Chart = http://quote.yahoo.com/q?s=PMCS&d=3m


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The Option Investor Newsletter          12-26-99  
Sunday                        3 of 5


INSP - InfoSpace.com $186.13 (+19.44)

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.

Another day, another Internet stock approaching $200 after a 
split announcement.  Not very original, but we are not 
complaining.  On November 30th,  INSP announced that they would 
split their shares on January 4th, 2-for-1.  Despite a huge day 
yesterday and a subsequent pull back today, we still feel there 
may be more to go to the upside for this stock.  There has been 
plenty of other good news recently to keep investors 
interested.  In recent weeks the company has announced plans to 
buy two other companies that could prove to be very beneficial 
for InfoSpace.com.  The first is a wireless service company, 
the other an e-commerce company for $750 million.  It is 
possible that the e-commerce side of InfoSpace.com's business 
could explain the lackluster behavior of the stock today, as 
the major commerce players pulled back.  INSP also received a 
long-term Buy recommendation from Merrill Lynch.  Monday, INSP 
announced a strategic partnership with MSFT.  The two companies 
are integrating their instant messaging capabilities.  It will 
give users the ability to send and receive instant messages 
anytime, anywhere and on any device.  After INSP launched 
itself into orbit yesterday making a new high at $197.75 it 
succumbed to some profit taking finishing down $3.88 today.  
Take a look at the premiums on the calls.  They have really 
jacked up the prices.  This is great for those already long, 
but new investors should be wary of these premiums.  This stock 
trades very well when it makes a new high, so expect a good 
follow through if it trades above $198.  If the market is weak 
next week you may have a chance to go long INSP in the mid 

In other news it was announced last 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.  This has proven to be a very profitable strategy for 
other Internet companies, most notably CMGI.

BUY CALL JAN-180 OHY-AP OI=182 at $38.25 SL=29.75
BUY CALL JAN-185*OHY-AQ OI=106 at $37.38 SL=29.13
BUY CALL JAN-190 OHY-AR OI= 91 at $35.25 SL=27.38
BUY CALL JAN-195 OHY-AS OI= 40 at $33.13 SL=25.84

Picked on Dec 19th at   $166.69    P/E = N/A
Change since picked      +19.44    52-week high=$197.75
Analysts Ratings      6-4-0-0-0    52-week low =$  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


YHOO - Yahoo! Inc. $402.63 (+52.63)(+3.25)

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.

Same as last week...recently added to the S&P 500...now 
preparing for an earnings run with scheduled announcement on 
January 11.  YHOO is also a heavily favored split candidate.  
Historically, the splits have been 2:1, however, we think there 
is a strong likelihood of a 3:1.  First of all there are enough 
authorized shares without requiring a shareholder vote.  Second, 
a 2:1 really doesn't do much to make the shares any more 
affordable.  That said, with the exception of the big run last 
Tuesday, volumes have been slipping below the ADV of 9.1 mln 
shares, telling us that YHOO may take a few days of rest.  
Thursday, just 4.6 mln shares traded, indicating not much buying 
interest right now.  YHOO could be entering a consolidation phase 
for the next week.  Hence now could be the time to target shoot 
for an intraday low in these days of volatility.  On the old 
resistance equals new support theory, YHOO looks buyable here at 
roughly $400.  The nearest historical support is $395.  However, 
despite an intraday bounce in the closing minutes on Thursday, 
the price was in descent mode on increased volume.  YHOO is a 
volatile play, so if you play it, watch to see its behavior on 
Monday morning.  Between $395 and $400 is the target.  However 
below $395 is a red light.  Wait for the bounce and don't try to 
catch the falling knife.  $426.25 is resistance.  

If you hadn't already heard the news, Yahoo! will partner with 
SoftBank and Kmart to launch a new online shopping site called 
"bluelight.com".  Looks like the specials will no longer be 
relegated to 10 minute time slots on isle 29.  While an initial 
expense increase to K-Mart, YHOO benefits.  Other than that, 
there isn't much in the news moving the price, just momentum.

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

BUY CALL JAN-390 YUU-AR OI= 821 at $47.13 SL=38.00
BUY CALL JAN-400*YUU-AT OI=6737 at $42.88 SL=33.50
BUY CALL JAN-410 YHX-AB OI= 270 at $37.00 SL=29.00
BUY CALL JAN-420 YHX-AD OI= 306 at $32.50 SL=25.00

Picked on Dec 12th at   $350.00    P/E =1677
Change since picked      +52.63    52-week high=$426.25
Analysts Ratings    14-14-4-0-0    52-week low =$109.00
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 =  9.1 mln
Chart = http://quote.yahoo.com/q?s=YHOO&d=3m


DCLK - DoubleClick $211.63 (+6.69)(+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, DCLK 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 rumor became a reality in the shares of DCLK this week.  
After Monday's closing bell, the Board of Directors approved 
a stock split for shareholders of record on Dec 31st.  The split 
will take place on Jan 10th.  The split run has now officially 
begun and we expect the stock to remain strong up to the stock 
split which is only 11 trading days away.  But don't forget 
the volatility that comes with trading a stock like DCLK.  This 
week the stock traded to a high of $224, before profit-takers 
stepped up to the table to lock in gains.  Another volatile, 
but profitable trading week for DCLK, the shares ended the week 
up $6.69 at $211.63.  Possible target-shooting could be attempted 
above $213.  Trailing stops are a must.  As we look towards the 
last week of the year, volume will possibly start to dry up.  
That will increase volatility so be careful, but use the swings 
to get a good entry point.  A bounce off of $210 is worth a 

Traders may be anticipating higher prices over the short-term 
for DCLK.  Take a look at the option activity, it has increased 
recently in the out of the money near term Calls.  The open 
interest for the Jan 260's is currently at "2201" contracts.  

BUY CALL JAN-220*QTD-AD OI=1483 at $19.50 SL=15.75
BUY CALL JAN-230 QTD-AF OI= 425 at $15.50 SL=12.25
BUY CALL JAN-240 QTD-AH OI= 371 at $12.50 SL=10.00

SELL PUT JAN-180 TDU-MP OI= 988 at $ 8.88 SL=11.00
(see risks of selling puts in the legend)

Picked on Dec 9th  at     $197.00    P/E = N/A
Change since picked        +14.63    52-week high=$224.00
Analyst Ratings        11-7-1-0-0    52-week low =$ 21.81
Last earnings 10-03    est= -0.14    actual= -0.13
Next earnings 01-19    est= -0.10    versus= -0.13
Average daily volume = 2.45 mln 
Chart = http://quote.yahoo.com/q?s=DCLK&d=3m


AOL - America Online Inc $81.38 (-3.61)(-6.50)(+13.38)

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.  

Can you say entry point?  AOL got more consolidation again 
this week inching closer to the support at $80. The stock did 
decline for most of the day and then bounced near $81 at the 
end of the day to close at $81.38.  In the news, AOL acquired 
a map making company Wednesday called MapQuest.com.  The deal 
valued about $1.1 billion allows MapQuest shareholders 0.31558 
of AOL stock for each share of MapQuest stock.  AOL states that 
this is an attempt to localize the Internet by giving the 20 
million AOL subscribers easy access to instant electronic maps 
and directions to restaurants, stores and other locations.  The 
company also announces today that AOL's Moviefone.com has had 
a 62% Growth in usage making it the most popular site for 
Do you have all your Christmas shopping done yet?  With less 
than two days to go (I started shopping yesterday), it may be 
profitable to take advantage of the post-Christmas sales.  
AOL announced today a new discount shopping center at Shop@AOL 
geared to capture the interest the online bargain hunters.  
Shop@AOL's clearance sale is offering up to 70% off a wide 
variety of name brand products.

BUY CALL JAN-80*AOO-AP OI=43292 at $7.50 SL=5.25
BUY CALL JAN-85 AOO-AQ OI=56395 at $5.13 SL=3.50
BUY CALL JAN-90 AOO-AR OI=50832 at $3.50 SL=1.75
BUY CALL JAN-95 AOO-AS OI=28034 at $2.50 SL=1.25

SELL PUT JAN-80 AOO-MP OI=28697 at $3.63 SL=5.50
(See risks of selling puts in the play legend)

Picked on Dec 2nd at     $79.88    P/E = 251
Change since picked       +1.50    52-week high=$95.81
Analysts Ratings    23-15-3-0-0    52-week low =$28.58
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


BVSN - Broadvision $153.06 (+24.06)(+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.

Broadvision is proving to be the picture perfect positive 
momentum play.  Broadvision traded up to a new high of $146 
in the early part of Wednesday's session and continually 
tested and held support at $140.  Not satisfied with a mere 
$146, BVSN made its way up to a new high of $162.13 on 
Thursday, posting nearly three million in volume, which is 
just slightly higher than average.  BVSN found new support 
at $150 throughout the day.  Look for these two newly 
established support levels to hold going forward.  If needed, 
BVSN has additional support at its 5-dma which is currently 
at $137.50.  Other than the psychological levels, i.e., $160, 
the only mentionable resistance at this point is the new 
52-week high.  As we have mentioned before, according to 
BVSN's recent trading pattern, your best bet is to time your 
entries toward the early part of the day or to wait for bouts 
of profit taking backed by holding support.  As we make these 
substantial moves up, tighten your stops accordingly 
to protect your profits.  

On Wednesday, BVSN announced that they had expanded their 
relationship with Verity (VRTY) in order to broaden their OEM 
alliance in the e-commerce arena. 

BUY CALL JAN-150 BDV-AJ OI=271 at $21.25 SL=16.50
BUY CALL JAN-155*BDV-AK OI=145 at $18.63 SL=15.50
BUY CALL JAN-160 BDV-AL OI=229 at $16.63 SL=13.00

SELL PUT JAN-130 BDV-MF OI=175 at $ 8.25 SL=10.50

(See Risks of Selling Puts in Play Legend)

Picked on Dec. 16th at  $131.69     P/E = 878
Change since picked      +21.38     52-week high=$162.13             
Analysts Ratings     5-16-2-0-0     52-week low =$  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 = 2.03 mln
Chart = http://quote.yahoo.com/q?s=BVSN&d=3m


VRTS - VERITAS Software $143.19 (+25.72)(+8.41)(+2.93)

The world's largest maker of storage management software is 
located in Mountain View, California.  VERITAS Software Corp.
supplies enterprise data storage management solutions, and 
provides advanced storage management software for open systems
environments.  Many of their products provide performance 
improvement and reliability enhancement features that are 
critical for many commercial applications.  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.  
Over 34% of the company is owned by institutional investors.  
Since their IPO in 1993 they have competed with some of the best
in Sun Microsystems, BMC Software and Legato Systems.

Another week, another $25 move.  Don't we wish it was that
simple.  VRTS had a great holiday week, making a new high at 
$147.88 just after noon today.  VRTS did fall back to close at
$143.19 but it appeared to be traders squaring positions as 
they headed home for the holiday's.  The volume for the week
has been solid, averaging 2.8 mln. shares per day.  VRTS received
some help Wednesday from Wadell and Reed.  VRTS was listed
as one of the companies "tech favorites" for one of the company's
funds.  As we mentioned before VRTS is popular among the 
institutions and is certainly well positioned in the market place.
Technically VRTS has exploded to the upside and only time will 
tell as to whether it can maintain its momentum into Y2K.  We
would be somewhat cautious about entering at this level and 
would look for a pullback to a support level and a bounce
before entering a new play.  Intraday support is found at 
$141, 136, and $131.  VRTS has jumped over $24 in the past two
sessions, so a retracement and a bounce would not be out of the 
question.  If we see continued strength after the Christmas break,
we would enter a new play or add to an existing position, but 
would cautiously as some of the recent buyers may decide to take
some money off the table.  Whether we see continued momentum
or a decline with a bounce confirm the volume in VRTS before
placing an order.  The option premium in VRTS options is high
due to the volatility of the stock, so this may be a play 
that is better left to those with a strong heart.

As we've said VRTS is well connected in its industry.  Wednesday
IBM named VERITAS ClusterX for its WLBS(Windows NT Load Balancing
Service).  VRTS completed ClusterProven validation on IBM's
Netfinity 7000 M10 server.  IBM and VERITAS are long standing
partners and continue to expand their relationship.  

BUY CALL JAN-130 VUQ-AF OI=273 at $22.00 SL=17.25
BUY CALL JAN-135*VUQ-AG OI=308 at $18.63 SL=14.75 
BUY CALL JAN-140 VUQ-AH OI=  0 at $16.00 SL=12.63 New Strike
BUY CALL JAN-145 VUQ-AI OI=  0 at $13.50 SL=10.63 New Strike

Picked on Dec 12th at   $109.06    P/E = N/A
Change since picked      +34.13    52-week high=$147.88
Analysts Ratings     6-15-2-0-0    52-week low =$ 17.53
Last earnings 10/99   est= 0.14    actual= 0.11 surprise=+27.3%
Next earnings 01-13   est= 0.15    versus= 0.08
Average daily volume = 2.60 mln
Chart = http://quote.yahoo.com/q?s=VRTS&d=3m


INKT - Inktomi $191.75 (+20.69)(+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.

INKT gave us the breakout we were looking for Tuesday.  
Wednesday the bears jumped in with both feet driving shares of
INKT, back down to a support level of $170.  Calmer heads 
prevailed as the bulls jumped back in and bid the price of INKT 
stock higher to close the session at $176.50.  This morning 
Merrill Lynch analyst Henry Blodget woke up in a good mood and 
raised his near term rating for the Internet directory company 
to accumulate from a neutral rating.  When this analyst speaks
traders listen.  Blodget feels INKT is one of the best positioned
companies to benefit from the hyper-growth in content distribution
services.  He set a new price target of $225 per share.  INKT 
gapped up at the open today and traded between $189 and $197.25 
for the session.  Remember our interest in INKT was for a 
split run.  INKT splits 2:1, Dec 31st.  If you have a position in
this play, assess your profit objectives and move your stops up
accordingly.  If you have not yet entered this play, and are
considering a new position, please do so carefully.  We only
have next week for the split run to continue.  A pullback to 
$185 followed by a bounce could provide an opportunity to buy 
calls.  If we see continued strength early next week, that would 
also signal a buying opportunity.  If you enter a position and
get a profit, don't be afraid to take it as INKT is another
Internet stock that can turn on a dime.

BUY CALL JAN-180*KYQ-AP OI=1130 at $25.50 SL=20.00
BUY CALL JAN-190 KYQ-AR OI=1407 at $19.75 SL=15.63
BUY CALL JAN-200 KYQ-AT OI=   5 at $16.00 SL=12.63 low OI

Picked on Dec 9th at    $166.94    P/E = N/A
Change since picked      +24.81    52-week high=$197.25
Analysts Ratings      7-5-3-0-0    52-week low =$ 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 = 1.96 mln
Chart = http://quote.yahoo.com/q?s=INKT&d=3m


GSTRF - Globalstar Telecommunications $28.19 (+4.19)

The difference between GSTRF and Iridium, the most recent flop in 
satellite communications can be described in four letters: CDMA.  
Globalstar will use it as the medium of transmission, instead of 
the TDMA technology used by Iridium.  GSTRF will be able to 
transmit not just crystal clear quality voice calls, but data, 
messaging, paging, and GPS services.  GSTRF uses 48 satellite in 
low orbit above the earth in conjunction with a ground-based 
system.  Thousands of beta users already report fantastic 
results.  Though commercial service has already begun, it will be 
available for the rest of us by the end of the first quarter in 
2000.  Loral Space and Communications owns 43% of the venture, 
while QCOM and others own the balance.

Isn't this thing doomed to fail like the rest of them?  
Emphatically, the answer is no.  GSTRF is based on CDMA 
technology, which is far superior and thus the new standard for 
wireless transmission, outstripping the growth rate of GSM and 
TDMA combined.  Other systems can not as reliably transport data 
the way CDMA can.  As for fundamentals, GSTRF costs only half as 
much to build as IRID and is profitable with only 400K users.  
While IRID had to charge $1 per minute just to break even, GSTRF 
has a cost of $0.05 including operating costs.  They have already 
pre-sold $25 mln of time to wholesalers averaging $0.47 per 
minute - 85% cash flow margin at peak use.  Want more?  It's 
scalable so that when the system needs more capacity (around 7 
mln users), more satellites can be added and ground equipment 
changed without modifying the whole system.  40K handsets are 
already sold and 200k are expected to be in circulation by the 
end of the first quarter.  We could go on about the technological 
aspects that will make this system a huge success, but that gets 
boring.  For us traders, we should note that volume has been from 
30% to 500% greater than the ADV last week, indicating a heavy 
accumulation.  Historical support and resistance has been 
channeling between $20 and $30, respectively.  We believe that 
after the new year and maybe as early as next week, GSTRF is 
finally going to get the respect it deserves.  If you want to 
target shoot, mild support is at $24 and $26.  Otherwise, a 
breakout over $30 with volume is the key to a good entry.

In the news, George Gilder, telecoms guru had kind words for 
GSTRF, which might help explain its monster volume on Thursday.  
He wrote, "The stock is still down because of the aftershock of 
the TDMA failures of Iridium and Teledisic.  We are not market 
timers, but as a historian, I note that Globalstar is an 
ascendant technology, and that the stock has yet to ascend.  You 
do not have to be a rocket scientist to recognize that such a 
discrepancy between potential and kinetic energies - such an 
underestimation of CDMA and bandwidth demand - historically 
supplied the voltage for the explosive ascent of Qualcomm.  "Nuff 
said."  Ditto (Remember from the Nortel write-up that bandwidth 
demand is projected to increase by 100 to 260 fold in the next 
four years)

BUY CALL JAN-25 YVQ-AE OI=4002 at $4.75 SL=3.00
BUY CALL JAN-30 YVQ-AF OI=1938 at $2.25 SL=1.00
BUY CALL JAN-35 YVQ-AG OI= 472 at $0.88 SL=0.00 High Risk!
BUY CALL MAR-30*YVQ-CF OI=3014 At $4.50 SL=2.75
BUY CALL MAR-35 YVQ-CG OI=3653 at $2.81 SL=1.25

Picked on Dec 23rd at   $28.19    P/E = N/A
Change since picked      +0.00    52-week high=$33.00
Analysts Ratings     4-7-1-0-0    52-week low =$12.63
Last earnings 10/99  est=-0.35    actual=-0.19 surprise=+84%
Next earnings 01-11  est=-0.75    versus=-0.19
Average Daily Volume = 1.8 mln
Chart = http://quote.yahoo.com/q?s=GSTRF&d=3m


NT - Nortel Networks $98.69 (+8.25)(+2.19)(+8.06)(P5W +21.25)

Here come 'Ol Flat Top; he come groovin' up slowly.  What 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, local area networks, 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 firm, BCE owns 40%.  The U.S. 
accounts for over 50% of sales.

Bring on the bandwidth.  NT demonstrated in late November their 
ability to transmit 80 gigs per second on a single wavelength, 
with each fiber able to carry 80 wavelengths.  Doing the math, 
that equates to 5.6 petabits per second on a single 864-strand 
fiber cable.  Bandwidth glut coming?  Not even close.  Telecoms 
guru, George Gilder, notes that while bandwidth will increase 80-
fold over the next four years, demand will rise between 100 and 
260 times creating a capacity crunch.  Look for NT's sales to 
faster than the 20% rate currently expected by the street, and 
for their margins to rise.  Fund managers like this stuff, but 
have temporarily (likely holiday related) put their plans on hold 
until after the new year.  It shows in the volume.  Technically, 
NT still has good support at $97.  Barring a market meltdown or 
"frozen rope" from left field, that should hold.  $95 is the next 
level of support on the theory that old resistance equals new 
support.  New resistance is $100.  Target shooting at support or 
waiting for the breakout with volume over $100 may be the best 
way to play this.  Earnings are January 25, and NT is a split 
candidate over $88.

Not much in the news other than that noted above, however there 
is speculation that BCE, which reportedly owns 41% of NT may spin 
it off in the near future, creating as much as $30 per share in 
value for BCE owners.  We're not suggesting that you back up the 
truck on BCE, but make a note of the possibility as a basis for 
further research on BCE.

BUY CALL JAN- 90 NT- AR OI=3380 at $12.63 SL=10.00
BUY CALL JAN- 95*NT- AS OI=2364 at $ 9.13 SL= 6.75
BUY CALL JAN-100 NTV-AT OI=1730 at $ 6.63 SL= 4.75
BUY CALL MAR- 95 NT- CS OI= 648 at $14.25 SL=11.25
BUY CALL MAR-100 NTV-CT OI= 166 at $11.88 SL= 9.25

Picked on Nov 7th at   $68.81     P/E = 613
Change since picked    +29.88     52-week high=$100.19
Analysts Ratings  12-12-3-0-0     52-week low =$ 23.63
Last earnings 09/99 est= 0.26     actual= 0.28 surprise=7.7%
Next earnings  1-25 est= 0.44     versus= 0.36
Average Daily Volume =   4.4M
Chart = http://quote.yahoo.com/q?s=NT&d=3m


NOK - Nokia $174.00 (+5.50)(+0.50)(+11.94)(P3W +40.19)

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?

While we didn't see that pop on Wednesday following Tuesday's 
rally, we have seen an ascending consolidation on lower than 
average volume beginning to form that infamous technical pennant, 
portending a breakout.  Does it look familiar to you as the lows 
get higher while the resistance remains strong at $175?  It 
should.  Think QCOM, JDSU, and YHOO.  Not un-coincidentally, an 
ABM-ANRO analyst advised moving out of QCOM (we don't yet) and 
into NOK calling it "the most attractive stock in Global Telecom 
Equipment Sector based on future earnings and relative PE 
valuations."  They have also been called potentially the largest 
volume PC producer in 2002, citing the shift of handsets to 
performing PC functions.  We've also noted that NOK is planning 
on meeting their three-year scheduled in just 2 years - a 50% 
growth rate.  We look for a string of upside earnings surprises 
and the possibility of a split announcement on their tentative 
announcement date of January 20.  On the chart, support has been 
growing in $15 increments at $135, $150, and recently at $165.  
Once a breakout over $175 happens, look for the next level of 
resistance to be $180.  As an ADR, there is some confusion as 
to the actual announce date.  Their web site says February 1, 
however web site data has been historically inaccurate and 
subject to change even when provided by the company itself.  
Zack's states January 20, which is closer to NOK's historical 
reporting pattern.  Thus we use that until we can confirm the 
date with the company, which will still be subject to change.  
The best entry will be achieved by buying dips or waiting for 
the breakout with volume over $175.

In what was greeted a disappointment by the Street, QCOM 
announced the sale of their CDMA handset business to the Japanese 
handset maker, Kyocera.  The world (including us) was expecting 
NOK to be the buyer, but NOK seems to have bounced back from the 
minor surprise.

BUY CALL JAN-160*NAY-AL OI=4693 at $20.50 SL=16.00
BUY CALL JAN-170 NZY-AN OI=3765 at $14.75 SL=11.75
BUY CALL JAN-180 NZY-AP OI=1711 at $ 9.63 SL= 7.25
BUY CALL APR-180 NZY-DP OI= 521 at $21.63 SL=17.00

Picked on Nov 14th at   $122.25     P/E = 74
Change since picked      +51.75     52 week high=$179.13
Analysts Ratings     13-8-0-0-0     52 week low =$ 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 = 3.30 mln 
Chart = http://quote.yahoo.com/q?s=NOK&d=3m


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The Option Investor Newsletter             12-26-99  
Sunday                        4 of 5

QCOM - Qualcomm Inc. $466.50 (+11.50)(+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 OmniTRACS® and a 6.4% interest 
in Globalstar(TM). Headquartered in San Diego, Calif., QUALCOMM 
is included in the S&P 500 Index and is a 1999 FORTUNE 500® 
company traded on the Nasdaq under the ticker symbol QCOM.

Anybody sell too soon at $522 at the open on Wednesday?  QCOM 
encountered some negative news of its own making shortly 
thereafter when it announced it was selling its handset business 
to Kyocera (KYO) of Japan, the parent of the largest PCS service 
in the region also enjoying the fastest growth.  This caught many 
by surprise, including us, whom expected the buyer to be Nokia.  
It also means a $30 mln one-time expense to earnings.  While it 
sounds bad, it's really nothing in the scheme of things, 
especially since the terms of the sale include Kyocera buying 75% 
of its CDMA chips from QCOM over a 5-year supply agreement.  KYO, 
the fastest grower in a new region, apparently gave QCOM the 
better deal.  We should be happy about it, and most investors 
should get over the shock rather quickly (Nokia has).  It does 
nothing to harm the long-term viability of QCOM.  Besides that, 
has everybody forgotten that QCOM splits 4:1 on December 30?  
We'd view the pullback as a buying opportunity.  QCOM rests on 
support of $465, and is still well above its 10-dma of $446

The analysts are impressed anyway, if you consider that QCOM has 
been awarded three upgrades in the last 24 hours.  B of A 
Securities maintained its Buy rating, but upped FY2000 earnings 
from $3.85 to $4.00.  CS First Boston in a not so daring move 
raised its price target from $450 to $520.  While giving a plug 
for NOK and recommending a move out of QCOM, an ABM ANRO analyst 
nonetheless raised earnings estimate from $4.00 to $4.23 in 
FY2000, citing the absence of the poorly performing handset 

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

BUY CALL JAN-450 AAF-AK OI=2085 at $55.00 SL=43.00
BUY CALL JAN-460 AAF-AM OI=1749 at $51.13 SL=40.00
BUY CALL JAN-470 AAF-AO OI=1142 at $46.38 SL=36.00
BUY CALL JAN-480*AAR-AQ OI=2173 at $41.25 SL=32.00
BUY CALL JAN-490 AAR-AS OI=1410 at $38.25 SL=30.00

Picked on Nov 16th at   $330.00    P/E = 391
Change since picked     +136.50    52-week high=$522.13
Analysts Ratings      6-8-4-0-0    52-week low =$ 25.12
Last earnings 11/99   est= 0.88    actual= 0.91
Next earnings 01-19   est= 0.95    versus= 0.33
Average Daily Volume = 5.60 mln
Chart = http://quote.yahoo.com/q?s=QCOM&d=3m


JDSU - JDS Uniphase $298.06 (+57.12)(-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 

"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.  
Wow!  Three breakouts and record closes in a row since last 
Monday!  But the volume remains about average.  What's floating 
this issue now?  The 2:1 stock split is the answer since the new 
shares begin trading on December 30.  Support appears at $260, 
$275, 280, and (today only) at $296.  Resistance is at the new 
intraday high of $305.25.  Wait for a dip, followed by a bounce 
on strong volume before you take a position.  This is a volatile 
issue and you don't want to buy in on the "I'm missing the train" 
emotional state of mind (fear and greed in the same playpen).

First in the "woops, we misread that" department, we had 
previously noted that JDSU's symbol would change to JDSUV after 
the split - not so.  It will remain as JDSU.  Second, telecoms 
guru, George Gilder reports from a European visit that JDSU is 
popping out optical amplifier pump lasers at a pace of "hundreds 
of thousands per year", whereas just two years ago, the number 
was in the low thousands.  Keeping up with demand appears to be 
one of the greatest challenges facing JDSU right now.  We wish 
all companies had this problem.  Third, winning the "close the 
barn after the animals are out" award, Gruntal and company raised 
their price target from $270 to $310 (no bravery there).

Time premiums are high.  Consider covered calls as well.

BUY CALL JAN-290*XXZ-AR OI= 937 at $33.25 SL=26.00
BUY CALL JAN-300 XXZ-AT OI=1710 at $28.75 SL=22.50
BUY CALL JAN-310 XXZ-AB OI= 272 at $24.25 SL=19.00

Picked on Nov 21st at  $213.81    P/E = N/A
Change since picked     +84.25    52-week high=$305.25
Analysts Ratings   13-13-0-0-0    52-week low =$ 29.62
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 = 3.2 mln
Chart = http://quote.yahoo.com/q?s=JDSU&d=3m


BCE - BCE Inc. $88.75 (+9.56)

BCE is a diversified holding company whose primary business is 
telecommunications services in Canada and communications 
equipment manufacturing.  BCE is the parent company of Bell 
Canada and controls a 65% share of the Canadian long-distance 
market.  BCE is also substantially involved in wireless 
communications and telephone directory publishing.  BCE is a 
player in e-commerce, satellite networks and Internet Protocol 
based networks and solutions.

BCE has a very unusual capitalization situation which could 
potential reward patient shareholders with big rewards.  BCE 
owns 39.6 percent of Canadian neighbor and communications high 
flyer Nortel Networks (for more information about Nortel see 
our call play section).  BCE can't get any respect and is 
looking for ways to benefit from Nortel's stellar stock 
performance.  After you strip away the value of BCE's holdings 
in Nortel, the rest of BCE's businesses combined are barely 
given any value at all.  In effect, you can buy BCE and enjoy 
the price appreciation of NT and at the same time hope to cash 
in when the market recognizes the value of all of BCE's other 
holdings.  The big question for BCE is how to get any respect 
and the answer seems to be to spinoff its NT holdings.  The 
catch is how to do it without sticking the company with the 
biggest tax liability in Canadian history.  The company is 
actively petitioning the Canada Customs and Revenue Agency to 
allow BCE to enact a butterfly reorganization that would be 
exempt from capital gains tax.  The question is; When can all 
of this happen?  There is a proposed change to the Income Tax 
Act currently being considered by Parliament that would 
declare butterfly transactions exempt.  A passage of a bill 
could be several months away.  The best scenario would be some 
sort of advanced assurance.  If that were to happen then BCE 
could get very serious about developing a plan.  If a spinoff 
of NT seems inevitable then BCE's shares should appreciate 
nicely.  In the meantime, think of BCE as a tracking stock of 
NT with the possibility of a little extra kick if we get the 
right news.  Technically, BCE's shares are very strong.  The 
stock is in a very strong uptrend ever since it broke above 
$57 in late October.  The most recent mini-breakout was at 
$85.  A small pullback to that level could prove to be a good 
entry point.  Otherwise, a more aggressive investor could go 
long at these prices.  Since we have no idea when the news 
will hit, a longer term investor might want to take a look at 
the June options.

On Tuesday it was announced that BCE, Bell Canada, BCE Emergis 
and Ariba Inc. have signed a long term agreement in which BCE 
Emergis will provide Bell Canada and its subsidiaries with a 
fully managed business-to-business corporate exchange 
marketplace and e-procurement solution that will initially be 
used by Bell Canada and all of its suppliers across Canada.  
Over time, the agreement will offer substantial cost savings 
for all parties involved.  Last week BCE was upgraded to the 
Recommended List from Market Outperform by Goldman Sachs.

BUY CALL JAN-80*BCE-AP OI=903 at $10.25 SL= 7.50
BUY CALL JAN-85 BCE-AQ OI= 71 at $ 6.63 SL= 4.75
BUY CALL JAN-90 BCE-AR OI= 35 at $ 3.88 SL= 1.75
BUY CALL JUN-80 BCE-FP OI= 46 at $15.50 SL=11.75
BUY CALL JUN-85 BCE-FQ OI= 37 at $12.50 SL= 9.50

Picked on Dec 16th at    $88.75    P/E = 16
Change since picked       +0.00    52 week high=$89.63
Analysts Ratings      4-5-0-1-0    52 week low =$34.88 
Last earnings 09/99   est= 0.47    actual= 0.47
Next earnings 01-27   est= 0.64    versus= 0.52
Average daily volume = 371 K
Chart = http://quote.yahoo.com/q?s=BCE&d=3m


IMNX - Immunex Corp. $99.88 (+10.38)

Their primary products include Enbrel, for treating rheumatoid
arthritis, Lukine, which is used in the treatment of bone-marrow
transplant patients and Novantrone, used to treat acute non-
lymphocytic leukemia and to ease pain associated with prostate 
cancer.  Immunex develops biopharmaceutical products aimed at
treating cancer, auto-immune disorders, and infectious diseases.
They are in the developmental stages of developing other drugs
to treat asthma, leukemia, and certain other cancers.  Immunex
competes in the marketplace with heavy weight Amgen, Bristol-
Meyers Squibb and Merck.  54% of Immunex stock is owned by 
American Home Products through its subsidiary American Cyanamid.

The Biotechnology sector has began to attract investors attention 
this past week.  Immunex has certainly attracted its share of
interest in the past ten sessions.  December 9th IMNX closed at 
$63.  This afternoon shares of the drug maker closed at $99.88.
The biotech index rose about 19 percent this week as investors
have started to focus on the optimism about prospects for
breakthrough medications and expectations that biotech companies
are takeover targets.  Shares of IMNX have traded in a sideways
pattern since the middle of May.  This past week IMNX broke out 
of that pattern with solid momentum. Today the stock pushed to
another new high at $101.25  We have added IMNX as a call play 
based on the momentum behind the stock and the sector.  This is
a play you may want to consider entering after a pullback.  IMNX 
has jumped over 40 percent in the month of December.  A 
retracement back to intraday support levels of $95 or $90 followed
by a bounce may provide an excellent opportunity to buy calls.
With the strength seen in the Dow, and broadening into other 
sectors today, we believe the biotech stocks should continue to 
flourish into the new year.  As always assess not only your 
risk profile, but your profit objectives prior to placing an 
order in a new play.

The first two days of the week analysts at Robertson Stephens
and Dain Rauscher Wessels reiterated Buy recommendations on
IMNX.  Todd Nelson at Dain Rauscher Wessels projected a 12-month
price target of $121 for the drug maker.  Tuesday afternoon
Ralph Acampora, chief technical strategist for Prudential 
Securities, and a prominent Wall Street bull mentioned IMNX in 
a list of companies he remains bullish on in the year 2000.
Wednesday IMNX jumped $6 after the comments.

BUY CALL JAN- 90*IUU-AR OI=773 at $13.75 SL=11.00
BUY CALL JAN- 95 IUU-AS OI=  0 at $ 8.13 SL= 6.25 New Strike
BUY CALL JAN-100 IUU-AT OI=  0 at $ 7.75 SL= 6.00 New Strike
BUY CALL JAN-105 IUU-AA OI=  0 at $ 5.50 SL= 3.75 New Strike

Picked on Dec 23rd at    $99.88    P/E = 407
Change since picked        0.00    52-week high=$101.25
Analysts Ratings      3-8-9-0-0    52-week low =$ 26.88
Last earnings 10/99   est= 0.10    actual= 0.12 surprise=+20.0%
Next earnings 01-18   est= 0.09    versus= 0.06
Average daily volume = 1.54 mln
Chart = http://quote.yahoo.com/q?s=IMNX&d=3m


GENZ - Genzyme General $46.38 (+7.38)

GENZ is a diversified human health care business with product 
development, manufacturing and marketing capabilities in
therapeutic and diagnostic products, pharmaceuticals and
diagnostic services. 

Between the incredible strength in the overall markets and the
improving sentiment towards the Biotechs, GENZ had a great week,
tacking on $7.88 on much better than average volume.  Although
volume was weaker today (probably due to investors gone for
the holiday), GENZ still managed to add $2.75, closing near the
high of the day.  Over the past 5 weeks, solid support has formed
in the $35-36 range.  When the breakout started back on December
10, GENZ cleared its 10-dma, which has acted as support ever 
since.  The move really kicked into high gear on Tuesday when 
prices broke above both the 30 and 50 day moving averages.  At 
the same time the 10-dma moved above these longer averages, which 
is typically a very bullish sign.  Adding fuel to the move seems 
to have been all the news related to the potential merger with 
Cell Genesys (see below).  Also, with earnings being released in
less than a month, GENZ should continue to be strong.  Although it
is too early for an earnings run, investors know that GENZ has a
habit of beating earnings.  Today, GENZ broke through and closed
above resistance at $45 and if the strength continues, there is
tiered resistance at $52, $56, and $61.  Consider opening new
positions on continuing strength from this point or on a pullback
and bounce between $43-45.  As always, confirm that the volume 
remains strong.

On Wednesday, GENZ terminated its proposed merger with Cell
Genesis Inc., which would have involved a stock swap valued
at $350 million.  This seems attractive to GENZ investors as
the value of Cell Genesis had appreciated significantly and
would probably have required an increase in the value of the

BUY CALL JAN-40 GZQ-AH OI=1107 at $7.50 SL=5.75
BUY CALL JAN-45*GZQ-AI OI=618  at $4.50 SL=2.75
BUY CALL JAN-50 GZQ-AJ OI=946  at $2.06 SL=1.00

Picked on Dec 23rd at    $46.38     P/E = 22
Change since picked        0.00     52-week high=$62.06
Analysts Ratings      7-4-1-0-0     52-week low =$32.94
Last earnings 10/21   est= 0.43     actual= 0.49
Next earnings 01-20   est= 0.48     versus= 0.39
Average Daily Volume = 1.24 mln
Chart = http://quote.yahoo.com/q?s=GENZ&d=3m


December 23rd - LEAPS

What a week for stocks!  It is almost hard to be impressed 
anymore with the continual gains the Nasdaq (and now the Dow) 
have posted for over 2 months.  The bottom line is that there 
are still no sellers in sight.  Most likely because investors 
are waiting until the clock ticks into the year 2000, thus 
delaying the tax implications.  So with liquidity due to the 
holiday and no sellers, the market is feeling light-footed as 
it runs to new highs.  The VIX is currently at 22.58.

Current Plays


EMC     11/07/99  JAN-2001 $80  ZOH-AP at $34.88   $15.38  126.79%
                  JAN-2002 $90  WUE-AR at $39.63   $19.00  108.59%
DELL    11/07/99  JAN-2001 $50  ZDE-AJ at $13.63   $ 7.00   94.71% 
                  JAN-2002 $50  WDQ-AJ at $18.88   $11.25   67.82%
GPS     11/07/99  JAN-2001 $40  ZGS-AH at $11.13   $ 5.75   93.57%
                  JAN-2002 $45  WGS-AI at $13.25   $ 7.88   68.15%
IBM     11/07/99  JAN-2001 $100 ZIB-AT at $24.38   $13.63   78.87%
                  JAN-2002 $110 WIB-AB at $28.00   $16.50   69.70%
WMT     11/07/99  JAN-2001 $70  ZWT-AN at $11.50   $ 6.50   76.92%
                  JAN-2002 $75  WWT-AO at $15.13   $ 9.75   55.18%
LU      11/14/99  JAN-2001 $80  ZEU-AP at $15.63   $12.88   21.35%
                  JAN-2002 $90  WEU-AR at $19.00   $16.13   17.79%
CSCO    11/14/99  JAN-2001 $80  ZCY-AP at $35.88   $19.13   87.56%
                  JAN-2002 $90  WIV-AR at $38.13   $22.00   73.32%
SLR     11/14/99  JAN-2001 $85  ZSR-AQ at $23.63   $21.75    8.64%
GE      11/21/99  JAN-2001 $150 ZGR-AU at $30.25   $16.25   86.15%
                  JAN-2002 $150 WGE-AU at $40.63   $25.50   59.33%
GTW     11/21/99  JAN-2001 $90  ZWB-AR at $12.38   $17.75  -30.25%
                  JAN-2002 $100 WGB-AT at $17.13   $22.50  -23.87%
NT      11/28/99  JAN-2001 $75  ZOO-AO at $37.63   $22.25   69.12%
                  JAN-2002 $75  WNT-AO at $46.50   $30.25   53.72%
VOD     12/05/99  JAN-2001 $50  ZAT-AJ at $10.63   $10.75   -1.11%
                  JAN-2002 $50  WHV-AJ at $14.63   $15.00    6.50%
KM      12/05/99  JAN-2001 $10  ZKM-AB at $3.38    $ 2.50   35.20%
                  JAN-2002 $15  WKM-AC at $2.50    $ 1.75   42.86%
ADBE    12/12/99  JAN-2001 $65  ZAE-AM at $17.13   $15.00   14.20%
                  JAN-2002 $70  WAE-AN at $21.25   $20.38    4.27%
TXN     12/12/99  JAN-2001 $110 ZTN-AB at $22.75   $22.25    2.24%
                  JAN-2002 $120 WGZ-AD at $28.38   $28.50    0.42%
NXTL    12/19/99  JAN-2001 $90  ZFU-AR at $33.75   $23.50   43.62%
                  JAN-2002 $100 WFU-AT at $34.63   $27.25   27.08%
SUNW    12/19/99  JAN-2001 $80  ZJX-AP at $18.13   $17.63    2.84% 
                  JAN-2002 $90  WJX-AR at $22.25   $22.00    1.14% 

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

AOL - America Online $81.13

It's back!  You may recall three weeks ago we added AOL as a 
new LEAPS play but said we were waiting for an entry point.  
$80 was the number we were target-shooting and our patience 
is ready to be rewarded.  AOL came down to $80.63 for the low 
on Thursday.  We feel like this is the time to jump aboard.  
AOL has excellent support at this price, which has attracted 
us to the play.  As an Internet bell-whether, AOL has provided 
some outstanding plays and profits in the past.  We expect 
it to duplicate this trend, especially heading into earnings 
next month.  We do want to give AOL some room to breath but 
any drop below $70, in any market conditions, would be a sign 
to exit the play. 

BUY LEAP JAN-2001 $ 90.00 ZKS-AR at $20.13
BUY LEAP JAN-2002 $100.00 WAN-AT at $25.63



We are still encouraging LEAP holders to sell too soon
when you reach your initial goals or become uneasy about
the current market levels.  It may not be worth risking 
your profits if the market turns volatile ahead of Y2K 
(you haven't forgotten about that, have you?). Stop 
losses would be perfect if your broker allows.


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.


ETYS - eToys Inc. $30.94 (-6.63)(-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.

The disparity between consumer sentiment and investor interest
continued this week as ETYS continued to fall despite any good
news.  The past two days have brought the e-tailer to within
spitting distance of its 52-week low at $28.50.  Several times
bottom-fishers have attempted to push prices higher, but each
time the sellers have won out, and at ever-decreasing levels.
Today, they couldn't even push through $33.  Volume remains
heavy, trading at 50% above the ADV today and 250% of the ADV
on Wednesday.  ETYS appears to be developing significant support
at $30.  For those that have open positions, we strongly recommend 
tightening your stops to keep all those profits.  This play has 
been very good to us, but may be getting a little long in the 
tooth.  New entries can be considered on a bounce south from 
the $34-35 range as this level has provided resistance this
week.  If prices break convincingly (read strong volume) below
$30, this could also be used as an entry cue.

News on ETYS has been sparse this week, with the only items of
note being general to the industry and referring to competitors.
Today Alottafun! Inc. (ALFN) announced successfully clearing its 
registration with the SEC.  ALFN is a manufacturer of collectible
toys and in expanding its e-commerce operations may draw investors
away from ETYS.

BUY PUT JAN-40 ETU-MH OI=641 at $10.88 SL=8.75
BUY PUT JAN-35*ETU-MG OI=846 at $ 7.13 SL=5.25
BUY PUT JAN-30 ETU-MF OI=291 at $ 4.38 SL=2.75

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


LTR - Loews Corporation $61.44 (+1.50)(-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.

Even a blind squirrel finds a nut once in a while.  LTR finally
had a positive day, due in large part to the broad-based rally
in the markets the past two days.  LTR managed to pierce
resistance at the 10-dma yesterday on slightly less than average
volume.  Today was another good day, allowing LTR to move all the
way up to the 30-dma (currently at $63.44) before turning around 
and drifting south for the remainder of the day, closing at 
$61.44.  LTR now sits poised just above its 10-dma (currently at
$60.50).  The move up today was on slightly less than the ADV 
and has the appearance of bottom fishing.  Look for weakness to
continue next week with strong volume.  New positions can be
considered on a drop back through the 10-dma or another bounce
down from the 30-dma.  Despite the move up this week, the negative
news and interest rate fears should continue to exert pressure on 
the price of LTR.

In the news this week, the woes of LTR continue on both the tax
and litigation fronts.  On Monday, the New York State Assembly
stated their intention to double cigarette taxes to pay for a
new $2.9 billion health care program.  Also, the government of
Canada filed suit against big tobacco, adding further pressure
on the litigation front.

BUY PUT JAN-65*LTR-MM OI= 16 at $5.13 SL=3.25 low OI
BUY PUT JAN-60 LTR-ML OI=130 at $1.19 SL=0.00 High Risk!

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


GT - Goodyear Tire and Rubber $27.13 (+0.07)(-1.69)(-4.06)

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.

Is there a bottom to this put play?  GT may have held its 
ground this week but every time it has done this in the past 
4 months GT heads south again. Volume remains high is there 
going to be support at $20.  GT's 5 and 10-dma are still 
providing immediate resistance right around $27.  GT has 
further resistance at $30.  Being that GT typically opens 
at the high of the day and steadily declines for the remainder 
of the session, try and time new entries to the earlier part 
of the day.  As always, confirm direction and watch for the 
GT mini-rallies for potential points of entry. The only 
positive news is that BMW has chosen GT's run-flat tire for 
their BMW 7-Series 'Protection' models.

BUY PUT JAN-35 GT-MG OI= 464 at $8.00 SL=6.25
BUY PUT JAN-30*GT-MF OI= 628 at $3.25 SL=1.75
BUY PUT JAN-25 GT-ME OI=1304 at $0.68 SL=0.00 High Risk!

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


WB - Wachovia Corporation $67.86 (+1.86)(-7.13)(-5.68)

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.   

In new news, there is nothing more than a headline which states, 
"Moody's Affirms Wachovia Bank AA2 Deposits Rating, Revises 
Outlook to Negative"

If you watch the chart you will see that since the beginning of
November WB as been falling approximately $15.00 then a slight 
$2.00 - $5.00 comeback before it drops again, for the week WB 
is up +$1.69.  Can you say entry point?

BUY PUT JAN-70 WB-MN OI=292 at $4.00 SL=3.00
BUY PUT JAN-65 WB-MM OI=210 at $1.75 SL=1.25

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


NSOL - Network Solutions $250.25 (+10.31)

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.  

Tuesday you probably were reading about NSOL as one of our
more profitable call plays.  We are adding Network Solutions
as a put play tonight.  We dropped NSOL from our call section
and added it to our put list due to the recent pullback in the 
stock.  Much of what surrounds NSOL news-wise has been positive.
Monday it entered the Nasdaq 100 index.  Wednesday NSOL announced
a 2:1 stock split.  In making the announcement it said it also
plans to hire financial advisors to assist in separating its 
registry and registrar services.  Technically NSOL has fallen 
back over $37 from its high at $287.75 on Wednesday.  It could
be just a retracement with profit taking but it really appears
as though NSOL is beginning to roll over.  The short side of 
this play may not be a long term change in direction but it does
appear to be a potentially profitable play.  NSOL seems to be
suffering a buy the rumor, sell the news scenario right now.
If we see more weakness in the price of NSOL stock, the first
level of support would be seen near $240, followed by the
$230 mark.  An additional point of reference shows the 10-dma 
at $238.58.

In other news the company also filed for a follow-on stock 
offering of 7.73 million shares on Wednesday, 6.7 million of
which are held by Science Applications International Corp.
or (SAIC)the largest scientific research organization in the 
U.S.  At the same time NSOL said SAIC executive John Glancy 
will resign from the NSOL board, as will Donald Telage.  
Telage will also step down as Network Solution's senior vice
president of Internet relations and special programs.

BUY PUT JAN-250*JNV-MJ OI=114 at $30.00 SL=23.75
BUY PUT JAN-240 JNU-MH OI=152 at $24.88 SL=19.63
BUY PUT JAN-230 JNU-MF OI= 46 at $20.00 SL=15.88

Average daily volume = 1.10 mln
Chart = http://quote.yahoo.com/q?s=NSOL&d=3m


CIEN - Ciena Corp. $58.00 (-5.00)

Ciena Corp designs, manufactures and sells open architecture, 
dense wavelength division multiplexing systems for fiber 
optic communications networks, including long-distance and 
local exchange carriers.  Ciena has more than two million 
optical channel kilometers installed worldwide.  Ciena's 
MultiWave DWDM systems enhance the transmission capacity of 
a single optical fiber without requiring significant 
modification or upgrade to transmission equipment.  Ciena 
offers optical transport products for long distance, short 
distance and ring-based applications, and through its 
wavewatcher network management system software.

What a great comeback for Ciena Corp.  Trading in single digits 
just over a year ago the most exciting thing for Ciena was a 
botched takeover attempt by Tellabs.  Boy have things changed!  
Optical cable looks as pretty attached to the name of a company 
as "dot" com.  Ciena came roaring back in 1999 trading as high 
as $74.56 earlier this month.  Alas, the party may be over 
for this pixie in the land of giants.  Ciena has many bruises 
from trying to carve market share against its two biggest 
competitors, Nortel and Lucent.  It hardly seems fair then 
that Cisco is now joining the battle field with its planned 
purchase of Pirelli.  Investors fear that Ciena's attempts 
to expand its product mix and customer base may not be enough 
to keep them from getting squished by its richer competitors.  
It would not take much to scare money out of this stock.  It 
has fallen before, and whether it deserves it or not the 
perception is that it can fall again and nobody wants to be 
left holding the bag if it does.  A good entry point for a put 
position would be when the stock trades below today's support 
of $57.50.  A more conservative approach would be to hold of 
buying puts until the stock tests and fails to trade through 
resistance at $62.  A drop below $54 could take the stock down 
into the forties pretty quickly.

BUY PUT JAN-60*EUQ-ML OI=1003 at $7.13 SL=5.25
BUY PUT JAN-55 EUQ-MK OI=2239 at $4.38 SL=2.50
BUY PUT JAN-50 EUQ-MJ OI=1369 at $2.44 SL=1.25 

Average daily volume = 5.40 mln                  
Chart = http://quote.yahoo.com/q?s=CIEN&d=3m


PHCM - Phone.com Inc $118.25 (-17.06)

Phone.com, Inc. is a provider of software that enables the 
delivery of Internet-based services to mass-market wireless 
telephones.  The Company's software products enable the 
delivery of Internet-based services to mass-market wireless 
telephones.  Wireless subscribers have access to Internet-
based and corporate intranet-based services, including email, 
news, stocks, weather, travel and sports. In addition, 
subscribers have access to telephony services, which may 
include over-the-air activation, call management, billing 
history information, pricing plan subscription and voice 
message management. 

Only seven months since its IPO back in June, PHCM has been 
in a forlorn state for almost the entire month of December.  
What has caused this downfall?  PHCM has been introduced to 
some new competition from AOL and MSFT.  AOL acquires Tegic 
Communications giving AOL access to licensing deals with the 
world's largest wireless handset makers.  Then with MSFT, 
analysts say that their tie with Ericsson, number 3 in the 
world in mobile handsets, to market Internet-ready phones 
using MSFT's Mobile Explorer, which may threaten PHCM.  Also 
PHCM's director Roger Evans and Bell Canada filed plans to 
sell 66,666 and 551,012 shares of the company's common stock 
respectively.  This will put pressure on the stock until it 
is digested by the market.  Obviously, PHCM has had a great 
year but we want to capitalize on the over-extended state of 
their stock and the newly found shares.

BUY PUT JAN-120*UMC-MD OI=555 at $16.00 SL=12.50
BUY PUT JAN-115 UMC-MC OI=107 at $13.25 SL=10.25

Average Daily Volume = 1.41 mln
Chart = http://quote.yahoo.com/q?s=PHCM&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 
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The Option Investor Newsletter             12-26-99  
Sunday                        5 of 5


Stock Buying Basics: Which Approach Is Best?

With the incredible number of new traders entering the market, we
thought it might be a good time to review the basics of position

There are two common approaches to analyzing stocks; technical and
fundamental. Most of the older investors are more comfortable with
fundamental analysis. That is the process where one attempts to
predict the future profits of a company by analyzing their market
share, revenue, pricing structure, and other components regarding
the actual operation of the company's business. In contrast, the
study of historical pricing trends and chart patterns has nothing
at all to do with the daily operations of the company. Technical
analysis of price patterns is a technique used to forecast the
future direction and magnitude of a stock's movement. Although
each style is often viewed as less than adequate by the opposing
group, there is value in both methods. In many cases, each system
can produce favorable results.

Technical analysis is generally more suitable to short-term
trading, since it offers the best method for timing entries and
exits. Fundamental analysis provides an accurate picture of the
long-range outlook, but it is miserably late in predicting the
actual movement of stock prices. However, analyzing the value of
a company can help to forecast potential profits (or losses) and
in the end, earnings usually determine share value. Quarterly
reports will also affect the short-term trading of a stock and
the most significant moves occur when a company reports earnings
that are different from the analysts' consensus estimates. A
worse-than-expected earnings report will inevitably cause share
values to fall as soon as the information become public news. When
this happens, the brokerages are first to change their opinions on
the company, downgrading the issue and causing further damage to
the share value. This is one of the few times when fundamental
analysis might be helpful in a short-term trading scenario.

Most of the positions that we offer are of a short-term nature
and thus we favor technical analysis as the primary means for
stock selection. This type of research bases its forecasts for the
future on past prices, moving averages, and volume considerations.
These are valuable tools in almost every case, and we will discuss
them in detail in future narratives.

Next week; Trend-lines, Time-frames and Relative Strength.


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

MCRE    7.56   8.94   JAN   7.50  1.31  *$  1.25  20.0%  14.5%
SPLH    8.44   8.13   JAN   7.50  1.81  *$  0.87  13.1%  11.4%
EMIS   19.88  24.63   JAN  17.50  4.50  *$  2.12  13.8%  10.0%
WSTL   10.75  11.00   JAN  10.00  1.88  *$  1.13  12.7%   9.2%
CBIZ   10.31   9.13   JAN   7.50  3.63  *$  0.82  12.3%   8.9%
FSII   10.69  11.94   JAN  10.00  1.94  *$  1.25  14.3%   8.9%
LGND   11.69  11.13   JAN  10.00  2.75  *$  1.06  11.9%   8.6%
NFO    14.38  21.69   JAN  12.50  2.94  *$  1.06   9.3%   8.1%
AWEB   12.13  12.63   JAN  10.00  3.00  *$  0.87   9.5%   6.9%
SCOC   17.88  32.00   JAN  15.00  4.13  *$  1.25   9.1%   6.6%
PILT   17.56  17.00   JAN  12.50  5.88  *$  0.82   7.0%   6.1%
ONHN   10.25  10.81   JAN   7.50  3.38  *$  0.63   9.2%   5.7%
BAMM    9.81   8.81   JAN   7.50  2.75  *$  0.44   6.2%   5.4%
TTWO   16.31  14.50   JAN  12.50  4.63  *$  0.82   7.0%   5.1%
MWHS   15.06  18.63   JAN  12.50  3.25  *$  0.69   5.8%   5.1%
PILT   20.25  17.00   JAN  15.00  6.38  *$  1.13   8.1%   5.1%
RNBO   20.00  21.75   JAN  15.00  6.13  *$  1.13   8.1%   5.1%
BIDS    5.13   4.44   JAN   5.00  1.00   $  0.31   7.5%   4.7%
TSCM   15.75  16.78   JAN  12.50  3.88  *$  0.63   5.3%   4.6%
NETS   28.00  29.88   JAN  22.50  6.63  *$  1.13   5.3%   4.6%
AGY    16.88  15.25   JAN  15.00  2.75  *$  0.87   6.2%   4.5%
SATH   12.69  10.38   JAN  10.00  3.38  *$  0.69   7.4%   4.0%
MESG   16.63  14.25   JAN  12.50  4.88  *$  0.75   6.4%   4.0%
BNYN   15.81  23.13   JAN  12.50  4.13  *$  0.82   7.0%   3.8%
BIDS    5.25   4.44   JAN   5.00  0.94   $  0.13   3.0%   2.6%

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

Positions Closed: 
Summit (BEAM), Value America (VUSA) 

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

EMIS   24.63  JAN 20.00  MTQ AD  5.38  297   19.25   3.9%   3.9%
ENMD   28.44  JAN 22.50  QMA AX  6.75  40    21.69   3.7%   3.7%
VDAT   13.50  JAN 10.00  UDT AB  3.88  243    9.62   4.0%   4.0%

Sequenced by Return Not Called

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

VDAT   13.50  JAN 10.00  UDT AB  3.88  243    9.62   4.0%   4.0%
EMIS   24.63  JAN 20.00  MTQ AD  5.38  297   19.25   3.9%   3.9%
ENMD   28.44  JAN 22.50  QMA AX  6.75  40    21.69   3.7%   3.7%

Company Descriptions

EMIS - Emisphere  $24.63  *** Higher And Higher! ***

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 new chance to gain entry into an ever climbing
issue that is nearing blue sky territory.

JAN 20.00 MTQ AD Bid=5.38 OI=297 CB=19.25 RC=3.9% RNC=3.9%

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


ENMD - Entremed  $28.44  *** Awesome Volatility  ***

Entremed engaged primarily in the research and development of 
biopharmaceutical products that address the role of blood and
blood vessels in the prevention and treatment of a broad range
of diseases. Their core technologies include the development of
products intended to inhibit the abnormal growth of new blood
vessels associated with cancer and certain causes of blindness,
and a device designed to enhance the ability of blood cells to
deliver oxygen to organs and tissues. The latest spike in price
occurred after Entremed exercised its stock repurchase option 
from Bristol-Myers Squibb. Favorable speculation that must be
researched thoroughly. Excellent support above the sold strike.

JAN 22.50 QMA AX Bid=6.75 OI=40 cb=21.69 RC=3.7% RNC=3.7%

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


VDAT - Visual Data Corp.  $13.50  *** A New Uptrend? ***

Visual Data produces, markets and distributes original video and 
audio content for the Internet and soon Interactive Television. 
Visual Data's extensive video libraries cover a wide range of 
topics, including travel, business information, medicine and 
healthcare and entertainment. Through its subsidiary EDnet, Inc.
Visual Data has established relationships throughout the motion 
picture and recording industries. VDAT's strategic alliances
include PR Newswire, InterVu, and TravelWeb, to name a few. Visual
Data recently launched TheFirstNews.com, which provides breaking 
corporate news releases in a streaming-audio format giving 
subscribers corporate news announcements. The issue has moved back
above its 150 dma on increasing volume and is now breaking above a 
recent four-month base. Earnings are due near the end of December.

JAN 10.00 UDT AB Bid=3.88 OI=243 CB=9.62 RC=4.0% RNC=4.0%

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


Option Trading Strategies: Orders And Executions
We have received a number of emails regarding option trading in
a volatile market. There are numerous obstacles that an investor
must overcome when participating in this type of environment and
it is important to understand the limitations of the system that
we use.

Wide price fluctuations and heavy trading characterize volatile
markets.  These conditions generally arise as a result of an
imbalance of trade orders in one direction or another and can
occur at the market opening or at any time during the trading
day in either the over-the-counter exchanges or the NASDAQ. The
markets can be driven by many different factors including news
releases, changes in analyst recommendations, Internet news and
rumors in chat rooms, adjustments to interest rates, interviews
with leading policy-makers or for no reason at all.

Sometimes the sheer volume of trades being processed in a fast
market will lead to delays in trade execution and/or trade
reports.  Prices and trades move so quickly that there can be
significant differences between the quote you receive at one
point in time and the price at which the trade is executed later.
Even real-time quotes will be lagging behind the current market.
The number of shares/contracts available at a certain price and
the size of the position at the current quote by a market maker
can also change rapidly; affecting the likelihood of your order
being filled at that previously quoted price.

Market orders are executed on a first-come first-served basis.
The high volume of orders that are rapidly submitted to market
makers and specialists from many broker-dealers may create a
backlog that can cause significant delays. As a result, when you
place a market order under these conditions, the quote you get is
more an indication of what has already happened than that of the
execution price you will receive.

In the time between when your order is placed and when it is
executed, other orders already in line ahead of yours can adjust
the stock/option price and movement. There are also significant
delays between an initial partial execution you receive, which
may be an automatic execution, and the subsequent fill of the
balance of a larger order, which may be executed manually. Many
market makers offer automatic execution for eligible securities
up to certain size positions (20 contracts is the standard number
for auto execution of an option order). However, during volatile
market conditions, that feature may be modified or suspended for
some or all issues. Under those circumstances, delays may result
and order executions can occur at prices less favorable than the
originally quoted.

If you place a trade order during a volatile market, there is no
guarantee that your order will be executed. Entering a limit
order merely allows you to establish a buy price at the maximum
you are willing to pay, or a sale price at the lowest you are
willing to receive. Even when the market moves to your limit
price, there is no guarantee that you order will be executed
because there may be limit orders from other customers ahead of
yours. During a fast market, it is recommended that you don't
attempt to change or cancel limit orders. Change or cancel orders
do not expedite trade reports in a fast market; they actually
burden the system with more information to process. If you enter
a change, the broker will process your request on a best-efforts
basis and that change will probably result in your order moving
to the back of the line.

The safest way to trade in a fast market is to find a dependable
broker (there are many!) and make your desires very clear so that
they can effectively execute the transaction that you are paying
them to perform.

Good Luck!

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


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

RNBO   21.94  21.75   JAN  17.50  0.81  *$  0.81  15.6%  13.5%
AND     9.25   7.75   JAN   7.50  0.44  *$  0.44  18.4%  13.3%
SATH   12.94  10.38   JAN  10.00  0.56  *$  0.56  17.8%  12.9%
IUSA   12.13  12.88   JAN   7.50  0.31  *$  0.31  11.3%   9.8%
EMIS   21.00  24.63   JAN  15.00  0.50  *$  0.50  10.6%   9.2%
DAVX   23.75  20.50   JAN  17.50  0.56  *$  0.56  10.5%   9.2%
CCUR   17.75  15.44   JAN  12.50  0.50  *$  0.50  12.3%   8.9%
SCOC   17.88  32.00   JAN  12.50  0.44  *$  0.44  10.9%   7.9%
MSGI   19.00  17.38   JAN  12.50  0.38  *$  0.38   9.1%   7.9%
CS     28.50  26.75   JAN  20.00  0.56  *$  0.56   8.9%   7.8%
PRRC   23.56  27.25   JAN  17.50  0.56  *$  0.56  10.6%   7.7%
INSO   32.13  31.25   JAN  20.00  0.75  *$  0.75  10.4%   7.6%
WAXS   20.50  21.25   JAN  15.00  0.38  *$  0.38   8.5%   7.4%
NETS   28.00  29.88   JAN  20.00  0.50  *$  0.50   8.2%   7.1%
EGRP   35.56  27.25   JAN  25.00  0.56  *$  0.56   7.3%   5.3%
MMWW   37.38  29.88   JAN  22.50  0.50  *$  0.50   6.3%   4.5%

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

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

AWEB   12.88  JAN 10.00  UWB MB  0.50  80     9.50  16.3%
ENMD   28.44  JAN 20.00  QMA MD  0.44  70    19.56   7.2%
ORCT   31.00  JAN 25.00  QFY ME  0.81  130   24.19  11.2%
PILT   17.13  JAN 12.50  PTU MV  0.50  13    12.00  12.7%

Sequenced by ROI  

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

AWEB   12.88  JAN 10.00  UWB MB  0.50  80     9.50  16.3%
PILT   17.13  JAN 12.50  PTU MV  0.50  13    12.00  12.7%
ORCT   31.00  JAN 25.00  QFY ME  0.81  130   24.19  11.2%
ENMD   28.44  JAN 20.00  QMA MD  0.44  70    19.56   7.2%

Company Descriptions

AWEB - Autoweb.com, Inc.  $12.88  *** Breakout Soon! ***

Autoweb.com is the leading consumer automotive Internet service, 
guiding consumers through every stage of vehicle ownership. From 
research and buying, to enjoying, maintaining and selling, AWEB
delivers what consumers want. Autoweb.com works with over 5,000 
Member Dealers and other commerce partners to provide the best 
experience at every stage of vehicle ownership. Autoweb.com has
announced a long-term, strategic e-commerce alliance with Saturn 
Corp. that spans across its entire retail network nationwide. 
AWEB has achieved a number one ranking for unique visitors among 
online car buying services in November. The chart looks great as
Autoweb.com is moving up and out of a basing formation. Several
technical indicators continue to strengthen and $0.50 is a very
reasonable reward for trying to own the stock below $10.

JAN  10.00  UWB MB  Bid=0.50  OI=80   CB=9.50  ROI=16.3%

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


ENMD - Entremed  $28.44  *** Awesome Volatility ***

Entremed engaged primarily in the research and development of 
biopharmaceutical products that address the role of blood and
blood vessels in the prevention and treatment of a broad range
of diseases. Their core technologies include the development of
products intended to inhibit the abnormal growth of new blood
vessels associated with cancer and certain causes of blindness,
and a device designed to enhance the ability of blood cells to
deliver oxygen to organs and tissues. The latest spike in price
occurred after Entremed exercised its stock repurchase option 
from Bristol-Myers Squibb. Favorable speculation that must be
researched thoroughly. 

JAN  20.00  QMA MD  Bid=0.44  OI=70  CB=19.56  ROI=7.2%

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


ORCT - Orckit Communications  $31.00   *** Telecom - DSL ***

Orckit Communications develops, manufactures and delivers DSL 
solutions, which enable telephone companies and ISP's to optimize
the bandwidth in the "last mile" of copper wire in the Local Loop.
Orckit's core silicon expertise enables them to provide a wide 
range of world-class DSL systems including its FastInternet(TM) 
DSLAM System with ADSL, and its CopperTrunk® HDSL and VDSL product
lines. Orckit has key strategic alliances with several leading 
semiconductor companies and telecom equipment providers. Orckit
has recently been awarded $2 million in funding by the U.S.-Israel
Science and Technology Foundation to design and develop access 
solutions enabling commercial deployment of future residential
broadband systems. Signs of strength are returning to the tape 
which may be signaling an end to the recent consolidation.

JAN  25.00  QFY ME  Bid=0.81  OI=130  CB=24.19  ROI=11.2%

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


PILT - Pilot Network Services $17.13   *** 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,
which appears to be ending, is offering a new entry into Pilot.
The technical outlook is still bullish and we favor the support
near $12.50. Earnings are due near January 20.

JAN  12.50  PTU MV  Bid=0.50  OI=13  CB=12.00  ROI=12.7%

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


Dow Delivers Christmas Cheer..

Wednesday, December 22

Cyclical issues led the blue-chip index as investors transitioned
to inflation-resistant stocks and bellwether technology companies.
Both the Nasdaq composite and the S&P 500 index advanced to record
highs for the second consecutive day. The Dow gained just 3 points
to 11,203. Market breadth was negative on the NYSE as 1,689 shares
fell while 1,419 moved higher. Volume was modest with 849 million
shares traded on the Big Board and 1.47 billion shares on Nasdaq.

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

Silicon Valley  SVGI   JUN17C/JAN17C   $2.06   debit   calendar 
I-Stat          STAT   APR10C/JAN15C   $4.68   debit   diagonal

Silicon Valley Group was out of the gate quickly with only a few
minutes of trading before it began to move higher. There were a
few contracts on the short side of our trade (at $1.50) but no
other interest during the first hour. The position prices were
within a reasonable range and our recorded entry was $0.06 from
the observed quote. I-Stat offered a much easier entry with the
best opportunity near 11:00 AM. The spread debit was observed at

Portfolio plays:

The trend was much the same today as the market continued higher
on strength in individual issues that dominate the averages. One
of the few differences was the beginning of a shift to consumer
stocks and much of the Dow's gains came from advances in Procter
& Gamble (PG). The stock closed up almost $5 after analysts said
they expected strength in the entire consumer products sector.
The company also won a false advertising suit in a court battle
against a rival. Our new LEAPS/CC's play is profitable after just
one month. To compliment the rotation, Insurance issues were back
in favor along with companies that are less affected by inflation
and the economy. American International Group (AIG) rose $2.38 to
$108. The world's largest insurer may be interested in acquiring 
Massachusetts insurer Trust Insurance. Both of our bullish debit
spreads moved back into favorable territory and now we will look
for an early exit opportunity.

Today's top performer in the technology portfolio was PanamSat
(SPOT). The stock jumped $3.88 after last night's news that its
advanced Galaxy XI spacecraft had been successfully lofted into
orbit, becoming the largest commercial communications satellite
ever launched. Galaxy XI, PanAmSat's 20th satellite, will offer
video, Internet and telecommunications services throughout North
America and Brazil. The launch marks the beginning of PanAmSat's
comprehensive satellite expansion and backup plan that will grow
the company's fleet to 25 satellites by mid-2001. Both of our new
(bullish) spreads are profitable after just one week. Another top
performer was Adobe Systems (ADBE) with a $3.50 move to $67. The
issue has corrected significantly since we recommended the play
a few weeks ago but the LEAPS/CC's position should be positive at
January expiration.

Small-cap issues were hammered today but one of our speculation
stocks continues perform well. Autoweb.com (AWEB), the leading
consumer automotive Internet service, achieved a #1 ranking for
unique visitors among Internet car buying services in November.
According to Nielsen/NetRatings, Autoweb.com's combined properties
received approximately 1,125,000 unique visitors in November, 18%
higher than its next closest competitor. AWEB's online advertising
also reached more consumers than any online car buying service.
Our bullish diagonal spread continues to outperform many of the
higher priced plays with numerous profitable exit opportunities
since the position was initiated. 

Bellwether technology issues gained ground but telecommunications 
companies slumped after recent gains. AT&T (T) fell $1.31 on news
that Bell Atlantic (BEL) received clearance from the FCC to offer
long distance phone service in New York. BEL is the first company
to receive authority to provide service in its home territory but
AT&T said it expects to file a court challenge to the ruling as
Bell Atlantic's network may limit fair competition. Both of our
plays were affected but neither is in danger of a loss. The BEL
calendar spread currently has a $4 profit and the T debit spread
will profit if the stock finishes above $49. Another big loser was
3com (COMS). Share value of the network solutions company dropped
almost $5 after a profit warning. COMS reported quarterly income
of $0.37 a share, beating Street estimates by $0.03, but it warned
third-quarter profit will be hurt by a Y2K sales slowdown. Our play
is safe at $32.50.
Potential merger partners Pharmacia & Upjohn and Monsanto moved
higher after offering upbeat earnings forecasts to gain support
for their deal. The companies said that estimated sales of the
combined continuing operations will be almost $17 billion and
the new business is expected to grow at an annual rate of 14-15%.
Of course that did nothing to help the flagging Delta and Pine
Land (DLP), whose owners can't seem to understand that a break-up
might be a good thing. There's nothing wrong with finding a new
dance partner when the one you have keeps stepping on your toes.
DLP fell $0.50 to $15.

Thursday, December 22

Blue-chips stocks filled investors with joy as holiday buying
reached a climax with an across-the-board rally that saw the
major averages set new records. The Dow Jones Industrial Average
rocketed 202 points to 11,405 while the Nasdaq Composite reached
a new high at 3,969. The tech-gauge peaked at 4001 in intra-day
trading, crossing the 4,000 barrier for the first time. The S&P
500 index also climbed to another record. Volume was light at 735
million shares on the NYSE. Market breadth was positive during the 
session, with 19 winners for every 11 losers but despite the rally,
161 stocks hit new lows while only 86 made new highs. In the bond
market, prices attempted to recover from early losses but the
30-year Treasury eventually slipped 11/32 to yield 6.48%.

Portfolio plays:

The festive mood on Wall Street spread to groups in the market
that have been under recent pressure including financial issues
and transport stocks. Banking companies posted healthy gains
despite a downturn in the bond market and that helped insurance
stocks as well. Our bullish position in American International
Group (AIG) benefitted from the move, climbing $1.56 to $109.50.
The midday rally provided early exit opportunities for both of
the debit spreads near a break-even cost basis. The rotation to
cyclical stocks continued today with Johnson & Johnson (JNJ) in
the headlines after a $4 gain to $95. Our LEAPS/CC's play has
doubled in value since the position was opened in late summer.
Another long-term issue, United Airlines (UAL) made a big move
during the session. UAL climbed $1.88 to end at $77 with the
rallying transport sector. Both of our new LEAPS/CC's positions
on this issue are profitable after just one month. 

The top performer in the portfolio was again PanamSat (SPOT). The
stock price climbed another $3.50 to close at a recent high near
$58 on momentum from Tuesday's successful satellite launch. SPOT
will follow the deployment of Galaxy XI with the scheduled liftoff
of Galaxy XR in January 2000. The new satellite will take-off from 
French Guiana aboard an Ariane rocket on a mission to become their
fifth satellite in the Galaxy cable neighborhood. PanamSat is also
expected to launch Galaxy IVR in the first quarter of 2000. Both
of our (bullish) debit spreads are deep ITM with favorable exit
opportunities. Loral Space (LOR) rode the industry's enthusiasm to
a nice recovery, rising $1.25 to a recent high near $18. The move
places our long-term calendar spread in profitable territory. Last
but not least, we can't avoid mentioning Motorola (MOT) which has
exceeded even the most optimistic estimates in 1999. Today the
stock rose another $3.25 to a new all-time high at $145. The move 
prompted our adjustment to a higher strike in the bullish diagonal
spread. The new LEAPS/CC's position is LJAN105C/JAN130C at $19.50

I would like to take this opportunity to thank all of you that
offered such generous support and encouragement for this section
while we learned the tricks of the trade during the past year. I
hope that you and your families enjoy a wonderful holiday season
with all of the joy and happiness the Lord can provide. Remember
those who are less fortunate when you give gifts and always treat
your loved ones with the respect that they most certainly deserve.

Merry Christmas and Happy New Year!

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


CRUS - Cirrus Logic $14.06     *** Chip Sector ***

Cirrus Logic is a manufacturer of proprietary ICs for desktop and
portable computing, telecommunications and consumer electronics
markets. The company has developed a broad portfolio of products
and technologies spanning multimedia (graphics, video, and audio), 
wireless and wireline communications, magnetic disk and CD-ROM
storage, and data acquisition applications. Cirrus is a market
leader in audio integrated circuits for computer, consumer and 
professional segments; and in optical storage for the CD-R/RW
industry. The company is also a technology leader in magnetic
storage segment with its 3Ci system-on-chip (SOC) solution, which 
substantially integrates hard disk drive electronics.

This year, Cirrus realigned operations to succeed in embedded
applications, based on its unique combination of analog circuit
skills and mixed-signal expertise. During this period, they
returned to the fabless model that spurred its earlier growth. 
With its experience in both SOC solutions and audio technology,
CRUS is well positioned to be a significant supplier in the
emerging market for Internet audio, driven by the popularity of
portable digital music players that can operate with either MP3
or Microsoft Audio compression standards. During 1999, Cirrus
accelerated its momentum in the industrial market with the launch
of numerous high-precision/resolution chip solutions.

With nearly 900 patents (issued and pending) in its rich product
portfolio, Cirrus Logic intends to build upon its strong market 
opportunities and technology positions. The company targets large
existing markets that are undergoing major product or technology 
transitions as well as emerging markets that forecast high growth.
They participate in worldwide markets, with more than 50% of sales
coming from exports to Pacific/Asia, Japan and Europe.

Technically, Cirrus has bounced off price support provided by the 
September high and the increase in volume (last two days) with a 
significant rise in buying reinforces the bullish outlook. The new
interest suggests the up-trend is ready to resume and we will use
the long-term approach to increase profit potential.
PLAY (aggressive - bullish/diagonal spread):

BUY  CALL JUN-10 CUQ-FB OI=310  A=$5.12
SELL CALL JAN-15 CUQ-AC OI=2145 B=$0.75
- or -
PLAY (conservative - bullish/diagonal spread):

BUY  CALL JUN-10.00 CUQ-FB OI=310  A=$5.12
SELL CALL JAN-12.50 CUQ-AV OI=777  B=$1.93

Note: We will use this position if the stock opens lower (from its
recent overextended rally) on Monday. This spread offers increased
downside protection but the sold (short) option must be monitored
closely and rolled forward before expiration to protect the long 

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


BCGI - Boston Communication Group  $5.12   *** Bottom Fishing ***

Boston Communication Group develops, markets and provides
innovative call processing and customer support services to
wireless telephone carriers. The company's roaming services,
customer support services and prepaid wireless services and
designed to enable wireless telephone carriers to focus internal
resources on their core business activities, while increasing
revenues, improving service quality and reducing costs. Their
services are available in the United States, Mexico and Canada.

Not much news on this issue but the company appears to be in
a good position for future growth. Rumors on the message boards
suggest that insiders and industry players are investing heavily
in this company. One commented that Nortel Networks (NT) is using
BCGI's wireless prepaid system and Voicemail platform and they
have installed a large amount of BCG equipment in recent months.

The chart on Boston Communications is showing subtle signs that
the selling pressure is ending. Several technical indicators have
formed positive divergences that suggest the stage IV trend has
ended and a stage I base has begun. Increasing volume with the
recent accumulation may be an indication that new institutional 
investors are adding bullish positions. We will use the small
disparity in option pricing to open a favorable speculation play.

PLAY (speculative - neutral/calendar spread):

BUY  CALL JUN-5.00 QGB-FA OI=95 A=$1.75
SELL CALL JAN-5.00 QGB-JA OI=35 B=$0.68

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

Y2K Renewal Offer!!!

Announcing the cheapest renewal rate available! $24.91 mo*

Long time readers know that each December we offer our 
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