Option Investor
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Daily Newsletter, Sunday, 01/02/2000

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The Option Investor Newsletter          Sunday  1-2-2000  1 of 5
Copyright 1999, All rights reserved. 
Redistribution in any form strictly prohibited.

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

Entire newsletter best viewed in COURIER 10 font for alignment
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
       12-30-99            High     Low     Volume Advance Decline
DOW    11452.90 -  31.80 11568.80 11446.70   553,570k 1,766  1,365
Nasdaq  4036.87 -   4.59  4090.61  4026.19 1,100,607k 2,026  2,193
S&P-100  792.14 -   1.50   798.41   790.59    Totals  3,792  3,558
S&P-500 1464.47 +   1.01  1473.10  1462.60            51.5%  48.5%
$RUT     499.27 +   2.26   499.27   498.87
$TRAN   2963.45 +  21.46  2973.69  2934.13
VIX       25.96 +   1.59    25.96    24.39
Put/Call Ratio       .51
*************************************************************

The countdown continues only this clock won't stop at 007

By the time some of you read this it will be 2000. Due to the
age old application of time zones, at 6:01 AM ET Friday morning 
it will be 12:01 AM 1/1/2000 in Auckland, New Zealand. (This always
makes me laugh when someone claims the world is going to end
at 12:01 on a given day. I want to hunt them up and ask them
what time zone they are using.) Because of the many readers we
have worldwide, in over 100 countries, we are sending the Sunday
newsletter on Thursday night. While we have completely tested
all 50+ computers in our office network and we are sure you have
tested yours, we are not sure about the tens of thousands of
servers that our email touches on its way across the Internet
to you. Hopefully this will be just another event you will either
forget by the end of next week or remember to tell your children
later when talking about H.G. Wells War of the Worlds and the 
great Y2K scare.

In my mind, and it has been very crowded in there lately, I think
we should be more worried about the market next week than Y2K
tomorrow. The small sell off today was simply traders moving to
the sidelines for the holiday and nothing more should be made
of it. The Dow and Nasdaq both opened strongly positive and
then bled volume all day. The advance decline line was positive
on both exchanges most of the day as it was yesterday also. This
convinces me that the tax loss selling for 1999 is over and
traders are ready to put their money back to work. 


 


 

Next week is shaping up to be quite a battle. The combination of
cash inflows from retirement contributions and Y2K money coming
off the sidelines will be pushing the markets higher. However,
the Y2000 tax selling will begin in earnest. We will have massive
movements of cash coming into the market and leaving at the same
time. The positive side of the Y2000 tax deferred sales is that
only a portion of the money will be leaving. Cash to pay 1999 
taxes and a little spending money to pay off those holiday bills.
The balance will either go into different stocks or go to the
sidelines to wait for the coming pull back. Portfolio managers
have down played the impact of these tax sales of previous big
tech winners. The retort is "If we sold them what would we buy?"
Trust me, there will be selling and with the Fed likely to be
aggressive in 2000, the odds of strong selling before the Feb 1st
Fed meeting is very strong. I would bet on a two billion share
day on the Nasdaq next week as investors shuffle their holdings.

There was an article on CNBC today about market tops in previous
Januarys. I think they claimed that 70% of the time the first
week in January was a short term market top. Many years it was
the first or second day. Sometimes it was months before the
market recovered. In 1999 the market top was the second Monday
and the following slide took -200 off the Nasdaq and -600 off 
the Dow. I feel there is just too much liquidity to hold the 
market down long but we may see an end to day after day of new 
market highs. I incorrectly quoted the earnings date for Yahoo
on Tuesday as Jan 6th, it should have been Jan-11th after the
close. This is normally a turning point for the net stocks and
the Nasdaq. The put/call ratio which measures investor sentiment
is at the highest levels in memory on the Nasdaq and Dow. This
points to a level of extreme pessimism and concern. Normally a
high ratio is only achieved after a significant drop and represents
a bottom. The existence of these high levels without a previous
drop is actually an insurance policy against a severe sell off.

Abbey Joseph Cohen was interviewed again today and if you read
between the lines, she was hedging her bets. She said again that
2000 will be a good year but not a great year. The statement that
caused me concern was her answer to tech valuations. She said
that for most of this decade techs were grossly undervalued. BUT,
now she feels that techs are FAIRLY valued and NOT cheap. This
is a noted bull. What does she consider a good year for 2000?
Her target as stated on CNBC AFTER the market close today was
1525 by year end. Before you start popping champagne corks
let me remind you that the S&P closed today at 1464, only 60
points from her 2000 year end target. To be fair she always
claims that her targets are low and obtainable. I hope so!
It may be of note that the tech stocks in the S&P were up +75%
for the year and all the other S&P stocks were only up +4.5%.
Does this mean she expects a tech wreck in 2000? Don't forget
that the Nasdaq is 44% over its 200DMA, a level historically
unsupportable. Also historically the gains by the major
indexes in the year after a record year have been terrible.
After the previous biggest gain on the Nasdaq of +81% the
next year the Nasdaq only gained +15%. The DOW, S&P and Russell
all lost ground in the years following their biggest gains.
The Nasdaq is up +84% in 1999 for the biggest gain on record.

Name five stocks that are guaranteed to have strong volume
on Friday's half day of trading. Here are my picks. HD, WCOM,
INKT, GBIX and QCOM. I cheated, all of these stocks split after
the close today and will trade at the post split prices on
Friday. The biggest volume of course will be QCOM. Now the
second quiz. If you have been holding QCOM for more than a
week, did you sell at the open Thursday at $740? If not, why?
After seeing it drop to 645 at the close, almost -$100, were
you reconsidering your decision? More than 10% of the 140M
float traded today, more than three times the recent daily
volume. 


 

The new price target on QCOM, which caused the spike yesterday,
is now $250. (post split) The stock price at the open tomorrow
will be in the $161 range depending on after market activity.
While a $600 QCOM has been making huge moves it is entirely
possible that these big swings are now going to slow with
four times the shares available. We have seen it time and time
again. As outstanding shares increase the size of the moves
decrease. Check out the recent moves on MSFT, INTC or DELL
which all have over three billion shares outstanding. Granted
the 644 million shares after the split still pale in comparison
to the 3 bln for these other heavyweights. My point here is
that paper gains are just that, paper profits, until sold.
Many of the stockholders for the last couple of years bought
this stock for $20-$50 and are now paper millionaires. A $38,750
investment on 1/1/99 (1550 shares) is now worth over $1,000,000.
Some may decide they will want to turn paper profits into cash 
in January. Many funds have share limits for stocks in their 
portfolio to avoid having huge losses should disaster strike. 

Institutions hold 55% of the available shares or 77 mln shares.
As of tomorrow, they will own 308 mln shares. If your share
limit was one million then you will be three million over as
of tomorrow. There is no drop-dead date when they must sell
their shares but you can bet they will want to sell before
the price drops very far. Remember every -$1 drop is now
-$4 with four times the shares. Have you heard that there
are several companies that claim they have a better product
coming to market next year? Now that I have built a case
for a coming drop let me switch sides. The $250 share target
price is probably low. Even at these lofty 500+ PE levels
the odds of QCOM beating the $250 level this year are 100%.
Investors that missed the run will pour into the new $160
shares in record numbers hoping to see the $250 target by
February. QCOM also has new products on the horizon. One
which has analysts excited is streaming video over your
cell phone. Data rates 50 times current modem speeds are
expected soon. This will only increase the population of 
the CDMA technology. Confused? What we have here is simply 
a difference in time frames. Short term there may be some 
selling pressure as traders lower their exposure and diversify.
Long term it is still a great company and a great stock. Did 
I mention that they just voted to increase the outstanding
shares to 3 bln?  There are now only 644 mln outstanding, 
can you say 4:1 split again soon?

Friday should be exciting depending on the problems or
lack of problems as Y2K moves across the face of the planet.
Since the new year will be reported with a microscopic focus
in each time zone, a lack of problems will likely cause a
flood of money into the market before the 1:PM closing bell.
Conversely if networks show disaster after disaster then the
money may move quickly to the sidelines as well. The focus
should be on the length of time expected to correct the
problems and the severity. 

Next week begins the economic challenges for 2000 with the
NAPM on Monday, Construction Spending on Tuesday, Factory
Orders on Wednesday, New Home sales on Thursday and the
biggie, the December Jobs Report on Friday. Remember, the
Fed does not have to wait for the Feb-1st meeting to raise
rates. Should a strongly negative report stimulate Greenspan
things can turn ugly in a heartbeat.

I will resume my Options 101 articles next Sunday with "How
to trade the high risk Internets, without any risk".

Good Luck, and a happy new year to everyone!

Jim Brown
Editor



Happy New Year from all of us at OIN.

/charts/index.asp?image=mw530
 

This is some of the staff from the Denver office at our Christmas
party. About 25 were either unable to attend or work in other
states and commute by email. Jim is the gray haired man in the 
center. 



**************************
Twas the night before Y2K
**************************

Twas the night before Y2K,
And all through the nation
We awaited The Bug,
The Millennium sensation.

The chips were replaced
In computers with care,
In hopes that ol' Bugsy
Wouldn't stop there.

While some folks could think
They were snug in their beds
Others had visions
Of dread in their heads.

And Ma with her PC,
And I with my Mac
Had just logged on the Net
And kicked back with a snack.

When over the server,
There arose such a clatter
I called Mister Gates
To see what was the matter.

But he was away,
So I flew like a flash
Off to my bank
To withdraw all my cash.

When what with my wandering eyes
Should I see?
My good old Mac
Looked sick to me.

The hack of all hackers
Was looking so smug,
I knew that it must be
The Y2K Bug!

His image downloaded
In no time at all,
He whistled and shouted,
Let all systems fall!

Go Intel! Go Gateway!
Now HP! Big Blue!
Everything Compaq,
And Pentium too!

All processors big,
All processors small,
Crash away! Crash away!
Crash away all!

All the controls
That planes need for their flights
All microwaves, trains
And all traffic lights.

As I drew in my breath
And was turning around,
Out through the modem,
He came with a bound.

He was covered with fur,
And slung on his back
Was a sackful of virus,
Set for attack.

His eyes-how they twinkled!
His dimples-how merry!
As midnight approached, though
Things soon became scary.

He had a broad little face
And a round little belly,
And his sack filled with virus
Quivered like jelly.

He was chubby and plump,
Perpetually grinning,
And I laughed when I saw him
Though my hard drive stopped spinning.

A wink of his eye,
And a twist of his head,
Soon gave me to know
A new feeling of dread.

He spoke not a word,
But went straight to his work,
He changed all the clocks,
Then turned with a jerk.

With a twitch of his nose,
And a quick little wink,
All things electronic
Soon went on the blink.

He zoomed from my system,
To the next folks on line,
He caused such a disruption,
Could this be a sign?

Then I heard him exclaim,
As he drove out of sight,
Happy Y2K to all,
It's a helluva night!


*****************************
TWAS THE WEEK AFTER CHRISTMAS
*****************************
 
 'TWAS THE WEEK AFTER CHRISTMAS
 AND ALL THROUGH THE HOUSE
 NOT ONE PC WAS WORKING
 NOT EVEN A MOUSE.
 
 I TURNED ON THE POWER
 BUT NOTHING WAS WORKING
 I GRAB THE COMPUTER
 AND START BANGING AND JERKING.
 
 I LAID OUT THREE GRAND
 FOR THIS BIG PIECE OF JUNK
 ON JANUARY 1ST
 THE DUMB THING WENT "KERPLUNK"!
 
 WHEN I THREW IT OUT THE WINDOW
 IT MADE SUCH A CLATTER
 MY NEIGHBOR JUST CALLED
 TO SEE WHAT'S THE MATTER.
 
 I TURNED ON THE TV
 THE CABLE IS DOWN
 MY MICROWAVE OVEN
 IS MAKING WEIRD SOUNDS.
 
 MY NEW VCR
 IS AS DEAD AS A ROCK
 NOT ONE LIGHT IS BLINKING
 NOT EVEN THE CLOCK.
 
 IT'S TWENTY BELOW
 THE PEAK OF SNOW SEASON
 THE FURNACE WON'T WORK
 THE PIPES ARE ALL FREEZING
 
 THIS COULDN'T HAVE HAPPENED
 AT A WORSE TIME
 I THINK I HAVE FROSTBITE
 ON MY BEHIND.
 
 I LAUGHED FOR A SECOND
 AND THOUGHT IT ALL FUNNY
 THEN A CALL FROM MY BANK
 IN REGARDS TO MY MONEY.
 
 WE MANAGED YOUR PENSION
 AND SAVINGS WITH CARE
 BUT FOR SOME ODD REASON
 YOUR MONEY'S NOT THERE
 
 WE WERE Y2K READY
 WE'D THOUGHT WE'D BE HEROES
 BUT REGRET TO INFORM YOU
 YOUR BALANCE IS..ZERO"!
 
 I DROP THE RECEIVER
 TO THE BATHROOM I RUSH
 I PUSH DOWN THE HANDLE
 THE TOILET WON'T FLUSH.
 
 I TURNED ON THE FAUCET
 NOT ONE DROP HITS THE SINK
 I HEAD OUT THE DOOR
 TO THE PUB FOR A DRINK.
 
 I JUMP IN THE CAR
 TURN THE KEY IN THE SWITCH
 IT ONLY GOES "CLICK"
 I SCREAM,"SON OF A WITCH!"
 
 A COMPUTERIZED IGNITION
 HAS JUST SEALED MY FATE
 NOT SET UP
 FOR THE "2000" DATE.
 
 I TWITCH LIKE A MADMAN
 THIS CANNOT BE TRUE
 NO CAR, HEAT, OR MONEY
 WHAT THE HECK CAN I DO.
 
 SHOUTING OBSCENITIES
 AS I RAN OUT OF SIGHT
 HAPPY Y2K TO ALL
 IT'S BEEN ONE HECK OF A NIGHT!



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

There is no Stock News article this weekend



*******
Ask OIN
*******

There is no Ask the Analyst article this weekend.


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

As of Market Close - Thursday, December 30, 1999 

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

DOW Industrials   10,800  11,320  11,453    BULLISH  12.23
SPX S&P 500        1,340   1,400   1,464    BULLISH  12.03
OEX S&P 100          700     750     792    BULLISH  12.03
RUT Russell 2000     430     450     497    BULLISH  11.12
NDX NASD 100       2,850   3,150   3,684    BULLISH  12.03
MSH High Tech      1,450   1,630   1,846    BULLISH  12.03

XCI Hardware       1,160   1,210   1,401    BULLISH  11.11
CWX Software       1,100   1,200   1,381    BULLISH   9.03
SOX Semiconductor    580     660     695    BULLISH  12.21
NWX Networking       750     800     876    BULLISH  12.03
INX Internet         600     675     727    BULLISH  12.07

BIX Banking          645     690     567    BEARISH  11.30
XBD Brokerage        410     450     446    Neutral  11.30
IUX Insurance        625     650     607    BEARISH  11.30

RLX Retail           900     935   1,007    BULLISH  11.23
DRG Drug             380     400     354    BEARISH  12.07
HCX Healthcare       760     790     707    BEARISH  12.07
XAL Airline          180     190     155    BEARISH   5.21
OIX Oil & Gas        290     315     292    Neutral  11.23

 
Posture Alert    
Late day selling left the broad market in negative territory, 
with the NYSE setting a 52-week low for volume during regular 
trading days. The Nasdaq still managed to crack over the 
billion-share figure, and with the way things are going, we would 
not be surprised to see a 2 billion-share day early in the new 
millennium. Most sectors were quiet today and thus relatively 
unchanged; however, the only real losing sector was the Internet 
sector, which closed down -2.42%. With a half-day tomorrow, we 
would like to wish you a happy and safe New Year!



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

Thursday December 30, 1999

Higher Highs in the New Millennium!

The Nasdaq lost all steam this afternoon, as the technology index 
gave away all of the gains from the morning session. Volume was 
decent, but volume on the Big Board set a 52-week low for futility 
during regular trading sessions. Regardless, tomorrow's trading 
day should be even more futile. The only real action to watch 
today was the Qualcomm gap-up at the opening, which gave many 
people the case of "sticker shock," as their 740 dollar purchase 
dropped a quick eighty or ninety dollars. The fun should continue 
for this stock, as it will be trading split adjusted tomorrow. One 
amusing event witnessed today was Abbey Joseph Cohen getting the 
honor of closing the NYSE. For those of you who witnessed it, you 
saw Abbey-the-bull doing the ritual of hitting the gavel while 
being surrounded by all the NYSE officials during the close of 
the exchange. However, in this case, the top of the gavel broke 
off and flew straight down into the trading pit. It was a pretty 
amusing sight, but we hope it didn't hit any bears!
 
Speaking of bears, they are definitely on the prowl pre-Y2K. They 
seem to believe that the end of the market is coming upon us, as 
they jump on out-of-the-money puts right before the big dance. 
Price premiums for out-of-the-money index puts are currently much 
greater than calls of equal stature. Another indicator that is 
showing an increase in pessimism is the Pinnacle Index for the OEX, 
in which overhead resistance has dropped dramatically. If this 
trend continues, and we think it will, this may just be indicating 
that we are due for a rally. 

Another issue that jumps out at Pinnacle is that the put/call 
ratios continue to be dominated by the bears. The put/call ratio 
for the S&P 500, during this last trading day, stood at 2.85, 
which is very bearish. It gets worse. The put/call ratio for the 
Dow was at 5.9, and for the Nasdaq 100, it was at a blistering 
10.07. OUCH! Pretty bearish stuff. The Nasdaq 100's overall p/c 
ratio is now back over the 2.0 benchmark, and is currently 
clocking in at a 2.23. This benchmark number is significant, as 
the p/c ratio has consistently been above this number during the 
NDX's magnificent run. What this is telling us is that the NDX may 
have some strong legs in January!

One last issue that came out this week was the most recent short 
interest ratio for the Nasdaq. The Nasdaq set a short interest 
record for the third month in a row ending December 15, clocking 
in with a 2.13% increase. Shares short rose by 49,301,236 to a 
grand total of 2,363,795,218. The bearish sentiment continues. 
This is the 3rd record in a row. Can you imagine being short back 
in October? It is our opinion that this bearish sentiment will 
only help technology stocks in the near term. When you combine 
this statistic with the ones above, what you get is a recipe for 
higher highs in the new millennium! The traders at Pinnacle 
Capital would like to wish everyone a safe and happy New Year!    


BULLISH Signs: 

Cash Flow:
The amount of money continues to pour into this market, but more 
importantly, is the money that is building up on the sidelines that 
will eventually have to be put to use.

Short Interest:
The Nasdaq set a short interest record for the third month in a row 
ending December 15, clocking in with a 2.13% increase. Shares short 
rose by 49,301,236 to a grand total of 2,363,795,218. This high 
level of bearish sentiment may only help increase the up-move in 
technology stocks during the new millennium. 


S-Squeeze:
News events continue to squeeze the shorts, as lately evidenced by 
Commerce One (CMRC) and Qualcomm's (QCOM) recent tour into the 
stratosphere.


Mixed Signs:

Volatility Index (25.45):
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.


BEARISH Signs:

Interest Rates (6.475%):
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, but recently, we are starting to witness a 
slight uptick.

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.


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                       (12/24)    (12/28)     (12/30)

Overhead Resistance (795-810)     N/A        6.34       3.98

OEX Close                         N/A      794.71     792.14

Underlying Support (775-790)      N/A        0.96       1.04


What the Pinnacle Index is telling us:
Based on 12/30, overhead is starting to lighten up, and if this 
pace continues, may indicate a rally at the start of the new 
millennium. Underlying support is getting stronger, but is still 
light.


Put/Call Ratio                  Friday     Tues       Thurs
Strike/Contracts                (12/24)   (12/28)    (12/30)

CBOE Total P/C Ratio             N/A        .47        .51
CBOE Equity P/C Ratio            N/A        .35        .38
OEX P/C Ratio                    N/A       2.48       1.87


Peak Open Interest (OEX)
                     Friday           Tues            Thurs
Strike/Contracts     (12/24)         (12/28)          (12/30)

Puts                   N/A          700 / 11,096     700 / 11,799
Calls                  N/A          700 /  6,383     700 /  6,086
Put/Call Ratio         N/A             1.74             1.94



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

Monday - NAPM

Tuesday - Construction Spending

Wednesday - Factory Orders

Thursday - New Homes Sales

Friday - December Employment Report, Consumer Credit



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

NOPE, The Party Was Only Beginning After All.

As Gomer Pyle used to say, "SUR-PRISE, SUR-PRISE". I don't think 
anyone was expecting yesterday's run up by Qualcomm, but I will 
remember it always. More Champagne, please!!!

Well, what should I say? "Oops", for selling my higher risk QCOM 
contracts on Tuesday, or "Thank Goodness", for holding on to all 
the others? Either way, I am happy. Remember, we never complain 
for taking profits, especially nice juicy profits...even if they 
doubled the next day!! Congratulations to everyone who has been 
playing this gorilla. Perhaps now you can appreciate why I have 
focused my attention primarily on YHOO and QCOM for most of this 
month.  I am a very happy lady. Yesterday, QCOM just made me 
happier and YHOO is building steam. Just for the record, thank 
goodness I only sold off my high risk trades! Otherwise, you 
would have seen one upset brunette developing new foreign language 
skills! Luckily, I had kept my basket of January 500 calls bought 
at 16 1/4. Today they closed at 173. Gulp!

I know from my emails, that I am not alone. Anyone lucky and 
brave enough to jump in on this play, was greatly rewarded. 
Anyone who didn't, is probably in  a bad mood.  Don't thank me 
or blame me. I am just a player like you. We all win some and 
loose some. The winners feel a lot better. In medicine, one 
learns how to perform procedures by the theory "see one, do 
one, teach one". You watch someone who is more experienced than 
you, do one. You study their technique and then you try it 
yourself. After learning it and becoming more polished, it is 
your responsibility to then teach someone else. The rotation 
of learning continues.

I am very grateful for the lessons I have learned this year 
but I have much more to learn, that will still take years. 
This market is exciting and I will remember this year the 
rest of my life. It is this euphoric feeling that urges me 
to repeat the 18 mistakes I discussed in my article "Loosing 
Money On Vacation" printed in November. These are the mistakes 
I realized I had made, after loosing my nice profits, from the 
first quarter of this year. After trading successfully for 
several years, it wasn't until I had an extreme quarter, before 
I learned what I didn't know.  I lost site that the market could 
actually STOP going up. 

It wouldn't hurt any of us to review my mistakes again. Making 
these mistakes and then learning from them, has drastically 
improved my trading. As you re-read them, ask yourself if you 
too could be feeling a similar false since of security, like 
I felt last April before I left town with open positions. Perhaps 
it will help you be careful, going into January. None of us want 
to give up any of our profits next year. You should be able to 
find the whole article in the archived Woman's World section.

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

Okay, so what else happened this week? Well, I took profits in 
some of my deep ITM YHOO contracts and bought more multiple OTM 
contracts on dips. Naturally, I could be wrong, but I expect 
this one to really start taking off next week since YHOO's earnings 
are less than 2 weeks away. I was able to buy BVSN on Wednesday's 
intra-day dip and also picked up some February BRCM, which will 
hopefully become a split play. I know you will think I'm nuts, 
but I bought a couple of more QCOM on the big dip today because 
I expect more buying after the split. I will be watching my QCOM 
very carefully next week. Do you think it will have an earnings 
run in January???? (that's a joke! ...who knows?!) 

Anyway, I am pretty well settled on my current positions. The 
decisions and game plans have been established. I know why I 
bought each one and what I am expecting from them. For now, I'll 
just rest and celebrate a great year, waiting on nightfall Friday. 
Over the weekend I will be checking foreign markets for weird 
happenings and like everyone else, I will hold my breath hoping 
I made the right decision to hold over the weekend. I have sold 
off my riskiest positions, which hopefully will give me some form 
of protection if something horrible happens. I worry more about 
having online access to trade, than the trades themselves. If I 
need to exit, can I? If holding proves to be a mistake, at least 
I will know that it was a once in a lifetime mistake, which will 
never happen again.

When making your New Year's resolutions, consider making one 
that affects your trading too. Decide on ONE thing you can do, 
which will improve your trading. I suspect if each of us chooses 
just one thing, our profits will reward us for the conscious 
effort. Here are some ideas that may help: learn a hedging 
technique for a future market down turn, learn basic technical 
analysis, learn how to benefit from a quote service, go to a 
conference and sit in the front, learn how to research a play 
and read a basic chart, learn how to choose an entry point, 
decide on a stop limit on your losses and be sure you abide by 
it, learn how to churn for cash flow instead of holding for 
eternity, know your exit plan before you enter and perhaps, 
learn how to stop when your plays aren't working. Improving 
even one thing at a time, will help a lot more than you realize. 

Good Luck Everyone. I hope you have a Memorable and Safe New 
Years.  I'll be raising my glass to QCOM, YHOO and others, for 
a fabulous year. I'll also have a special toast for the OIN 
Research Team. Now it's time to have some fun, but I really 
am scared of the dark.

Renee
renee@OptionInvestor.com

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

What a year it has been

It's easy to have a happy New Year with gains like those seen 
by most of us this year! The only problem now is it is getting 
harder to find good high quality tech stocks which haven't 
skyrocketed so high that the premiums are over valued. I sold 
my Nortel June 85 calls at 20.5 last week (for a two point 
profit) then watched the stock rise another ten points before 
setting in the 98-101 range. Then I bought Nortel June 100 
calls for 20.5 this week. I think these are a gift. My other 
strategy for this week is Nextlink stock hedged with Nextlink 
Feb 80 puts. This position was entered Monday, and all Nextlink 
has to do next week is make a big move one way or the other for 
this position to be profitable. Nextlink is a dynamic stock with 
explosive revenue growth potential and it has recently been added 
to the Nasdaq 100.  However, the volume in this stock has been 
unusually low this week and I think it will pick up next week 
when the holidays are over and institutional buying occurs.Next 
week we also have the employment report, which usually swings 
the market dramatically one way or the other.  I won't make as 
much money as I would in a call option this way, but I only take 
high risk positions with a certain percentage of my capital. I 
am hanging on to my CMGI stock until it splits, after that it 
may settle down to a 2-5 point trading range which is easy to 
trade.

Around this time of year most Wall Street analysts are reflecting 
on the phenomenal year we have had and making annual predictions 
for the year ahead. The majority I have read about are bullish, 
with year end predictions for the Dow in the range of 12,500 to 
14,000 and the Nasdaq 5000 or more. There are a few famous doom 
and gloomers who are predicting that stocks will take a major 
down turn, I am sure everyone knows who they are. If you look at 
a 50 year chart of the Dow or the S & P 500 which you can get off 
the Yahoo finance or other services you will see that over the 
very long term the US stock markets go up. However, the last 
really bad year we had in the market was 1991, and it is important 
to look at circumstances we had in the 1980s and early 1990s to 
understand what was going on so everyone can reach his or her own 
conclusions and strategies for this year.

There are several key factors which have driven the phenomenal 
bull market of the 1990s. One of them is the technological 
revolution and the growth and productivity it has stimulated.
The NASA scientists who started the Internet years ago, the guys 
at Intel, Cisco and Microsoft who made the equipment for people 
to access the Internet,and the leaders at American companies who 
lead the world in technological improvements and innovation every 
day made all of this possible. If we look ahead a long time it's 
easy to see that some of these companies will grow to be 5 or 10 
times bigger than they are now in the next decade. The fundamentals 
of most companies in the U.S. have improved over the last decade, 
as earnings, profit margins and return on equity have grown, which 
gradually adds to the book value of a company.

In addition, we have been lucky the last several years because 
several of the economic factors which influence the stock market 
have been consistently benign. We have had historically low 
interest rates, relatively low inflation and low unemployment. 
Despite all of the technological growth we can see in the future, 
if one or more of these factors changes, this may change the rate 
of growth we see in the market.

One of the reasons we have experienced relatively low interest 
rates of below 7% in the latter part of the decade is the fact 
that we now have a federal budget surplus. It wasn't always this 
way. When Ronald Reagan left office in the late 1980s the federal 
budget deficit was in the trillions. Trillions! This was partly 
due to the fact that the federal government spent heavily on 
defense and other programs while he was in office. This was a 
different era, it was during the height of the cold war, and the 
former USSR was perceived by many to be a major threat to 
international security. However, when Reagan left office interest 
rates went as high as 12%. Economists blame this on several factors, 
including the heavy increases in interest rates by the Federal 
Reserve under Paul Volker, but there is no denying that the federal 
budget deficit influences interest rates greatly.

The Clinton Administration, on the other hand, instituted a program 
of fiscal conservatism and restraint which has been consistent 
throughout the last 8 years. Such noted experts as former Treasury 
secretary Robert Rubin have stated that this fiscal conservatism was 
the primary factor which reduced the federal budget deficit to the 
surplus we are enjoying now. The implications for this on the 
interest rate market and the stock market are huge. A big federal 
budget deficit is like a big weight on your shoulders. Imagine 
trying to purchase something on a credit card when you are already 
a million dollars in debt. The rate they would charge you would go 
way up.

What worries me is that the federal budget surplus could become 
a budget deficit again. We are in an election year, and if a new 
administration comes in next year, which does not follow the same 
program of fiscal restraint our budget surplus could become a 
deficit again. It probably won't happen next year, maybe not even 
the following year, but if it were to happen, things could change 
in the market.

The technology stocks have been on fire, and have been ignoring 
the slight increases in interest rates we have seen. Interest 
rates have increases from 6% to 6.45% and still the market has 
rallied. However, if rates were to increase to 8% or 9%, imagine 
what would happen to the market. No one can predict exactly how 
the stock market would react to this, but heavy increases in 
interest rates are generally not good for stocks. In addition 
to competing for investors' money by offering high risk-free 
yields, high interest rates mean it is harder for corporations 
to borrow to expand their programs, and must reduce their profit
margins to pay off interest on debts.

So, although most analysts can see another good year ahead of us, 
it doesn't always mean that things will always necessarily be 
this good forever. Every market moves in cycles, and sometimes 
prolonged good periods can dull peoples' perception of risk. 
It's always best to invest some of your money for retirement 
for the very long term (the rest of your life) while hedging 
your bets with your trading capital to a certain degree.

Mary@OptionInvestor.com


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DISCLAIMER
***********

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

The Option Investor Newsletter              1-2-2000
Sunday                        2 of 5


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

Trading Decision Game #1

Last week, I set up what I call a "Trading Decision Game," which 
was designed to give our readers the chance to design a plan for 
how they would handle a specific situation. Please go back to that 
column under the Trader's Corner tab on the left to review the 
situation. Recall that the date is December 7, 1999, you have made 
a nice profit on NOK Dec140 calls which spiked up sharply to 170 - 
178 on the CEO's higher estimate of handset growth, and you are 
now considering entering a new NOK Jan160 position. You have $50,000 
in your account. Here are three possible plans --

Solution 1

what I would do is take half the profit from the Nok 140 call 
and put it in to a Nok 165 call when the stock is 169. I always 
sell after a couple of points profit, even though I miss some 
really big moves that way. I like to watch it rather than enter 
the order right away and decide when to sell it. 

Solution 2

I would watch for any pullback, and bounce off support near the 
160-165 range. If this occurs I would target shoot the option 
price with a "limit buy to open" on the January 160 call. Four 
contracts in the $8 range. One order GTC. If filled, I would 
place a limit sell on two contracts at $16 and a stop loss of 
$4 on the other two contracts. Hopefully all goes well and I get 
limited out on the two $16 sells at which time I would move up 
my stop and let the other two contracts run until I see any 
signs of weakness. Then I would close the remaining contracts. 
I would only hold the GTC order for one or two days because I 
am afraid of buying options too close to expiration. 

Solution 3 (author's solution)

I would use buy to open, market, contingent on stock orders with 
2 contracts each at the following prices -- 164.75, 159.75, and 
157.75. After getting filled on each order, I would immediately 
set a sell to close, market, stop on stock (since NOK is a NYSE 
stock) at a price 5 points below NOK's price when it filled. When 
NOK hit its lower Bollinger Band, I would convert the orders to 
limit sells above the current price of the option for 50% profits.

Commentary

These three approaches highlight different ways to approach this 
problem. Solution 1 focuse on money management. She will never put 
all of the capital back to work in the same stock. In this way, 
she maintains the upside potential, but never risks her total gain. 
Solution 2 presents an interesting approach -- setting a stop for 
half of a position and a limit sell for the other half. This 
technique can give you some protection on the downside while also 
giving you the ability to profit from sharp upward intraday spikes. 
The last solution attempts to take advantage of the newsletter's 
comments regards probable levels of support. In fact, these levels 
of support did not hold in this particular case, as the stock 
traded as low as 150 by mid December. Therefore, this solution 
would highlight the need to also be very market aware through 
reading the Market Wrap & Market Posture sections of the newsletter, 
as well as outside sources. 

I am actually in this play. I got filled in three different stages, 
roughly as I outline in Solution 3, but I did not set the stops 
which I describe. As a result, I became overly focused on NOK as 
it moved downward through 170, 160, and finally bottomed at 150. 
Of course, now that NOK is back up to about 180, my play is 
profitable, but it is still a good lesson in how holding an option 
can make you an "investor" instead of a "trader." When you make 
that switch, you lose focus, and the ability to make sound decisions. 

My other plays are going OK, with QCOM an absolute blowout. I am 
concerned that the post split performance of JDSU bodes poorly 
for my decision to hold QCOM through the split and the New Year. 
But, for tax reasons alone, I feel this decision will be justified. 
I will be conducting an after action report next week, assessing 
my decisions, and going back to cash. 

Happy Holidays & Good Luck

Janar Joseph Wasito
janar@OptionInvestor.com




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

Daily Results

Index      Last    Mon    Tue    Wed    Thu   Week
Dow     11452.86 -14.68  85.63   7.95 -31.80  47.10
Nasdaq   4036.87   5.94  -3.27  69.36  -4.59  67.44
$OEX      792.14   1.42   0.13  -1.07  -1.50  -1.02
$SPX     1464.47  -1.25   0.57   5.80   1.01   6.13
$RUT      496.59   2.03   4.02   8.53  -0.42  14.16
$TRAN    2963.45  39.98  16.83  -2.52  21.46  75.75
$VIX       25.94   1.23   0.09   0.68   1.57   3.57

Calls              Mon    Tue    Wed    Thu   Week

AFFX      184.75  28.09 -12.94  20.44   4.56  40.16  New
DCLK      246.88  15.75  -6.44  28.19  -2.25  35.25  Party on!
INSP      213.75  -3.38  19.00   1.50  10.50  27.63  Splitting
HGSI      159.56   5.19  -2.31  10.13  10.56  23.56  Biotech play
BVSN      175.94   5.44   4.63   6.38   6.44  22.88  New high!
IMNX      116.00   0.88  -0.75   7.00   9.00  16.13  Hot sector
YHOO      416.06  12.38 -24.75  13.44  12.38  13.44  Upgraded
VIGN      163.75  -2.88   3.31   6.06   6.75  13.25  New
MWD       141.25   0.13   2.63   4.69   2.31   9.75  New
EMC       110.31   3.88  -1.25   4.75   1.81   9.19  New
CREE       84.88   1.63   1.75   7.25  -1.50   9.13  Top form!
ADI        90.44  -0.75   2.63   5.44   1.75   9.06  New
GSTRF      35.78   4.06  -1.88   2.06   3.34   7.59  Looks good
NOK       180.00  -3.13  -3.63  14.75  -3.00   6.00  Wakes up!
PMCS      150.88  -1.69  -1.31   6.69   1.94   5.63  Going north
TTN        46.50  -2.56  -0.81   0.25   6.06   2.94  Nice day
BCE        89.94   8.75  -4.81  -2.25  -0.50   1.19  NT play
NT         99.16   9.94  -5.88  -2.81  -0.78   0.47  Talented
STM       148.88   1.00  -1.25   3.13  -3.00  -0.13  Good story
GENZ       46.13  -1.81  -0.25   0.94  -0.31  -1.44  Earnings run?
NXLK       80.44  -3.13  -0.19  -0.81   0.94  -3.19  A must own?
VRTS      136.88  -9.50   1.44   4.94  -3.13  -6.25  Hangs on

Puts

NSOL      217.06 -10.38  -3.63  -9.75  -9.44 -33.19  Excellent
SPLN       45.88  -2.69  -3.69  -1.50  -4.25 -12.13  New
PHCM      111.50  -6.25 -12.19  18.19  -6.50  -6.75  Entry points
CIEN       56.50  -3.06   0.31   3.75  -2.50  -1.50  Rolling over
LTR        61.13  -0.94  -0.63  -0.09   1.44  -0.31  Dropped
WB         67.81   0.13  -1.06   1.00  -0.13  -0.06  Dropped
GT         27.44  -0.69  -0.44   1.94  -0.56   0.31  Dropped
PUMA      115.00  -3.75  -7.75  15.25  28.00  31.75  Dropped



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

Calls

MWD  - Morgan Stanley Dean Witter
ADI  - Analog Devices
EMC  - EMC Corporation 
VIGN - Vignette Corporation
AFFX - Affymetrix Inc.  

Puts

SPLN - Sportsline.com


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

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


CALLS

No dropped calls today.


PUTS

PUMA $115.00 (+31.75) Honestly, it is never a good sign when 
you have to start a put play write up with "PUMA traded up 
to a new 52-week high of $115 today" but here I am doing just 
that.  Thanks a lot QCOM.  If you take a look at the news for 
PUMA in the last two days, you will see repeated reference to 
the out-of-the-ballpark, 30 billion dollar Wednesday, Qualcomm.  
PUMA found a way to hitch onto the QCOM wagon and has managed 
a gain of $43.25 since we initially began coverage on Tuesday. 
Thankfully, PUMA never gave us much of a chance to hop on board 
before it took off.  Needless to say, we are bidding farewell 
to PUMA as a put play and moving on to plays heading in the 
right direction. 

GT $27.44 (+0.31) As we mentioned on Tuesday, it is time at 
long last to bid GT a very fond farewell.  GT made a good 
bounce off of $26 on Wednesday, gaining $2 for the session.  
Being that GT has continually found support at $26 and the end 
of the year is upon us, meaning that we will see the end of 
tax loss selling, we are pretty much convinced that we are at 
the bottom of this put play.  Perhaps the New Year will give
Goodyear a little drive.

WB $67.81 (-0.06) Down $0.06 for the week so far pretty much 
sums it up.  This put play has flattened out.  WB gave us 
a nice opportunity for entry on Monday, trading as high as 
$68 and followed up with a decent move down, trading as low 
as $66.19.  WB has regained the support of its 5 and 10-dma's 
and at this point looks to have lost the negative momentum 
necessary to make continuing this play worthwhile. 

LTR $61.13 (-0.31) Loews is looking like this is as low as it 
will go.  Over the past two weeks the price has bounced a point 
north and south of the 10-dma (currently just over $60).  When 
we began coverage of LTR, the 10-dma was providing resistance, 
but now looks to be changing to support.  Volume has been light 
along with the rest of the market, but this smells like bottom 
fishing.  Note the unwillingness of LTR investors to participate 
in the sell-off towards the end of trading today.  The news 
continues to be negative, but is no longer moving the share 
price.  We are dropping this one until it decides which way it 
wants to go.




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

Current Split Candidates
 
NOK  - Nokia
STM  - STMicroElectronics
BVSN - BroadVision
YHOO - Yahoo!
VRTS - Veritas Software
HGSI - Human Genome Sciences
IMNX - Immunex
 
Split candidates that are not current plays
 
CHKP - CheckPoint
BRCM - Broadcom
NT   - Nortel Networks
TMPW - TMP Worldwide
 
Recent announcements we predicted
 
SNE - Sony Corp. (most recent pick)  


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

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

Symbol - Stock          Splits/Date  
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
page.



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

GSTRF - Globalstar Telecommunications $35.78 (+7.59)(+4.19)

See details in sector list

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



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

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

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

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

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

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

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

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



***********
CALLS PLAYS
*************
SEMICONDUCTOR
*************

AFFX - Affymetrix Inc. $184.75 (+40.16)

Affymetrix, Inc. is recognized as a worldwide leader in the 
field of DNA chip technology.  The Company has developed and 
intends to establish its GeneChip system as the platform of 
choice for acquiring, analyzing and managing complex genetic 
information in order to improve the diagnosis, monitoring and 
treatment of disease.  The Company's GeneChip system consists 
of disposable DNA probe arrays containing gene sequences on a 
chip, certain reagents for use with probe arrays, a scanner 
and other instruments to process the probe arrays, and software 
to analyze and manage genetic information from the probe 
arrays.  The company sells its products to Drug and Biotech 
companies involved in gene research.

AFFX is a perfect example of a pure momentum play driven 
skyward by too much money chasing too few shares.  Gene 
research stocks have been the darlings of the momentum world 
for two weeks now.  What makes AFFX an interesting play here 
is that it is the company that supplies the tools that make 
the industry happen.  This is like the relationship of 
photomask makers like KLA-Tencor have with Intel.  The point 
is that if gene research is going to be the big growth 
industry of the next century somebody has to supply all of 
those researchers with the tools they need.  Investors seem to 
have honed in to this fact and they have driven AFFX into new 
high ground for eight staight trading days.  This current 
uptrend all started two months ago when Wall Street analysts 
started a string of new coverages and upgrades.  CSFB, Dain 
Rauscher and Robertson Stevens to name a few of the biggies.  
Technically the stock is very strong.  You might expect a 
pullback, but support at $180 has been very strong.  This is 
a very aggressive play, so be careful with your stops.  Any 
correction could be severe.  You do not want to get buried 
when you can get out and utilize any big drop as a buying 
opportunity.  

The only real news comes from the rumour mill that AFFX may 
merge with Gene Research.  The real news is still the 
investing public's love affair with gene based Biotechs.

BUY CALL JAN-180*FUE-AF OI= 11 at $23.13 SL=18.00
BUY CALL JAN-185 FUE-AQ OI=N/A at $17.63 SL=13.75
BUY CALL JAN-190 FUE-AR OI=N/A at $15.38 SL=11.75
BUY CALL JAN-195 FUE-AS OI=N/A at $13.50 SL=10.50 

Picked on Jan 2nd at   $184.75    P/E = N/A
Change since picked      +0.00    52-week high=$195.13
Analysts Ratings     3-5-2-0-0    52-week low =$ 22.88
Last earnings 10/99 est= -0.28    actual= -0.21
Next earnings 02-02 est= -0.20    versus= -0.31
Average daily volume =   389 K
Chart = http://quote.yahoo.com/q?s=AFFX&d=3m

****

ADI - Analog Devices $90.44 (+9.06)

ADI is a semiconductor company.  They design, manufacture, and 
market analog and digital integrated circuits (ICs) including 
digital signal processors.  Most of the company's components are 
used by original equipment manufacturers (OEMs) and include such 
clients as 3Com, Hewlett-Packard, and Electrolux.  Analog Devices 
have operations in the US, the Philippines, Taiwan, and Ireland.

ADI has been trending up this week and we do not want to miss 
out on the momentum.  Not too long ago bottom support was 
rock solid at $75 with $80 to $81 rendering a strong channel of 
opposition.  But on Tuesday the tightening coil was sprung and 
ADI clearly moved north and separated itself from the 10-dma 
(now at $81.77).  The next two days have followed with newer 
highs and strong closes.  If momentum does let up a bit after 
these recent gains, look for bounces off the 5-dma (now at 
$84.88) for confirmation that the uptrend is indeed intact 
before jumping in headfirst.

On Wednesday, ADI received a big boost from Rick Whittington, 
analyst at Banc of America.  He reiterated his Strong Buy 
rating and lifted fiscal estimates citing "improved fundamental 
visibility" and that annual revenue growth "should be at least 
30-40% each of next five years".  He topped it all off by 
raising the target price for ADI to $150 from $100.  

BUY CALL JAN-85*ADI-AQ OI=251 at $9.50 SL=7.25
BUY CALL JAN-90 ADI-AR OI=289 at $6.50 SL=4.75
BUY CALL JAN-95 ADI-AS OI= 65 at $4.50 SL=2.75
BUY CALL FEB-90 ADI-BR OI=  0 at $9.88 SL=7.50 New Strike
BUY CALL FEB-95 ADI-BS OI=  0 at $7.63 SL=6.00 New Strike

Picked on Dec 30th at    $90.44    P/E = 106
Change since picked       +0.00    52-week high=$92.25
Analysts Ratings     10-5-1-0-0    52-week low =$24.38
Last earnings 12/99   est= 0.35    actual= 0.40
Next earnings 02-17   est= 0.44    versus= 0.18
Average Daily Volume = 1.70 mln
Chart = http://quote.yahoo.com/q?s=ADI&d=3m

****

PMCS - PMC Sierra $150.88 (+5.63)(+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 
support.  
  
The Semiconductor industry seems to have stalled a bit.
PMCS struggled early in the week but today received new life 
as the traders that wanted to do business today zeroed in on
shares of PMCS.  PMCS gained $1.94 for the session, but made 
a new high at $154.25 on just under 678K.  That is still 
considered light volume but it did pick up over what we saw 
the previous two sessions.  With traders returning to work
next week we believe the some of the sectors that have been
in a consolidation mode for the past week will probably re-gain 
their momentum.  The current momentum behind PMCS should 
continue to pick up as well.  PMCS will report earnings in 
about three weeks.  At this point there is no indication that
there will be a split announcement, however with the recent
moves we wouldn't be surprised to see an announcement with
earnings.  PMCS split 2-for-1 back in the middle of May.
Analysts are projecting earnings to come just short of the 
previous year, but PMCS seems to have carved its own little 
niche in the Semiconductor industry.  If you haven't entered 
this play yet, PMCS has support at $150 and $145.  A retracement
to support followed by a bounce would provide and ideal entry 
point for this play.  Continued strength accompanied by strong
volume would also be viewed as a buying opportunity.

Yesterday PMCS was named to CNBC.com's top stock of 1999.
CNBC looked at stock-price gains, sales performance and the
company's gross-profit margin in consider company's to be 
added to their list.  PMCS was clearly ahead of the industry 
average in most category's. 

BUY CALL JAN-145*SQL-AI OI=143 at $16.63 SL=13.00
BUY CALL JAN-150 SQL-AJ OI= 20 at $13.88 SL=11.00 low OI
BUY CALL JAN-155 SQL-AK OI= 64 at $11.63 SL= 9.25 

Picked on Dec 23rd at   $145.25     P/E = 150
Change since picked       +5.63     52-week high=$154.25
Analysts Ratings     15-6-2-0-0     52-week low =$ 11.44
Last earnings 10/99   est= 0.24     actual= 0.25 surprise=+4.2%
Next earnings 01-20   est= 0.27     versus= 0.30
Average Daily Volume = 1.71 mln
Chart = http://quote.yahoo.com/q?s=PMCS&d=3m

****

STM - STMicroelectronics $148.88 (-0.13)(+10.00)(P3W +18.94) 

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 gap open story remains the same for STM.  This is a very
interesting story and strategy.  The last two trading sessions 
provided traders who have followed our updates good entry and 
exit points.  If the stock was purchased near the close of 
trading, and then sold at the open of trading the next morning, 
you would have been profitable.  Let's review: STM closed 
Tuesday's session at $148.75, Wednesday morning gapped at the 
open of the trading session at $152.50.  Closed Wednesday's 
session at $151.88, Thursday morning gapped at the open of 
the trading session at $154.00.  In two days, applying the 
fore-mentioned strategy, traders could have taken advantage of 
nice profits.  A combined total of almost 6 points.  We still
remain bullish on STM, hitting the 52-week high price of $154
again today before bouncing back to close at $148.88.  The 
uptrend is still firmly in place, but the volume remains low.
This low volume keeps our stance cautious.  We remain positive
going forward because support levels continue to hold near 
$149, $147.  Taking a position in STM late in the day continues 
to look attractive for a quick in and out trade the next 
morning, but past performance is no guarantee of future results.  
A break above $154.25 would be record territory.

In the past STM and the Semiconductor Index $SOX have mirrored
each other and this past trading week has not been any different.
The $SOX has been flat, with a bias to the upside, and so has 
STM.  The tug of war between profit-takers and traders buying 
the dips has kept both STM, and the $SOX in a trading range.  
Keep an eye on the $SOX, it should assist in recognizing the 
daily trading direction for STM. 

BUY CALL JAN-140 STM-AH OI= 96 at $14.38 SL=11.38 
BUY CALL JAN-145*STM-AI OI= 56 at $11.50 SL= 9.25 
BUY CALL JAN-150 STM-AK OI= 28 at $ 8.75 SL= 6.63 
BUY CALL JAN-155 STM-AK OI= 36 at $ 6.63 SL= 4.69

Picked on Nov 30th     $125.06    P/E = 91
Change since picked     +23.81    52-week high=$154.00
Analyst Ratings     12-2-2-0-0    52-week low =$ 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

****

CREE - Cree Research $84.88 (+9.13)

Cree Research develops, manufactures, and markets silicon 
carbide (SiC) diodes and wafers.  The blue light-emitting 
devices (LEDs) are used for various lighting applications 
such as displays or video screens and the SiC wafers are 
used primarily by research labs.  Almost 75% of all sales 
come from outside the US.

Our earnings' run play was in top form the past two days.  Both 
days it powered upward setting new highs along the way.  During 
Thursday morning's opening spike it peaked at $89.25 to set the 
latest 52-week record.  Honestly though, volume has been weak to 
moderate during its recent run up.  If we look at old resistance 
becoming new support then the $80 mark fits the bill.  Below at 
$75 is more solid, but the 10-dma ($76.40) now sits above this 
level.  A dip below this point should now be used as a warning 
sign while the 5-dma ($80.70) can be considered a good gauge 
for an entry.  Again we want to capitalize on this uptrend by 
getting in at good entry points and riding the wave up to the 
earnings date confirmed for January 13th, after the bell.

On Thursday, Cree Research announced it received additional 
orders from several Asian countries totaling $14 mln for its 
light emitting diode (LED) devices.  And last week Cree Research 
announced it began construction to expand its manufacturing 
facility for its high brightness light emitting diode (LED) 
product.  This endeavor is part of the company's multi-year 
factory expansion plan.

BUY CALL JAN-80*CQR-AP OI=518 at $ 9.00 SL=6.75
BUY CALL JAN-85 CQR-AQ OI=  0 at $ 6.25 SL=4.50 New Strike
BUY CALL JAN-90 CQR-AR OI=  0 at $ 4.00 SL=2.50 New Strike
BUY CALL FEB-85 CQR-BQ OI=  0 at $ 9.25 SL=7.00 New Strike
BUY CALL FEB-90 CQR-BR OI=  0 at $ 7.25 SL=5.50 New Strike

Picked on Dec 28th at  $79.13    P/E = 169
Change since picked     +5.75    52-week high=$89.25
Analysts Ratings    4-4-0-0-0    52-week low =$15.13
Last earnings 10/99 est= 0.13    actual= 0.15
Next earnings 01-13 est= 0.16    versus= 0.11
Average Daily Volume =  682 K
Chart = http://quote.yahoo.com/q?s=CREE&d=3m


********************************
CALLS CONTINUED IN SECTION THREE
********************************




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



The Option Investor Newsletter          1-2-2000  
Sunday                        3 of 5


***************
CALLS CONTINUED
*************** 
Internet
********

NSOL - Network Solutions $250.25 (-33.19)(+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.     

Sometimes the lack of liquidity can be a wonderful thing,
especially if you are on the right side of a trade.  NSOL had
a $28 trading range today.  NSOL took off right from the
opening bell today making a high of $243 in the first thirty 
minutes of trading.  The bearish day-traders stepped in and 
began to have their way with NSOL.  By the end of the session 
NSOL had made a low of $215.  All that movement with just 450K 
shares exchanging hands.  NSOL finished the session down -9.44.  
For the week NSOL gave back over $33 of its recent gains.  
Actually since its high last Wednesday, NSOL has retraced $70.69.  
NSOL broke the support area we mentioned Tuesday.  Given the
momentum behind the decline the next stopping point could be
near $204.  Much will depend on the mood of the traders next
week, when we get everyone back to work.  NSOL did announce
a 2-for-1 split and NSOL could become a Nasdaq favorite again
over night.  Remember it did jump up over $16 in the first 
thirty minutes this morning.  We would only enter this play
on further weakness accompanied by solid volume, or a bounce 
to resistance, which now sits at $232 and $245 followed by a 
decline.  As always assess your risk profile prior to entering 
a new play or adding to existing positions.

BUY PUT JAN-220 JNU-MD OI=457 at $24.88 SL=19.50
BUY PUT JAN-210*JNU-MB OI=357 at $18.63 SL=14.75

Average daily volume = 1.01 mln
Chart = http://quote.yahoo.com/q?s=NSOL&d=3m

****

INSP - InfoSpace.com $213.75 (+27.63)(+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.

Can you think of a better way for an Internet company to 
celebrate the New Year than by splitting their stock?  On 
January 4th INSP will split 2-for-1.  Last week we noted that 
INSP was poised to tackle the psychological barrier of $200. 
Well its there, so now what?  Time is ticking on this play 
because we usually do not like holding on to split plays 
through the split.  Look to take profits on strength on 
Monday, a nice run out into the close might be a good 
opportunity to exit this very profitable position.  The longer 
term story for INSP is still valid and bullish.  We may take 
a look at it after the split.  INSP has developed a strategic 
partnership with Microsoft that should yield dividends for 
many quarters to come.  It is the intention of the two 
companies to fully integrate their Instant Messaging 
capabilities enabling users to "I.M." anywhere, anyplace and 
from any device.  Those high option premiums were certainly 
justified this week as 15 point swings were very common.  
Hopefully, you were able to pick some calls up on the dips and 
take some nice profits.  Thursday's close was very powerful 
for the shares of INSP.  The stock rallied 13 points in the 
final half hour of 1999 trading, even though the market sold 
off.  With that kind of strength the opportunity for a big gap 
up on Monday exists, if there are no Y2K problems.  Either 
take your profits on a gap up or wait for an end of day rally. 
Anyone who wants to put a new position on Monday should wait 
for a pullback.  Any new positions should only be placed by 
very aggressive day traders.  

Last week InfoSpace.com 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.  This event could prove to be another good 
reason why INSP might do well after the split.

BUY CALL JAN-195 OHY-AR OI= 22 at $48.50 SL=37.75 low OI
BUY CALL JAN-200*OHY-AT OI=217 at $43.00 SL=33.50
BUY CALL JAN-210 OHY-AB OI= 40 at $40.00 SL=31.20

Picked on Dec 19th at   $166.69    P/E = N/A
Change since picked      +47.06    52-week high=$214.00
Analysts Ratings      6-4-0-0-0    52-week low =$  9.75 
Last earnings 10/99   est=-0.03    actual= 0.06 
Next earnings 02-04   est=  N/A    versus=-0.04
Average Daily Volume = 1.09 mln 
Chart = http://quote.yahoo.com/q?s=INSP&d=3m

****

DCLK - DoubleClick $246.88 (+35.25)(+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, DoubleClick centralizes
planning, execution, control, tracking and reporting for online
media campaigns.  The online advertising firm offers a targeted
delivery of ads using its patented DART technology.  DART 
measures Ad effectiveness and Web traffic.  DoubleClick has
Global headquarters in New York City and maintains offices 
in 32 other major cities around the world.

Trading remained light, but the party continues in DCLK, tacking
on over 35 points for the week and another 52-week high of 
$254.50, before settling in to close at $246.88.  This latest
upward move in DCLK was sparked when a Donaldson Lufkin & 
Jenrette analyst raised the 6-12 month price target from $190 
to $300.  As today's trading day progressed, momentum simply 
shifted into neutral as we approach the New year.  DCLK gave 
back a few points today, but nothing major.  Traders seem to be 
riding the wave towards the upcoming stock split on Jan 11th.  
Now only seven trading days away.  The wide daily trading ranges
have only been enhanced due to light volume in the overall 
market.  Take a look at today's chart, it looks like a roller 
coaster.  Take profits according to risk tolerance, firm up 
your trailing stops.  There is some support at $240 and then 
again down near $220.  Above $249.25 could provide a day-trading 
opportunity.  A major breakout would be above $254.75.

In the news, DCLK recently closed its purchase of NetGravity 
and Abacus Direct.  This will help to raise the margins of DCLK.
Also Donaldson, Lufkin & Jenrette has raised their 2000 revenue 
estimates by 42 percent and the 2001 revenue projections by
46 percent.  

BUY CALL JAN-260*QTD-AL OI=2282 at $20.13 SL=16.88
BUY CALL JAN-270 QTD-AN OI= 530 at $17.00 SL=13.75
BUY CALL JAN-280 QTD-AP OI= 226 at $13.75 SL=11.38

SELL PUT JAN-220 QTD-MD OI= 137 at $11.38 SL=14.00
(See risks of selling puts in play legend)

Picked on Dec 9th at    $197.00    P/E = N/A
Change since picked      +49.88    52-week high=$254.50
Analyst Ratings      11-7-1-0-0    52-week low =$ 21.81
Last earnings 10/99  est= -0.14    actual= -0.13
Next earnings 01-19  est= -0.10    versus= -0.13
Average daily volume = 2.24 mln 
Chart = http://quote.yahoo.com/q?s=DCLK&d=3m

****

YHOO - Yahoo! Inc. $416.06 (+13.44)(+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.

After watching Qualcomm all week, a $12 gain seems hardly worthy 
of mention.  Heck, even today's $41 point trading range seems 
paltry, but it isn't.  The point we are trying to make here is 
that we may have all become a bit spoiled into thinking that an 
issue is garbage if it isn't delivering daily double-digit gains.  
It is a rare moment in history to have so many issues trading 
over $300 per share.  We should be thinking of protecting this 
spectacular profit and working on controlling our greed.  That 
said, we can't help our eagerness to see how YHOO performs in the 
New Year.  After all, they have earnings coming up on Jan 11th 
after the bell.  If history is any indication, they should blow 
away the consensus number, and the whisper number too, by a 
significant margin.  It is also a split candidate, so look for 
that announcement at the same time.  In addition, money managers 
will want to own the top tier Internets (especially ones actually 
earning money) after the first of the year.  Market willing, next 
week will be a good one for YHOO.  Technically speaking, though 
reaching as high as $448, which will serve as some upside 
resistance, YHOO has historical support at $380, $390, $400, and 
$410-$413.  The 10-dma is $391, which should temporarily serve 
as a dip to rock bottom.  If it falls under that mark, we'd 
suggest standing aside.  Frankly, we think anything under $400 
is unlikely unless the whole market moves south.  Target shoot 
to your comfort level and get ready for January.

Blessed be the friendly analyst.  Right or wrong, Argus Research 
upped its 12-month price target on YHOO from $385 (not a tough 
call) to $550, which is partially responsible for Thursday's 
$12.38 gain, but more importantly, puts a solid underpinning at 
$385 - target reached.  Psychologically, it's time to move 
higher.

BUY CALL JAN-410*YHX-AB OI= 840 at $46.88 SL=35.50
BUY CALL JAN-420 YHX-AD OI=1132 at $42.25 SL=33.00
BUY CALL JAN-430 YHX-AF OI= 956 at $38.50 SL=30.00
BUY CALL FEB-420 YHX-BD OI= 211 at $56.50 SL=44.00
BUY CALL FEB-430 YHX-BF OI= 256 at $52.25 SL=41.00

Picked on Dec 12th at   $350.00    P/E =1614
Change since picked      +66.06    52-week high=$448.00
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 = 8.60 mln
Chart = http://quote.yahoo.com/q?s=YHOO&d=3m

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

EMC - EMC Corporation $110.31 (+9.19)

EMC wants to be your storage solution.  The company designs,
manufactures and markets a wide range of enterprise storage
systems, software, networks, and services.  The company's
products store, retrieve, manage, protect and share information
from all major computing environments including mainframe, 
UNIX, and Windows NT.  With offices around the world and a 
35% growth rate for the first 9 months of the year, EMC is 
effectively filling its role as the worldwide storage leader.

While volume may have been weak, this didn't bother the EMC
investors.  The strong move this week was just a continuation
of the trend that began in late October.  Since then, shares
have moved steadily upwards with the latest correction and
consolidation ending on December 15.  Since then prices have
stayed above and increased their distance from the 10-dma.  
In fact, since this latest move began, the 5-dma has been
the primary level of support.  Volume has been average to low
this week due to the paucity of traders, but the move has been
strong.  EMC likes to run strongly into earnings (still 3 weeks
away) and this is the time to start looking for an entry.  Keep 
in mind that nothing moves in a straight line, so we would like
to see prices come down a little to provide a good entry point.
Look for a pullback to 5-dma ($105.50) or if you're really lucky
the 10-dma ($101.81) for an entry point.  Strong support exists
at $98, the level EMC broke through as it began the latest leg 
of its move upwards.  If the strength continues next week, 
entries at current levels can be considered.  Just remember to 
play with stops as EMC could be susceptible to a correction 
before powering forward into earnings.

In the news today, EMC has qualified the Emulex LP850 Fibre
Channel host bus adapter for its Windows NT solutions.  This
will provide EMC customers with entry-level server connectivity
that delivers high-performance, scalability and flexibility in
Windows NT environments.  In its race to catch market-leader EMC,
IBM announced today that it sold more than 1000 large corporate
computer storage systems since late September.  EMC currently
has about 35 percent market share to IBMs 24 percent.  Finally, 
on CNBC today, EMC's CEO was upbeat about the future of the 
company; a good sign as we are deep into the earnings-warnings 
period.  This is what caused the afternoon rally in the shares.  

BUY CALL JAN-105*EMB-AA OI=3021 at $7.88 SL=6.25
BUY CALL JAN-110 EMB-AB OI=1292 at $5.00 SL=3.25
BUY CALL JAN-115 EMB-AC OI=1881 at $3.13 SL=1.50
BUY CALL FEB-110 EMB-BB OI= 544 at $8.25 SL=6.25
BUY CALL FEB-115 EMB-BC OI= 536 at $6.25 SL=4.50

Picked on Dec 30th at   $110.31     P/E = 100
Change since picked       +0.00     52-week high=$110.31
Analysts Ratings     14-7-3-0-0     52-week low =$ 40.81
Last earnings 10/99   est= 0.24     actual= 0.27
Next earnings 01-19   est= 0.31     versus= 0.24
Average Daily Volume = 4.36 mln
Chart = http://quote.yahoo.com/q?s=EMC&d=3m

****

VIGN - Vignette Corporation $163.75 (+13.25)

VIGN provides Internet Relationship Management (IRM) software
products and services, a category of enterprise solutions
designed to enable businesses to build sustainable online
customer relationships, increase returns on internet-related
investments and capitalize on internet business opportunities.
VIGN's clients come from diverse sectors and include financial
services, health, education and government, media, retail,
technology and telecommunications.

It seems you just can't lose with B2B e-commerce.  This is 
emerging as the new hot area of internet investing.  Even
splitting 2-for-1 in early December barely slowed VIGN down.
In the midst of a strong breakout, VIGN is dancing with its
10-dma, and very effectively leading it.  Currently at $152, 
the 10-dma has been excellent support since this move began in 
late November.  VIGN is showing a nice pattern of moving up 
strongly, consolidating, and then dropping back to kiss the 
10-dma and then repeating the process.  The latest breakout 
cycle began on Tuesday and should continue for a couple more 
days (market permitting), before consolidating to provide us 
with an attractive entry.  Needless to say, volume was fairly 
light this week and we would like to see a return to more 
normal levels before pulling the trigger.  Today was yet another 
52-week high, so we have no historical resistance levels to 
watch.  Round numbers, 170, 180, 190 are the best we can do 
at this point, but if sentiment is high and money continues to 
flow next week, VIGN may not even stop to smell the flowers until
hitting a nice round number like $200.  VIGN tends to have fairly
large intraday moves, so entry points should be abundant.  Just
confirm positive direction with volume and execute your plan.
As with anything in the volatile internet sector, evaluate your
risk tolerance and set your stops accordingly.  A quick look at
Commerce One (CMRC) is all you need to remind you of how quickly
stocks in this area can go up and down.   Support is also at 
$159, the old high which was strong resistance on Thursday.

There was very little in the way of specific news this week, 
but analysts continue to speak positively of both VIGN and the 
other players in the Internet software arena (just look at the 
analyst ratings below).  VIGN is seen as being a winner in 
this space long-term.

BUY CALL JAN-160*UOJ-AL OI=132 at $19.13 SL=14.88
BUY CALL JAN-165 UOJ-AM OI=93  at $16.75 SL=13.00
BUY CALL JAN-170 UOJ-AN OI=318 at $14.38 SL=11.50

Picked on Dec 30th at   $163.75     P/E = N/A
Change since picked       +0.00     52-week high=$163.75
Analysts Ratings      9-4-0-0-0     52-week low =$ 19.91
Last earnings 10/99   est=-0.20     actual=-0.19
Next earnings 01-19   est=-0.08     versus= N/A
Average Daily Volume = 1.36 mln
Chart = http://quote.yahoo.com/q?s=VIGN&d=3m

****

VRTS - VERITAS Software $136.88 (-6.25)(+25.72)(+8.41)(+2.94)

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

Shares of VRTS made it through the week without too much damage.
In a holiday week with the volume drying up to approximately
half the ADV, VRTS lost $6.25.  If you were so inclined, VRTS
did offer a few opportunities to pick up a small profit this 
week.  The trick to trading stocks with the liquidity as thin 
as it has been is being prepared to take a small profit when
you get one.  The day traders and hedge fund managers can turn
these markets on a moments notice.  VRTS has spent most of the 
week consolidating.  A look at the software index would indicate
it may be preparing for a pullback.  VRTS could be preparing to 
rollover, however we really believe when all the players return 
to work next week, VRTS will resume its upward trend.  If we 
see some profit-taking set in, VRTS will find intraday support 
at $129.  A bounce off that level would provide a good entry 
point to add to existing positions or enter a new play.  Before 
entering a new play, wait for a clear signal, like a move 
supported by strong volume.  A move back through $141 supported 
by strong volume would also provide a good entry point.  As 
always, assess your risk profile prior to entering a new play.
 
Veritas was mentioned today in an article outlining Scudder's 
Technology fund.  They talked about the fund manager's favorite 
picks and sure enough VRTS was included.  It is nice to see 
the big institutions still bullish on our play.

BUY CALL JAN-130 VUQ-AF OI=231 at $16.38 SL=12.75
BUY CALL JAN-135*VUQ-AG OI=539 at $13.88 SL=11.00 
BUY CALL JAN-140 VUQ-AH OI=174 at $11.38 SL= 9.00
BUY CALL JAN-145 VUQ-AI OI=423 at $ 9.13 SL= 6.75

Picked on Dec 12th at   $109.06    P/E = N/A
Change since picked      +27.82    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 = 3.08 mln
Chart = http://quote.yahoo.com/q?s=VRTS&d=3m

****

BVSN - Broadvision $175.94 (+22.88)(+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.

Another new 52-week high!  BVSN gapped up at the open today and 
traded as high as $177.81.  BVSN then made a move down backed 
by a nice bounce right around $170 and continued on with its 
move up.  It appears as though the $170 level that BVSN spent 
some time flirting around is now serving as support, being that 
it did a nice job of holding BVSN up throughout today's session.  
BVSN has some additional support right around $165, $160 and 
$150, which could hold should the Y2K bears emerge.  Resistance?  
BVSN doesn't seem to know the meaning of the word, although we 
are approaching another psychological level ($180).  As far as 
new entries go, your best bet is to make your move in near the 
open.  Be prepared, as we may be due for a bit of profit-taking 
since BVSN has gained $22.88 in less than a week and over $65 
in the last three weeks.  BVSN has a strong trend and enough 
positive news for the future to keep it moving, so take advantage 
of any pullbacks backed by support for possible points of new 
entry.

So what does BVSN have planned for the New Year?  According to 
a recent article, BVSN plans to focus on securing integration 
between third-party software and its Broadvision One-to One Web 
personalization system.  BVSN also has plans to release its 5.0 
version of its One-to-One system.  Oh, and did I mention an 
earnings announcement on the 26th?  (This date has been 
confirmed)

BUY CALL JAN-170 BZV-AN OI=523 at $24.13 SL=18.75
BUY CALL JAN-175*BZV-AO OI=286 at $21.50 SL=16.75
BUY CALL JAN-180 BZV-AP OI=104 at $19.63 SL=15.25

SELL PUT JAN-160 BZV-ML OI=241 at $13.00 SL=16.50
(See risks of selling puts in play legend)

Picked on Dec 16th at   $131.69     P/E = 1130
Change since picked      +44.25     52-week high=$176.00             
Analysts Ratings     5-16-2-0-0     52-week low =$  9.00                 
Last earning 10/99    est= 0.04     actual= 0.05                            
Next earning 01-26    est= 0.06     versus= 0.03                            
Average Daily Volume = 2.07 mln
Chart = http://quote.yahoo.com/q?s=BVSN&d=3m


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

GSTRF - Globalstar Telecommunications $35.78 (+7.59)(+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.

Bank of America Securities - Zero; George Gilder - One.  Not even 
the B of A analyst's "short" call (twice picked up by CNBC over 
two days) could keep GSTRF grounded on terra firma (Earth) 
forever.  The CDMA technology wins in the end.  The $0.05 cost 
basis, including operating costs provides an 85% cash flow 
margin, while even $25 mln of wholesale time was pre-sold at 
$0.47 per minute for resale to the consumer (estimated at roughly 
$1.00 per minute initially).  The venture, 6% owned by QCOM and 
41% owned by LOR breaks even at only 400 K users.  Unlike its 
doomed TDMA counterparts, Iridium and Teledisic, GSTRF's CDMA 
technology will likely be able to transmit at high data speeds 
too within 24 months.  The superb economics and CDMA technology 
have yet to be fully grasped by analysts whom we think will soon 
award GSTRF higher multiples.  While we're not saying you'll 
get an 1800% return in one year if you get in now, GSTRF still 
represents a significant opportunity for those who missed out 
on QCOM twelve months ago.  This could be your next chance.  
Technically speaking, $30 is solid support; $32 is pretty good 
too; and $34 provided strong support on Thursday.  For you moving 
average watchers, keep an eye on the 10-dma of $28.25 even though 
we don't think it will see that level any time soon, given the 
strong volume of this issue.  Even Thursday, the last full 
trading day of the year (and historically low on volume), GSTRF 
traded just under three times its ADV.  Nonetheless, if it trades 
under $30, stand aside until the smoke clears.  Otherwise, pick 
a comfortable entry for what we think will be a strong January 
(At least the first week).

GSTRF has yet another great link to a terrific company.  Yes, 
Vodafone-Airtouch (VOD) has the exclusive rights to sell the 
Globalstar services in the United States.  Beta users are already 
testing the system, which will be available on a limited retail 
basis in January.  Thursday, the FCC granted a license to GSTRF 
to officially sell the service in the U.S.  For us closet 
propeller-heads, this is going to be a cool toy.  But more 
importantly and contrary to the popular belief that the 
international businessperson is the target customer, GSTRF is 
actually the wireless solution for those who need coverage in 
the 90% of the land mass of the country where PCS and cellular 
don't reach.  We bet there are far more than 400K of them right 
here in the U.S., let alone internationally.

BUY CALL JAN-30 YVQ-AF OI=2325 at $7.13 SL=5.25
BUY CALL JAN-35*YVQ-AG OI=2459 at $4.00 SL=2.50
BUY CALL JAN-40 YVQ-AH OI=1382 at $2.19 SL=1.00
BUY CALL FEB-35 YVQ-BG OI= 925 at $5.63 SL=3.75
BUY CALL FEB-40 YVQ-BH OI= 267 at $3.25 SL=1.50

Picked on Dec 23rd at   $28.19    P/E = N/A
Change since picked      +7.59    52-week high=$38.88
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 = 2.3 mln
Chart = http://quote.yahoo.com/q?s=GSTRF&d=3m

****

BCE - BCE Inc. $89.94 (+1.19)(+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.

We have a multi-faceted interest in this stock.  It may sound 
strange considering that this stock is trading near its highs 
just under $100, but BCE is a value play and a growth play.  
BCE owns 39.6% of Great White North neighbor Nortel Networks.
Shareholders and management are a little miffed that their 
company is the Rodney Dangerfield of Canada.  Almost all of 
the market capitalization of BCE is tied to their NT holdings.  
The best way to unleash the value of the rest of their 
substantial businesses seems to be to spinoff NT.  The problem 
is that they need governmental assurance that they can 
proceed with a spinoff that would be tax free.  Otherwise the 
capital gains would be enormous.  We don't know when that 
might happen but when it does, BCE is going to take off.  In 
the meantime we will play BCE for the merits of its NT 
holdings.  For more details please look at NT in the calls 
section.  Trading in BCE has been very volatile this week.  A 
new high was established on big volume on Monday.  Since then 
the shares of BCE have drifted lower and are looking to 
establish support just under $90.  The stock has bounced there 
on each of the past two days.  If support holds there on 
Monday look to go long.  If support at $89-$90 does not hold 
then look to enter a position at the $85-$86 level.  Since we 
have no idea when the news of the spinoff will hit, a longer 
term investor might want to buy some time with the June 
options.

Last week 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.  There was no significant news 
announced this week.

BUY CALL JAN-80*BCE-AP OI=885 at $11.63 SL= 8.75
BUY CALL JAN-85 BCE-AQ OI= 26 at $ 7.63 SL= 5.75 low OI
BUY CALL JAN-90 BCE-AR OI=259 at $ 5.00 SL= 3.25
BUY CALL JUN-85 BCE-FQ OI= 11 at $14.75 SL=11.50 low OI
BUY CALL JUN-90 BCE-FR OI= 46 at $12.25 SL= 9.50

Picked on Dec 16th at  $88.75    P/E = 17
Change since picked     +1.19    52-week high=$98.31
Analysts Ratings    4-5-0-1-0    52-week low =$34.88 
Last earnings 10/99 est= 0.47    actual= 0.47
Next earnings 01-27 est= 0.64    versus= 0.52
Average daily volume =  403 K
Chart = http://quote.yahoo.com/q?s=BCE&d=3m

****

NOK - Nokia $180.00 (+6.00)(+5.50)(+0.50)(P4W +52.13)

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?

Just when we wrote that NOK might have fallen asleep at the 
switch as it seemingly encountered resistance at $175, investors 
gave NOK a wake-up call, and pushed it through to $183.38 on 
strong closing volume Wednesday afternoon (though daily volume 
remained low).  Thursday, NOK remained resilient.  Even though it 
dipped to $179 on 3 occasions, it held strong on continuing low 
volume, which tells us nobody is in line to sell.  Again, text 
book consolidation.  Based on that action, short-term support 
is at $179, with the next level at $175, then $172.  Volatility 
reigns, so pick your entry according your own tolerance for risk.  
Given that NOK expects to achieve their 3-year revenue goal in 
two years, look for money managers and investors to take 
positions (read that, increase buying volume) following the New 
Year.  This also portends an earnings surprise when they are 
announced on February 1 (subject to change per NOK investor 
relation) after the bell.  Though it could happen any time, 
February 1 would also be a great day to announce a split since 
it has a history of making announcements in the $150 range.

Remember that minor surprise when QCOM announced Kyocera of Japan 
would purchase QCOM's handset business instead of NOK?  As it 
turns out, NOK is contracting with another company, Interdigital 
Communications (IDC) for high capacity CDMA capabilities (IDC has 
some CDMA patents of its own).  NOK is not completely beholden to 
QCOM in the short run for the production of CDMA handsets.  Could 
QCOM have a competitor?  The answer is sort of.  QCOM actually 
licenses some IDC CDMA patents for re-licensing to others.  
However, before it's all over, IDC and QCOM will likely have 
to grant each other cross-license agreements for each others' 
patented CDMA technology, both of which will likely be adopted as 
the Third Generation (3G) standard.  So don't back up the truck 
on IDC.  We're just trying to explain why NOK might have passed 
up QCOM's handset business.  They are going to make a go of it 
on their own.

BUY CALL JAN-170 NZY-AN OI=3558 at $17.50 SL=13.50
BUY CALL JAN-180*NZY-AP OI=2528 at $12.25 SL= 9.75
BUY CALL JAN-190 NZY-AR OI= 844 at $ 8.00 SL= 6.25
BUY CALL FEB-180 NZY-BP OI= 149 at $17.88 SL=14.00
BUY CALL FEB-190 NZY-BR OI= 629 at $14.00 SL=11.00

Picked on Nov 14th at  $122.25     P/E = 83
Change since picked     +51.75     52-week high=$187.00
Analysts Ratings    13-8-0-0-0     52-week low =$ 52.31
Last earning 10/99   est= 0.52     actual= 0.57 surprise=9.6%
Next earning 02-01   est= 0.66     versus= 0.58
Average Daily Volume = 3.2 mln 
Chart = http://quote.yahoo.com/q?s=NOK&d=3m

****

NT - Nortel Networks $99.16 (+0.47)(+8.25)(+2.19)(P6W +29.31)

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

While bandwidth may increase 80-fold over the next four years, 
the demand for it will increase between 100-260 fold creating a 
capacity crunch.  The is a perfect opportunity for NT to extend 
its lead as the #1 maker of fiber optic networking equipment 
ahead of Lucent, as NT has recently demonstrated their ability to 
carry 80 gigs per second on a single wavelength, or 5.6 petabytes 
on a single 864 strand fiber cable.  (Can't you just taste the 
broadbandy goodness?  Thanks Williams).  This talent isn't wasted 
on fund managers who have taken note of NT's 20%+ growth rate and 
increasing margins to make this a darling of the industry, which 
is still attractively priced compared to LU and CSCO.  Though 
support at $100 gave way in yesterday and today's trading, we are 
willing to accept that given the whipsaw action borne of low 
volume.  It's hard to get concerned about low volume at the end 
of the year.  $98 offers stronger historical support and is also 
the 10-dma.  Look for this level to hold (barring intraday yo-
yoing).  If the volume picks up and the price falls below $98, 
it may be our cue to head for the exit.  Otherwise, to initiate 
a play, wait for a bounce, or be ready to buy the dip in 
anticipation of what we think will be a strong first week of 
the New Year.  Earnings are scheduled January 25, and NT is a 
split candidate above $88.

News is thin.  Cross your fingers for a strong start next week.  
Be sure to check out BCE as a tracking play

BUY CALL JAN- 95*NT- AS OI=2547 at $ 9.63 SL=7.25
BUY CALL JAN-100 NTV-AT OI=1954 at $ 6.88 SL=5.00
BUY CALL JAN-105 NTV-AA OI= 718 at $ 4.88 SL=3.00
BUY CALL FEB-100 NTV-BT OI= 364 at $10.38 SL=8.00
BUY CALL FEB-105 NTV-BA OI= 343 at $ 8.25 SL=6.25

Picked on Nov 7th at    $68.81     P/E = 613
Change since picked     +30.35     52-week high=$110.00
Analysts Ratings   12-12-3-0-0     52-week low =$ 23.63
Last earnings 10/99  est= 0.26     actual= 0.28 surprise=7.7%
Next earnings 01-25  est= 0.44     versus= 0.36
Average Daily Volume = 4.4 mln
Chart = http://quote.yahoo.com/q?s=NT&d=3m

****

NXLK - Nextlink Communications $80.44 (-3.19)(+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 could become one of the must own stocks of the new 
year.  For the past two weeks Nextlink's shareholders have 
experienced a nice run.  NXLK got investor's attention earlier 
in the month when the company was placed on the NASDAQ 100. 
This is a move from relative obscurity to the spotlight.  When 
a company is accepted into the fraternity of the hottest 
technology stocks it receives a thorough analysis from new 
investors.  Seems they liked what they saw and the shares 
starting bidding up.  On top of many small investors getting 
interested in the stock, at least one large investor bought a 
big stake in the company with the belief that NXLK will become 
one of the communications leaders of the next decade.  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.  
The convertible securities are deep in the money and they give 
the investor the right to "convert" the preferred stock into 
the common stock at the conversion price.  Ultimately this 
means that $63.50 should prove to be a very long term support 
level.  Put sellers please take note.  There was another 
recent news item that could provide support for the stock.  In 
the middle of January, Nextlink will complete the acquisition 
of 50 percent of INTERNEXT.  Nextlink will enjoy certain 
advantages if its stock price remains strong.  Technically, 
NXLK's shares have become volatile over the past two weeks.
After breaking out at $75 the stock rallied all the way to 
$91.50.  After a few days of selling, NXLK tested the $75 
level and rallied right back into the middle of its range.  It 
was significant that NXLK  broke its short term downtrend on 
Thursday.  Although the volume was light due to holiday 
trading.  A rally next week above $85 would imply a possible 
run to test the old high.  Look to get long if it trades above 
$85.  The stock has established excellent support at $75.  If 
the market is weak you may be able to establish a bullish 
position in the high 70's.  Put sellers might want to consider 
the $75 strike price which is at the support level.

Last week 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.  What's 
"Next" for this guy?  Actually, it looks like he will stay for 
awhile. There was no other news this week.

BUY CALL JAN-75 QNF-AO OI=310 at $9.75 SL=7.50
BUY CALL JAN-80*QNF-AP OI=706 at $7.13 SL=5.25
BUY CALL JAN-85 QNF-AQ OI=249 at $5.00 SL=3.25

SELL PUT JAN-75 QNF-MO OI=132 at $3.38 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      +13.75    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 = 1.00 mln 
Chart = http://quote.yahoo.com/q?s=NXLK&d=3m


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


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




The Option Investor Newsletter             1-2-2000
Sunday                        4 of 5


*****************
CALLS - CONTINUED
*****************
Miscellaneous
*************

AFFX - Affymetrix Inc. $184.75 (+40.16)

Affymetrix, Inc. is recognized as a worldwide leader in the 
field of DNA chip technology.  The Company has developed and 
intends to establish its GeneChip system as the platform of 
choice for acquiring, analyzing and managing complex genetic 
information in order to improve the diagnosis, monitoring and 
treatment of disease.  The Company's GeneChip system consists 
of disposable DNA probe arrays containing gene sequences on a 
chip, certain reagents for use with probe arrays, a scanner 
and other instruments to process the probe arrays, and software 
to analyze and manage genetic information from the probe 
arrays.  The company sells its products to Drug and Biotech 
companies involved in gene research.

AFFX is a perfect example of a pure momentum play driven 
skyward by too much money chasing too few shares.  Gene 
research stocks have been the darlings of the momentum world 
for two weeks now.  What makes AFFX an interesting play here 
is that it is the company that supplies the tools that make 
the industry happen.  This is like the relationship of 
photomask makers like KLA-Tencor have with Intel.  The point 
is that if gene research is going to be the big growth 
industry of the next century somebody has to supply all of 
those researchers with the tools they need.  Investors seem to 
have honed in to this fact and they have driven AFFX into new 
high ground for eight staight trading days.  This current 
uptrend all started two months ago when Wall Street analysts 
started a string of new coverages and upgrades.  CSFB, Dain 
Rauscher and Robertson Stevens to name a few of the biggies.  
Technically the stock is very strong.  You might expect a 
pullback, but support at $180 has been very strong.  This is 
a very aggressive play, so be careful with your stops.  Any 
correction could be severe.  You do not want to get buried 
when you can get out and utilize any big drop as a buying 
opportunity.  

The only real news comes from the rumour mill that AFFX may 
merge with Gene Research.  The real news is still the 
investing public's love affair with gene based Biotechs.

BUY CALL JAN-180*FUE-AF OI= 11 at $23.13 SL=18.00
BUY CALL JAN-185 FUE-AQ OI=N/A at $17.63 SL=13.75
BUY CALL JAN-190 FUE-AR OI=N/A at $15.38 SL=11.75
BUY CALL JAN-195 FUE-AS OI=N/A at $13.50 SL=10.50 

Picked on Jan 2nd at   $184.75    P/E = N/A
Change since picked      +0.00    52-week high=$195.13
Analysts Ratings     3-5-2-0-0    52-week low =$ 22.88
Last earnings 10/99 est= -0.28    actual= -0.21
Next earnings 02-02 est= -0.20    versus= -0.31
Average daily volume =   389 K
Chart = http://quote.yahoo.com/q?s=AFFX&d=3m

****

GENZ - Genzyme General $46.13 (-1.44)(+9.06)

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

The predicted drop in volume and investor interest that was
predicted for this week, definitely came home to roost with
GENZ.  After the strong move up last week, volume fell off
this week and there just wasn't enough interest to push prices
in either direction.  Hopefully next week we will see a return
of the buyers and a resumption of the uptrend.  Earnings are
just 3 weeks away and the company's history of beating
estimates should provide a nice run as the date approaches.
GENZ is currently sitting just above support (old resistance)
at $45.  Barring a Y2K catastrophe this weekend which spooks
the markets, GENZ should move up from here.  If prices drop
through this level, additional support is at the 10-dma
(currently $42).  We don't expect to see a level much lower 
than that without momentum players dumping the stock.  So your 
best bet is to enter on any pullback and bounce next week that 
is confirmed with strong volume.  More conservative investors 
may want to wait for GENZ to trade through the recent intraday 
high of $48.38 before opening new positions.  Although the 
markets will be open tomorrow, we recommend waiting until next 
week to open new positions as volume will probably be too weak 
to determine the future direction for GENZ.

There has been no news on GENZ since it terminated its merger
with Cell Genesis on December 22.  There has been a marked
improvement in the sentiment towards Biotechs in general and
when investors return in force next week, GENZ should be able
to ride the wave.

BUY CALL JAN-40*GZQ-AH OI=1020 at $7.13 SL=5.25
BUY CALL JAN-45 GZQ-AI OI=1100 at $3.38 SL=1.75
BUY CALL JAN-50 GZQ-AJ OI=1464 at $1.19 SL=0.00
BUY CALL FEB-45 GZQ-BI OI= 114 at $4.88 SL=3.25
BUY CALL FEB-50 GZQ-BJ OI=  38 at $2.50 SL=1.25 low OI

Picked on Dec 23rd at    $46.38     P/E = 27
Change since picked       -0.25     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 = 1.31 mln
Chart = http://quote.yahoo.com/q?s=GENZ&d=3m

****

TTN - Titan Corporation $46.38 (+2.94)(+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 
concern.

Earlier this week Titan looked more like a stumbling giant 
ready to fall back to earth, but look at the rally on 
Thursday.  People really want to own this stock despite Y2K 
fears.  Let's revisit the story.  Titan was the beneficiary 
of its own excellent foresight and a USFDA approval.  Titan 
secured patents for an irradiation technology that uses very 
cheap and safe electricity to kill deadly bacteria on raw 
meat.  In anticipation of an approval for this technology, 
Titan had the good sense to hammer out agreements with most of 
the largest meat producers in this country.  Titan was also 
smart enough to already have a processing plant ready to go 
when the approval came.  The ability to immediately reap the 
benefits of their technology has investors trying to grab a 
piece of Titan not unlike the Lilliputians swarming Gulliver! 
There is more to the Titan story than just meat irradiation. 
Titan is becoming a bigger player in the market leading 
communications sector by adapting its military communications 
technologies for civilian uses.  Titan has also been grabbing 
a piece of the Internet pie.  Titan does seem to be a very 
opportunistic company.  TTN made its all time high of $48.38 
on December 23rd.  Since that time it has been pulling back all 
week until Thursday.  It appears that the stock has found some 
nice support at $41.  With a six point run off of support while 
the rest of the market was selling off, it appears that TTN 
will be a popular holding for 2000.  Trading on Monday above 
$47 should make it only a quick hop to plow into new high 
ground.  If the world comes to an end this weekend, (just 
kidding!) support at $44 looks solid.

There was a huge news item on Thursday that may account for a 
lot of the renewed enthusiasm in the shares of TTN.  The 
company intends to spin off part of its stake in its business 
software subsidiary, Cayenta.com.  The company is attempting 
to unleash some more shareholder value.  By keeping a majority 
stake in the spinoff, the parent company looks to benefit both 
ways through this IPO.  Other news items concerning 
Cayenta.com include an announced acquisition of Internet 
commerce company, Assist Cornerstone Technologies.   Assist's 
technology provides a complete front to back-end solution to 
companies focused on conducting business over the Internet. 
Titan also recently announced the acquisition of Advanced 
Communication Systems, a leading government information 
technology services company.  

BUY CALL JAN-35 TTN-AG OI=2591 at $13.00 SL=10.50
BUY CALL JAN-40*TTN-AH OI=3651 at $ 9.00 SL= 6.75
BUY CALL JAN-45 TTN-AI OI= 284 at $ 6.50 SL= 4.25

Sell PUT JAN-40 TTN-MH OI=5318 at $ 2.56 SL= 4.00
(See risks of selling puts in play legend)

Picked on Dec 16th at  $35.00    P/E = 84
Change since picked    +11.38    52-week high=$48.38
Analysts Ratings    5-0-0-0-0    52-week low =$ 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 =  767 K
Chart = http://quote.yahoo.com/q?s=TTN&d=3m

****

IMNX - Immunex Corp. $116.00 (+16.13)(+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. 

Right on schedule, IMNX broke out to new highs.  Wednesday
saw shares of the drug maker hit $97 and take off like a rocket,
adding $7 to its previous close.  This morning investors got
serious about buying IMNX stock.  IMNX opened $1 higher and buy
the end of the session had made another new high at $120.50, 
before settling at $116, +9.00 for the session.  The encouraging 
aspect of this play is the volume that came in to support the
move today.  Almost 1.3 million shares exchanged hands in the
session that saw thin volume in the major indices.  The was no
company specific news to move the stock.  The Biotech sector
showed a small loss today, which gives more credence the strength
of IMNX.  Next week could be a tough call, although we do expect
shares of IMNX to continue higher.  Will there by tax selling
or buyers prepared to jump into this red hot sector.  We believe
there may be a small retracement, that will find buyers waiting
to jump on board.  IMNX shows intraday support at $114.50 and
$108.  The closest moving average is the 5 and 10-dma back at 
104.73, and 97.  As for entering new play wait for confirmation 
of a continuation of the trend or a bounce off intraday support.

Stephen Flaks, a hedge fund manager whose portfolio has more 
than double this year, likes the current momentum in the 
Biotech sector.  The recent strength in stocks like IMNX and 
the interest in genomics has added fuel to the fire.  Flaks 
says "there is definitely money in biotech that hasn't been 
seen for a long time."

BUY CALL JAN-105 IUU-AA OI=161 at $16.00 SL=12.50
BUY CALL JAN-110*IUU-AB OI=135 at $12.63 SL=10.00
BUY CALL JAN-115 IUU-AC OI=  0 at $ 9.75 SL= 7.50 New Strike
BUY CALL JAN-120 IUU-AD OI=  0 at $ 7.50 SL= 5.75 New Strike

Picked on Dec 23rd at    $99.88    P/E = 471
Change since picked      +16.12    52-week high=$120.50
Analysts Ratings      3-8-9-0-0    52-week low =$ 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 = 1.48 mln
Chart = http://quote.yahoo.com/q?s=IMNX&d=3m

****

HGSI - Human Genome Sciences $159.56 (+23.56)

Human Genome Sciences develops drugs and diagnostic products
based on human genes.  Although the company has no marketable
products, firms pay HGSI to develop products for cancer, heart
disease, arthritis, and Lou Gerhig's disease.  HGSI is involved
with SmithKline Beecham, Merck, and The Institute of Genomic 
Research.  HGSI also researches non-human genes, including
those of bacteria, fungi and viruses.  These could eventually
prove useful in creating vaccines and antibiotics.  HGSI 
competes with Genzyme, Incyte Pharmaceuticals and Scios.

It would appear that investors had the same idea about HGSI as
we did.  HGSI shot up over $20 since being added to our play 
list on Tuesday.  The impressive move came on good volume, which
considering the lack of liquidity in the markets this week, says
quite a bit about the confidence traders have in this stock.  
Wednesday's move came on volume of 409K, while today's $10 move 
showed over 750K exchanging hands.  HGSI is in a hot sector, and
the money has flowed into solid stocks that people believe are 
positioned well.  HGSI has received a lot of press this week, 
much of which came on CNBC.  Whether we like it or not, when a 
company gets mentioned in the national media, normally the stock 
moves.  Most of the mentions have obviously been favorable since 
HGSI has gained over $23 in the last week.  We feel the company 
is positioned well in its industry and will be for a long time. 
Our other interest is in a potential split announcement, with 
earnings.  HGSI will report earnings in the next three weeks. 
The company's board of directors recently approved an increase in
the number of authorized shares from 50 million to 250 million.
Regardless of whether they will meet earnings, the excitement 
around HGSI is the potential split announcement.  HGSI bounced
off support in the last hour of trading Thursday at $155.  The 
next level of support is near $149.  Look for continued strength 
as an opportunity to buy calls.  As always assess your risk 
profile prior to entering a new play.

Yesterday analysts at Janney Montgomery Scott maintained their
Buy rating on HGSI.  Analyst Heather D. Morris raised her price
target for the drug maker from $150 to $183.  Probably a good 
move, considering the stock was trading at $155 at the time.
We are not taking a shot at analysts, but would point out, we
are all human and just because analysts project a price target
doesn't mean it will hit it.

BUY CALL JAN-145 HHA-AI OI=N/A at $21.88 SL=17.25
BUY CALL JAN-150 HHA-AJ OI=N/A at $18.50 SL=14.75
BUY CALL JAN-155*HHA-AK OI=N/A at $15.75 SL=12.50

Picked on Dec 28th at   $138.88    P/E = N/A
Change since picked      +20.68    52-week high=$172.56
Analysts Ratings      1-4-2-0-0    52-week low =$ 28.75
Last earnings 10/99   est=-0.30    actual=-0.42 surprise=-35.5%
Next earnings 01-24   est=-0.70    versus=-0.55
Average daily volume =    520 K
Chart = http://quote.yahoo.com/q?s=HGSI&d=3m

****

MWD - Morgan Stanley Dean Witter $141.25 (+9.75)

MWD is the #2 retail broker in the US only after Merrill Lynch.  
The 1997 merger of Morgan Stanley and Dean Witter created 
an investment banking and retail brokerage powerhouse.  The 
company is now a global financial service firm with three 
primary business segments: securities, asset management, and 
credit services.  Its Discover unit has been one of the leading 
credit card issuers.  MWD has more than 430 branches in the 
US and some 30 more abroad.  Its clients include both 
individuals and institutions.

Breakout! This financial stock is splitting 2:1 on January 12th 
and it seems the party has begun.  On Wednesday MWD shattered 
its strong resistance at $135 and has consecutively powered 
higher.  MWD outdid yesterday's stellar performance and set 
another new record today.  Overhead opposition is now at $142.38 
with near-term support likely to evolve around the 5-dma now 
at $135.51.  The 10-dma ($131.97) has yet to catch-up with the 
recent gains, but marks a stronger support level.  Look for 
intraday dips that fit your risk portfolio to get into this 
split play.  Although it's important to realize the true 
test for this stock will be to hold above $140 over the next 
few trading sessions.  Keep in mind too that MWD is a financial 
stock and was certainly influenced by the lower bond yield that 
ultimately aided the broad market advances.  

In the news JP Morgan, Goldman Sachs, and Morgan Stanley Dean 
Witter are reported to be in talks to buy Credito Fondiario & 
Industriale SpA, an Italian corporate lender with a market 
value of about $247.7 mln.  All the companies failed to comment 
on the rumor. 

BUY CALL JAN-135 MWD-AG OI=2139 at $10.88 SL=8.75
BUY CALL JAN-140*MWD-AH OI=1205 at $ 7.75 SL=6.00
BUY CALL JAN-145 MWD-AI OI= 160 at $ 5.13 SL=3.25
BUY CALL FEB-140 MFZ-BH OI= 152 at $11.38 SL=9.00

Picked on Dec 30th at   $141.25    P/E = 19
Change since picked       +0.00    52-week high=$142.38
Analysts Ratings      4-4-6-0-0    52-week low =$ 70.81
Last earnings 12/99   est= 1.85    actual= 2.84
Next earnings 03-27   est= 1.85    versus= 1.76
Average Daily Volume = 2.00 mln
Chart = http://quote.yahoo.com/q?s=MWD&d=3m



*****
LEAPS
*****

With Y2K only a day away, we are going to sit back watch and 
see if this event has any major impact.  It's not likely, but 
there is no reason to risk capital.  Why not take a day off 
after such a phenomenal year?  What we want to focus on is going 
into the new year with stop losses.  We have lots of profits in 
our portfolio and it's tough to add to positions at this lofty 
level.  Not to mention, the markets usually dip mid-January 
after the earnings anticipation is over.  It would be this 
kind of market or stock dip that will turn us into buyers once 
again.  Therefore, tighten your stops while still allowing a 
little room for your options to breathe and wait for a strong 
downdraft in the averages, possibly lasting a few days, to buy.  
Remember, let the VIX be your eyes and ears on market sentiment.  
Anything over 30 is a good time to consider buying LEAPS.  The 
VIX is currently at 25.94.  This is the highest level in awhile.

Current Plays

SYMBOL  SINCE     LEAPS         SYMBOL    CURRENT  PICKED   RETURN

EMC     11/07/99  JAN-2001 $80  ZOH-AP at $41.25   $15.38  168.21%
                  JAN-2002 $90  WUE-AR at $44.38   $19.00  133.58%
DELL    11/07/99  JAN-2001 $50  ZDE-AJ at $13.25   $ 7.00   89.29% 
                  JAN-2002 $50  WDQ-AJ at $18.50   $11.25   64.44%
GPS     11/07/99  JAN-2001 $40  ZGS-AH at $13.38   $ 5.75  132.70%
                  JAN-2002 $45  WGS-AI at $16.13   $ 7.88  104.70%
IBM     11/07/99  JAN-2001 $100 ZIB-AT at $24.75   $13.63   81.58%
                  JAN-2002 $110 WIB-AB at $28.13   $16.50   70.49%
WMT     11/07/99  JAN-2001 $70  ZWT-AN at $11.63   $ 6.50   78.92%
                  JAN-2002 $75  WWT-AO at $15.38   $ 9.75   57.74%
LU      11/14/99  JAN-2001 $80  ZEU-AP at $13.63   $12.88    5.83%
                  JAN-2002 $90  WEU-AR at $17.00   $16.13    5.39%
CSCO    11/14/99  JAN-2001 $80  ZCY-AP at $37.13   $19.13   94.74%
                  JAN-2002 $90  WIV-AR at $39.25   $22.00   78.41%
SLR     11/14/99  JAN-2001 $85  ZSR-AQ at $24.63   $21.75   13.24%
GE      11/21/99  JAN-2001 $150 ZGR-AU at $27.88   $16.25   71.57%
                  JAN-2002 $150 WGE-AU at $38.25   $25.50   50.00%
GTW     11/21/99  JAN-2001 $90  ZWB-AR at $12.38   $17.75  -30.25%
                  JAN-2002 $100 WGB-AT at $17.25   $22.50  -23.33%
NT      11/28/99  JAN-2001 $75  ZOO-AO at $36.88   $22.25   65.75%
                  JAN-2002 $75  WNT-AO at $45.88   $30.25   51.67%
VOD     12/05/99  JAN-2001 $50  ZAT-AJ at $11.50   $10.75    6.98%
                  JAN-2002 $50  WHV-AJ at $15.38   $15.00    2.53%
KM      12/05/99  JAN-2001 $10  ZKM-AB at $ 3.13   $ 2.50   25.20%
                  JAN-2002 $15  WKM-AC at $ 2.19   $ 1.75   25.14%
ADBE    12/12/99  JAN-2001 $65  ZAE-AM at $16.25   $15.00    8.33%
                  JAN-2002 $70  WAE-AN at $20.38   $20.38    0.00%
TXN     12/12/99  JAN-2001 $110 ZTN-AB at $17.88   $22.25  -19.64%
                  JAN-2002 $120 WGZ-AD at $23.25   $28.50  -18.42%
NXTL    12/19/99  JAN-2001 $90  ZFU-AR at $32.00   $23.50   36.17%
                  JAN-2002 $100 WFU-AT at $35.63   $27.25   30.75%
SUNW    12/19/99  JAN-2001 $80  ZJX-AP at $19.75   $17.63   12.02%
                  JAN-2002 $90  WJX-AR at $23.88   $22.00    8.55%
AOL     12/23/99  JAN-2001 $90  ZKS-AR at $17.63   $20.13  -12.42% 
                  JAN-2002 $100 WAN-AT at $22.63   $25.63  -11.71%

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

No new plays today.  Remember to use any market meltdowns in 
the coming month to start a new position on an existing play.
  
Drops

No drops today either.  With our long-term outlook, we are 
more likely to give a stock some room to retreat, consolidate, 
and start moving up again.  That is what happened to SLR and 
we used that drop as an excellent entry point.  Now we are 
firmly in the money on that play.



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

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

****

PHCM - Phone.com Inc $111.50 (-6.75)(-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.  

We noted the possibility of a bounce and a bounce is what we 
got.  What an opportunity for entry points!  PHCM made it all 
the way up to $127, briefly peeking through its 10-dma, which 
was at $121, before making a turn and resuming its move south.  
Today was a perfect example of PHCM offering a wide trading 
range perfect for new entries.  PHCM traded from $127 all the 
way down to $110.75, a range of $16.25.  PHCM ended the session 
just three quarters above the low for the day backed with good 
volume, positioning us well heading into tomorrow's shortened 
session.  PHCM is currently resting on its 5-dma at $111 so 
watch for some trading below this level to confirm a 
continuation of the downward trend.  As we have seen, PHCM 
has some solid support at $100, so it is imperative to exercise 
caution and tighten your stops as we approach.  PHCM has 
resistance at $120, $121 (10-dma) and further resistance at 
$130 if needed.   

BUY PUT JAN-115*UMC-MC OI=0 at $17.88 SL=14.00 Today's vol=30
BUY PUT JAN-110 UMC-MB OI=0 at $15.25 SL=12.00 Today's vol=66

Average Daily Volume = 1.41 mln
Chart = http://quote.yahoo.com/q?s=PHCM&d=3m

****

CIEN - Ciena Corp. $56.50 (-1.50)(-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.

Ciena has been one of the big winners of the year.  Just over 
a year ago CIEN was trading in the single digits and nobody 
wanted to get near this former high-flyer.  Then the market 
fell in love with any company in the fiber optic 
communications business.  Ciena's stock made a comeback for 
the ages.  Funny thing about success.  When you do well, 
everybody wants a piece and the trailblazers sometimes lose 
their claims to bigger and better financed competition.  This 
seems to be the case with Ciena.  Nortel and Lucent have been 
aggressively moving into Ciena's business.  Being bullied 
about by these behemoths must hurt.  To make matters worse, 
CSCO has entered into the fray with its planned acquisition of 
the fiber optic division of the Italian company, Pirelli.  
Ciena is doing everything it can to increase its product and 
customer base.  Will it be enough?  Hard to know for sure, but 
it seems that fear has gripped the minds of Ciena's 
shareholders and they are doing some selling.  Anybody with a 
memory of Ciena's price history has to be worried that the 
stock could fall all the way back into the single digits.  
Ciena probably would not deserve such a beating but emotions 
drive markets.  After a nice drop on Monday morning, CIEN 
staged a little rally for a couple of days.  On Thursday it 
appears that CIEN might have begun to roll over.  Only time 
will tell of course, but it is a good sign for put holders that 
CIEN closed in the bottom end of its range after taking out 
Wednesday's high.  $55 seems to be an area of a little 
support.  Look to get into a bearish position if CIEN can 
trade below that level.  You need to be cautious of CIEN 
trading above $60.  That would be indicative of CIEN trying to 
keep its comeback going.

BUY PUT JAN-60*EUQ-ML OI= 901 at $7.13 SL=5.25
BUY PUT JAN-55 EUQ-MK OI=1586 at $4.25 SL=2.50

Average daily volume = 5.26 mln                  
Chart = http://quote.yahoo.com/q?s=CIEN&d=3m

****

SPLN - Sportsline.com $45.88 (-12.13)

SportsLine.com is at the leading edge of media companies, 
providing Internet sports content, community, and e-commerce 
on a global basis.  SportsLine.com's content includes more 
than 400,000 pages of multimedia sports information, 
entertainment, and merchandise.  SportsLine.com was founded 
in 1994, and its flagship Internet sports service was renamed 
CBS SportsLine in March of 1997 as part of an exclusive 
promotional and content agreement with CBS Sports.  SPLN 
produces the official league Web sites for Major League 
Baseball, the PGA TOUR and NFL Europe League, and serves as 
the primary sports content provider for America Online, 
Netscape, and Excite.

What do you get when you bring together Michael Jordan, John 
Elway and Wayne Gretzky on the same team?  A website.  Not your 
first guess, right?  On Dec 21st, these three sports legends 
came together to announce that they were forming MVP.com, 
which will take over the e-commerce business of Sportsline.com.  
SPLN will receive a percentage of the revenue generated from 
MVP.com's Internet sporting goods sales.  The day of this 
announcement, SPLN spiked up sharply tagging a new 52-week 
high of $83.25 and trading in a range over $20.  SPLN finally 
closed just a quarter shy of the low for the day while posting 
huge volume.  Once SPLN came crashing back to earth, it seemed 
to have trouble regaining its footing and continued to decline.  
On the 27th, SPLN broke through its 10-dma.  SPLN has also broken 
through and is now trading below its 5 and 30-dma's, levels that 
have been backing SPLN for some time.  SPLN is hovering above 
its 50-dma at $45 and should SPLN drop below this level, we 
could be cleared for a fall to $40.  SPLN looks to have additional 
support right around $36.  SPLN was held back at $50 in afternoon 
trading yesterday and this level managed to hold throughout 
today's session.  We should be cleared for new entries once we 
have a breakthrough $45.  SPLN is scheduled to announce earnings 
on January 20th (unconfirmed) so this may be a quick in and 
out play to avoid falling victim to a potential earnings run.  
Remember to use your stops.  On Wednesday, SPLN announced that 
CBS had exercised warrants to purchase 380,000 shares of SPLN 
at $20 per share.  CBS now owns a total of 16.1 percent of SPLN. 

BUY PUT JAN-50*QSP-MJ OI=0 at $6.50 SL=5.00 Just opened
BUY PUT JAN-45 QSP-MI OI=0 at $2.06 SL=1.50 Just opened

Average Daily Volume = 362 K
Chart = http://quote.yahoo.com/q?s=SPLN&d=3m


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

The Option Investor Newsletter             1-2-2000
Sunday                        5 of 5


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

Mutual Funds And Pension Plans Use It Too...

Believe it or not, buying stock and writing covered-calls is a
well-known institutional hedge strategy. Fund managers suggest
that the risk/reward characteristics of this technique can often
be much better than owning the stock or speculating in options.

There are a number or reasons why professional option writers use
the covered-call strategy to achieve above-average returns. The
motivation to sell call options comes from the fact that they are
generally overpriced. Whether due to supply and demand factors or
simple speculation, it's common for traders to pay more for call
options than they are worth. When options are expensive, option
writers benefit by receiving larger time values. Even a relatively
small difference in premium can result in a 3% to 5% increase in
the annual returns from this strategy.

The basic techniques that fund managers use when implementing this
strategy can be beneficial to retail investors as well. One of the
most common traits is selling short-term options to obtain higher
relative time values. In most cases, longer-term series have much
less premium (proportionally) in the option price due to a smaller
demand from traders. Fund and pension-plan buyers generally select
high-quality stocks and sell in-the-money options for increased
probability of assignment. When compared to outright ownership,
this method is almost equal to "pre-selling" the issue at a profit.

In covered-write positions, the owner retains any dividends issued
on the stock before the option is exercised. Profits from regular
dividends can increase the annual return of the position as much
as 5%. For this reason, hedge-fund managers sell options on stocks
with moderate to large dividends. In some instances, the early
exercise of options (dividend capturing) will prevent an investor
from receiving this added premium but the effect can be offset by
reinvesting the funds in another profitable position.

Institutions also use the popular buy-write technique when placing 
orders. Designating the net cost of the combined position when the
order is placed eliminates price risk and affords the fund manager
with an opportunity to negotiate a favorable basis. A block trader
will often agree to these terms in order to unload large amounts
of the stock with only a small premium concession from the current
market price.

Institutional traders generally utilize only the most successful
long-term strategies to guarantee a consistent rate of return. Any
method that produces less than profitable results will inevitably
lower their supply of funds. The covered-call strategy is commonly
used to generate moderate compound returns over a complete market
cycle while avoiding the potential of large portfolio losses. It
appears this may be the safest way to outperform all but the most
aggressive techniques in the majority of market conditions.


SUMMARY OF PREVIOUS PICKS

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

MCRE    7.56   8.88   JAN   7.50  1.31  *$  1.25  20.0%  14.5%
SPLH    8.44   8.63   JAN   7.50  1.81  *$  0.87  13.1%  11.4%
EMIS   19.88  32.94   JAN  17.50  4.50  *$  2.12  13.8%  10.0%
WSTL   10.75  10.44   JAN  10.00  1.88  *$  1.13  12.7%   9.2%
CBIZ   10.31   8.50   JAN   7.50  3.63  *$  0.82  12.3%   8.9%
FSII   10.69  11.50   JAN  10.00  1.94  *$  1.25  14.3%   8.9%
LGND   11.69  12.50   JAN  10.00  2.75  *$  1.06  11.9%   8.6%
NFO    14.38  22.06   JAN  12.50  2.94  *$  1.06   9.3%   8.1%
AWEB   12.13  10.75   JAN  10.00  3.00  *$  0.87   9.5%   6.9%
SCOC   17.88  28.88   JAN  15.00  4.13  *$  1.25   9.1%   6.6%
PILT   17.56  23.00   JAN  12.50  5.88  *$  0.82   7.0%   6.1%
ONHN   10.25   8.94   JAN   7.50  3.38  *$  0.63   9.2%   5.7%
BAMM    9.81   8.03   JAN   7.50  2.75  *$  0.44   6.2%   5.4%
TTWO   16.31  13.25   JAN  12.50  4.63  *$  0.82   7.0%   5.1%
MWHS   15.06  18.44   JAN  12.50  3.25  *$  0.69   5.8%   5.1%
PILT   20.25  23.00   JAN  15.00  6.38  *$  1.13   8.1%   5.1%
RNBO   20.00  23.00   JAN  15.00  6.13  *$  1.13   8.1%   5.1%
TSCM   15.75  19.81   JAN  12.50  3.88  *$  0.63   5.3%   4.6%
NETS   28.00  27.94   JAN  22.50  6.63  *$  1.13   5.3%   4.6%
AGY    16.88  15.31   JAN  15.00  2.75  *$  0.87   6.2%   4.5%
VDAT   13.50  10.19   JAN  10.00  3.88  *$  0.38   4.0%   4.3%
EMIS   24.63  32.94   JAN  20.00  5.38  *$  0.75   3.9%   4.2%
ENMD   28.44  25.63   JAN  22.50  6.75  *$  0.81   3.7%   4.1%
MESG   16.63  13.88   JAN  12.50  4.88  *$  0.75   6.4%   4.0%
BNYN   15.81  20.06   JAN  12.50  4.13  *$  0.82   7.0%   3.8%
BIDS    5.13   4.28   JAN   5.00  1.00   $  0.15   3.6%   2.3%
SATH   12.69   9.63   JAN  10.00  3.38   $  0.32   3.4%   1.9%
BIDS    5.25   4.28   JAN   5.00  0.94   $ -0.03  -0.7%   0.0%

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

Positions Previously Closed:

Value America (VUSA), Summit Tech (BEAM).


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


Sequenced by Company

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

CNCX   29.88  JAN 22.50  QXF AX  8.00  282   21.88   2.9%   2.9%
NPLS   20.56  JAN 17.50  UTN AW  3.63  1210  16.94   3.3%   3.3%
NETA   25.13  JAN 22.50  CQM AX  3.63  2681  21.50   4.7%   4.7%
STRX    8.13  JAN  7.50  TQQ AU  1.00  3047   7.13   5.3%   5.3%


Sequenced by Return Not Called

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

STRX    8.13  JAN  7.50  TQQ AU  1.00  3047   7.13   5.3%   5.3%
NETA   25.13  JAN 22.50  CQM AX  3.63  2681  21.50   4.7%   4.7%
NPLS   20.56  JAN 17.50  UTN AW  3.63  1210  16.94   3.3%   3.3%
CNCX   29.88  JAN 22.50  QXF AX  8.00  282   21.88   2.9%   2.9%


Company Descriptions

CNCX - Concentric Network  $29.88    *** Entry Point ***

Concentric provides complete Internet business solutions for small
and medium-sized enterprises including DSL access, Web hosting and
e-commerce. The company also offers data center services, virtual 
private networks, dedicated access, and application infrastructure
services for delivering applications over the Internet or a VPN. 
Concentric's services are offered through a nationwide network of 
data centers and a private, nationwide ATM network. Concentric's
post-split consolidation appears over as the technical strength 
improves. Recent "buy" ratings and a stake in a future IPO
(Register.com) provides for favorable speculation with a cost
basis at technical support.

JAN 22.50 QXF AX Bid=8.00 OI=282 CB=21.88 RC=2.9% RNC=2.9%

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

****

NETA - Network Associates  $25.13 *** Stage I Exit? ***

Network Associates is a leading supplier of enterprise network 
security and management software. Network Associates' Net Tools
Secure and Net Tools Manager offer best-of-breed, suite-based
network security and management software. Net Tools Secure and Net
Tools Manager suites combine to create Net Tools that centralizes 
these point solutions within an easy-to-use, integrated systems 
management environment. The upgrade in December with a "buy"
rating and price target of $35 should help NETA continue its move
out of a stage I base. Favorable speculation with support (the
positive test in early December) near the cost basis (July and
September highs).

JAN 22.50 CQM AX Bid=3.63 OI=2681 CB=21.50 RC=4.7% RNC=4.7%

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

****

NPLS - Network Plus  $20.56     *** Head-n-Shoulders Bottom ***

Network Plus is a network-based integrated communications provider
headquartered in Quincy, Massachusetts. Network offers broadband
data and telecommunications services to small and medium-sized
business customers located in major markets in the North-eastern
and Southeastern regions of the US. The company's bundled product
offerings include local and long distance services as well as
enhanced, high-speed data and Internet services, utilizing digital
subscriber line, or DSL, technology. New coverage, acquisitions, a
new data center, and new contracts have contributed to the recent
up-trend in Network Plus. The move has taken the stock price above
the neckline of a head-n-shoulders bottom, which is a very bullish 
formation. A conservative entry with the strike price near the
neckline; a technical support area.

JAN 17.50 UTN AW Bid=3.63 OI=1210 CB=16.94 RC=3.3% RNC=3.3%

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

****

STRX - Star Telecom  8.13    *** Merger In Progress ***

Star Telecom is an international long-distance provider offering
highly reliable, low-cost, switched-voice services on a wholesale
basis, primarily to U.S. carriers. STAR provides international
long-distance service to more than 275 foreign countries through
a flexible network of resale arrangements with providers, various
foreign termination relationships, international gateway switches
and leased and owned transmission facilities.  World Access (WAXS)
and Star Telecom recently signed a letter of intent to merge and
the reported value to STAR shareholders is above $10.50 per share.
Will the deal go through? Speculate at a cost basis below support.

JAN 7.50 TQQ AU Bid=1.00 OI=3047 CB=7.13 RC=5.3% RNC=5.3%

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



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

Trend-lines And Relative Strength...

It's important to understand the fundamentals of basic technical
analysis and market timing strategies. When successful investors
discuss their common traits, the most sought after qualities are
knowledge of entry/exit indicators and proven historical patterns.
In addition, the majority of option trading strategies are of a
short-term nature, thus technical analysis is generally the best
approach to use when researching potential candidates.

Here are this week's topics:

Trend-line

A line connecting any two lows or highs on a given chart can be
considered a trend-line. A significant trend occurs when the line
is touched at least three times. A violation of this line usually
signals a major change in the trend's direction. A move below an
advancing trend-line is negative, while a break above a declining
trend-line is bullish. However, the greater the slope of a given
trend-line, the less meaningful its break is on the downside. With
a rapidly advancing issue, a break below the current trend-line
may simply be a technical consolidation, followed by a slower rate
of future advance. When an issue is trading in a horizontal range,
a break above or below the current lines of support and resistance
is much more significant. The most compelling bullish signals are
given when a stock penetrates a well defined resistance trend-line
and simultaneously climbs above a long-term moving average.

Relative Strength

Relative strength is generally defined as how well a given issue
or instrument performs in relation to an industry average or the
overall market. A favorable relative strength is indicated when
the stock achieves a higher rate of gain than the specific index
or market gauge. The formula for measuring relative strength is
simply the price of the issue divided by the price of the average.

Poor relative strength demonstrates that the issue is an inferior
performer compared to the overall stock market and should not be
considered as a long position. Conversely, if relative strength
is favorable, the position can often be held through periods of
consolidation even when other forms of analysis suggest the issue
might be failing.

One of the most common and useful indicators in stock trading is
the relative strength indicator (RS). The RS is charted as an
oscillator with a value from 0 to 100. The direction or trend of
RS should confirm price movement and can also identify turning
points when there are divergence's in other indicators. An example
would be a new high in price without a new high in RS; this may
indicate a false breakout. RS can also identify overbought and
oversold conditions; when the RS value reaches extreme highs or
lows. One of the most significant bullish signals occurs when the
indicator moves from negative territory (below the zero line) to
positive territory. In cases where a trading range break-out is 
supported by a positive move in the relative strength line, the 
probability of a sustained bullish is greatly increased.



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


SUMMARY OF PREVIOUS PICKS 

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

AWEB   12.88  10.75   JAN  10.00  0.50  *$  0.50  16.2%  17.6%
PILT   17.13  23.00   JAN  12.50  0.50  *$  0.50  12.7%  13.8%
RNBO   21.94  23.00   JAN  17.50  0.81  *$  0.81  15.6%  13.5%
ORCT   31.00  34.13   JAN  25.00  0.81  *$  0.81  11.2%  12.2%
IUSA   12.13  14.00   JAN   7.50  0.31  *$  0.31  11.3%   9.8%
EMIS   21.00  32.94   JAN  15.00  0.50  *$  0.50  10.6%   9.2%
DAVX   23.75  19.81   JAN  17.50  0.56  *$  0.56  10.5%   9.2%
CCUR   17.75  18.81   JAN  12.50  0.50  *$  0.50  12.3%   8.9%
SCOC   17.88  28.88   JAN  12.50  0.44  *$  0.44  10.9%   7.9%
MSGI   19.00  17.00   JAN  12.50  0.38  *$  0.38   9.1%   7.9%
ENMD   28.44  25.63   JAN  20.00  0.44  *$  0.44   7.2%   7.8%
CS     28.50  26.00   JAN  20.00  0.56  *$  0.56   8.9%   7.8%
PRRC   23.56  23.88   JAN  17.50  0.56  *$  0.56  10.6%   7.7%
AND     9.25   7.31   JAN   7.50  0.44   $  0.25  10.5%   7.6%
INSO   32.13  32.31   JAN  20.00  0.75  *$  0.75  10.4%   7.6%
WAXS   20.50  20.00   JAN  15.00  0.38  *$  0.38   8.5%   7.4%
NETS   28.00  27.94   JAN  20.00  0.50  *$  0.50   8.2%   7.1%
EGRP   35.56  27.00   JAN  25.00  0.56  *$  0.56   7.3%   5.3%
MMWW   37.38  29.94   JAN  22.50  0.50  *$  0.50   6.3%   4.5%
SATH   12.94   9.63   JAN  10.00  0.56   $  0.19   6.0%   4.4%

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


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


Sequenced by Company

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

ITIG   24.81  JAN 17.50  ITU MW  0.63  50    16.88  11.2%
LOR    20.25  JAN 17.50  LOR MW  0.38  3502  17.13   6.6%
SCOC   29.00  JAN 17.50  UQS MW  0.56  110   16.94   8.8%
WAXS   20.00  JAN 17.50  WXQ MW  0.69  1220  16.81  11.1%


Sequenced by ROI  

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

ITIG   24.81  JAN 17.50  ITU MW  0.63  50    16.88  11.2%
WAXS   20.00  JAN 17.50  WXQ MW  0.69  1220  16.81  11.1%
SCOC   29.00  JAN 17.50  UQS MW  0.56  110   16.94   8.8%
LOR    20.25  JAN 17.50  LOR MW  0.38  3502  17.13   6.6%


Company Descriptions

ITIG - Intelligroup  $24.81     *** B-2-B IPO ***

Intelligroup is a global professional services firm that helps
its clients improve their business performance by building and 
supporting innovative Internet-based solutions and enterprise 
applications. Intelligroup solutions break down barriers across
clients' organizations, sharing information with their customers,
suppliers, partners and employees alike, building relationships
within and among these constituencies, increasing sales, cutting
cycle times, improving service and reducing costs. ITIG's price
jumped when it announced that it would spin off SeraNova (B2B 
Internet and portal solutions) to its shareholders in the first
quarter of 2000. Intelligroup is a fast growing company within a
"hot" sector, closing at a new all-time high earlier this week.
We feel $0.63 is just reward for trying to target shoot an entry
point near a 33% retracement of the recent rise in price.

JAN 17.50 ITU MW Bid=0.63 OI=50 CB=16.88 ROI=11.2%

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

****

LOR - Loral Space & Comm.  $20.25    *** Sleeper Play ***

Loral Space & Communications is a high technology company that 
concentrates primarily on satellite manufacturing and satellite-
based services, including broadcast transponder leasing and value-
added services, domestic and international corporate data networks,
global wireless telephony, Internet services, international direct-
to-home satellite services, and broadband data services including
business television, distance learning and video to the desktop.
Loral Space owns a 43% stake in Globalstar Telecom (GSTRF - see 
write-up in call section) and has benefited in the recent move
of Globalstar. This has moved Loral Space near the top of a year-
long base. We favor a cost basis below technical support.

JAN 17.50 LOR MW Bid=0.38 OI=3502 CB=17.13 ROI=6.6%

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

****

SCOC - Santa Cruz Operation  $29.00   *** Retracement = Entry ***

Santa Cruz Operation is a leading supplier of UNIX System software
for business-critical, network computing environments. Network
computing offers businesses a more powerful, cost-effective way to
share business-critical applications and information with people
anywhere in the world. The key elements are powerful, scaleable,
and reliable servers; and support for a wide range of clients. The
company also offers an application broker for network computing. 
The run-up has been incredible and we do appreciate getting paid
for trying to own a very bullish stock at technical entry points.

JAN 17.50 UQS MW Bid=0.56 OI=110 CB=16.94 ROI=8.8%

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

****

WAXS - World Access  $20.00      *** STRX Merger ***

World Access is focused on being a leading provider of bundled 
voice, data and Internet services to key regions of the world.
The company competitively provides end-to-end communications 
services through its redundant digital network which is capable
of supporting voice and data services, including frame relay, 
Internet Protocol, asynchronous transfer mode and multimedia 
applications. Located strategically throughout the US and 13 
European countries, World Access's network backbone consists of
gateway and tandem switches, linked by an extensive fiber network
encompassing tens of millions of circuit miles. World Access has
announced that they have signed a letter of intent to merge/buy 
Star Telecom (STRX) in a transaction valued at approximately $650 
million, which will expand its retail telecom services in Europe. 
We favor the technical support near the cost basis.

JAN 17.50 WXQ MW Bid=0.69 OI=1220 CB=16.81 ROI=11.1%

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



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

Pop The Corks - It's Party Time!

Wednesday, December 29

Stocks surged to record levels Wednesday as a combination of thin
volume and bullish analyst opinions boosted leading issues. The
Dow Jones Industrials ended 8 points higher at 11,484 after the
blue-chip index hit a new intraday high of 11,543. The tech-heavy
Nasdaq index closed above 4,000 for the first time, climbing 69
points to 4,041. The broad market S&P 500 index rose 5 points to
a record 1,463. The Russell 2000 index of small-cap stocks also
hit a new high, up 8 points to 497. Trading volume was light with
only 573 million shares exchanged on the NYSE. Market breadth was
positive with 1,991 stocks moving higher while 1,090 fell lower.
New lows outpaced new highs by a margin of 255 to 95. Bonds added
some support with the 30-year Treasury up 12/32, bid at 95 23/32,
and the yield at 6.44%.

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

Bio-Tech Gen.  BTGC   JUN5C/JAN5C     $2.00   debit   diagonal  
Star Telecom   STRX   MAY7C/JAN7C     $0.50   debit   calendar 
Talk.com       TALK   APR22C/JAN22C   $1.00   debit   calendar
LHS Group      LHSG   APR25C/APR25P   $6.75   debit   straddle

All of our new plays offered favorable entry prices during the
session. The positions were available at or below our suggested
targets.


Portfolio plays:

Cyclical, financial and technology stocks drove the market today
and wireless communication company Qualcomm (QCOM) set the stage
for a telecom rally, gaining $156 after PaineWebber upgraded the
stock and set a 12-month price target of $1,000. Qualcomm is a
developer of Code Division Multiple Access (CDMA) technology. The
company is going to split its stock four-for-one Friday and the
issue is expected to continue higher after the new shares are 
distributed. Lycos (LCOS) was our big Internet mover, up over $8
to $85 with the sector rally. This issue has produced multiple
winning positions in various strategies during the past month.

One of today's most active stocks was Charles Schwab (SCH), the
nation's #1 online broker. The bullish issue pulled the sector
skyward after saying it expects to exceed fourth-quarter profit
estimates due to strong trading volumes. Online financial stocks
climbed higher on the news and our bullish play on E*Trade Group
(EGRP) profited from the surprise announcement. Our current play 
(APR25C/JAN30C) has a credit of $5.25 with a cost basis of $3.50.
EGRP also announced that shareholders have approved the planned 
acquisition of Telebank, an online banking company.

A number of small-cap issues made nice moves today and many of
our speculation plays are now profitable. Loral Space (LOR) led
the group with an $0.88 move to $19.50. The sold (short) strike
in the LOR position is at $20 and our play is near maximum profit.
Other neutral spread issues moved up during the session including
Bid.com (BIDS), Champion (CHB), Silicon Graphics (SGI), Southwest
Bancorp (SWBT), and 3dfx (TDFX). A few of our mid-cap positions
performed well and Cendant (CD) was the leader, climbing $1.68 to
a recent high near $26.50. Our bullish debit spread is at maximum 
profit. Unisys (UIS) was a close second, rising $0.93 to $31.50.
Our spread achieves maximum profit with the issue above $30. The
best of the worst was Delta And Pine Land (DLP) with a $0.56 move
to $16. Our covered-call recovery play has a cost basis near the
current price.

On the down side, drug stocks showed weakness, with Dow component 
Johnson & Johnson (JNJ) falling $3.56 to $92.38. Our LEAPS/CC's
position is currently profitable with a $9 credit against $3.25
invested. Biotechnology stocks, on the other hand, soared again
and Medtronics (MDT) rebounded along with the group, rising $1.38
to $37.50. January will be the first month of positive returns
for this long-term play. The leaders in the LEAPS/CC's portfolio
were Motorola (MOT), Sun Microsystems (SUNW) and Vodaphone (VOD).

Corporate earnings warnings for the upcoming quarterly reporting
season have also affected a few of our positions but cash inflows
are heavy and yearly retirement contributions should continue to
have a positive effect on stocks for the next few weeks. Many of
the issues that have slumped in the past month are expected to
recover as the seasonal "January Effect" begins after the Y2K
rollover. With this in mind, we will wait until next week to pass
judgment on all but the most under-performing positions.

Thursday, December 30

U.S. markets consolidated Thursday as investors cashed-out of the
high-flying technology stocks in a pre-Y2K celebration. The Dow
Jones Industrial Average fell 31 points to 11,452 after hitting
an intraday high of 11,568. The Nasdaq composite index finished
down 4 points at 4,036, a day after its 60th record high of the
year. Europe's major markets; London, Germany and Paris, also
closed at yearly highs on Thursday. Trading volume was extremely
light with 561 million shares exchanged on the NYSE. Advancing
stocks edged out declines 1,767 to 1,363 on the Big Board with
108 issues at new highs and 165 at new lows. The benchmark U.S.
30-year bond rose 7/32 with yield ending at 6.42%.

Portfolio plays:

The market enjoyed a brief rest today as investors moved to the
sidelines in preparation for the New Year celebration. Within the
popular industries, Internet and semiconductor stocks came under
selling pressure, as did networking issues. Retailers put on a
strong performance but oil service stocks, precious metals, and
bio-techs fell from grace. Our standout was Computer Associates
(CA), which rose $4.12 to a new all-time high near $70. Stock
value of the application software company surged after Morgan
Stanley raised its price target on the stock to $80 a share,
based on solid business trends and new strategic contracts in
its consulting services. Our bullish LEAPS/CC's play is short
at $65 and we may need to roll to a higher strike if the stock
continues to rally. Plan to monitor the issue for further upside
movement and make the necessary adjustments.

Communication issues continue be the leaders in our portfolio and
specifically, the satellite group is performing very well. Loral
Space (LOR) is tagging along behind recent winner PanamSat (SPOT)
for almost daily gains. Today LOR climbed another $0.75 to close
above $20 for the first time in two months. Our bullish calendar
spread play is at maximum profit and may need to be adjusted to
extend gains. Recoton (RCOT) is another small-cap technology issue
that has a generous amount of upside potential. Our new diagonal
position is profitable after just three weeks and the technical
outlook is very favorable. A number of our large-cap stocks also
moved higher in today's trading but the most significant rally
came in United Airlines' (UAL) $2 spike to $78. The stock climbed
out of a previous channel near $75 and now appears poised for a
run on the yearly highs. Both of our long-term plays profited from
the rally but we will need to make some position adjustments if
the bullish trend continues.
       
One of our new speculation issues was hit hard by an unexpected
earnings warning. Bio-Technology General (BTGC) fell $2.62 to $12
after announcing it expects 1999 EPS $0.08 to $0.10 below 1998's
due to a reduction of Oxandrin inventory by its distributor. The
bullish diagonal position may eventually recover but it appears
the stock will test support near $10 in the short term. An early
exit on the February call option offered a $1.50 credit (capital
preservation). Another group that has fallen in recent weeks is
the Internet retail sector and our departure from these issues
was timely. Priceline.com (PCLN), Shop-At-Home (SATH) and Value
USA (VUSA) have all been hammered by holiday sell-offs and the
newest failure may be Autoweb.com (AWEB). Fortunately, the AWEB
position has provided a number of profitable exit opportunities.
Delta And Pine Land (DLP) was again the surprise of the day, up
$0.88 to $16.75 as buying pressure moved to a positive character.
The stock price is rebounding sharply from an extremely oversold 
condition and the trend should continue in the short-term.

Happy New Year!
  
Questions & comments on spreads/combos to ray@OptionInvestor.com


***************
LONG-TERM PLAYS
***************

NETA - Network Associates  $25.12     *** LEAPS/CC's ***

Network Associates (previously known as McAfee Associates) is a
leading supplier of enterprise network security and management
solutions. Network Associates' product offering includes four
individual software suites, Total Virus Defense, Total Network
Security, Total Network Visibility and Total ServiceDesk.

Network Associates has been on the move recently with the new
year expected to be a major time for virus and security issues.
Last week the company posted a number of anti-virus and online
security tips for corporations and consumers during the busy
holiday season. One of their leading products has been the "Total
Virus Defense" suite. The software provides complete anti-virus 
protection at the desktop, file server, group-ware server and
Internet gateway. Powerful integrated management tools make it
easy for administrators to deploy updates and upgrades, and to
configure and monitor virus security enterprise-wide. The product
comes with the Net Tools Secure suite, a comprehensive security
system incorporating anti-virus, encryption, authentication,
intrusion detection, vulnerability assessment, and security
management.

NETA is at the top of their game right now and the stock price
began moving higher after an analyst at S.G. Cowen issued a 'buy' 
recommendation, saying the issue has come under tax-loss selling 
pressure. The brokerage placed a $35 price target on the company
and we agree with their outlook. Technically, Network Associates
is moving out of a year-long stage I base with several indicators 
issuing buy signals. The recent bullish climb above the 150 dma
on increasing volume should lead to a successful rally through
the resistance area near $28. In any event, our new play should
remain profitable with the stock at or above the $22-$23 range.

PLAY (aggressive - bullish/diagonal spread):

BUY  CALL JAN01-15 ZNE-AC OI=283  A=$13.12
SELL CALL JAN00-25 CQM-AE OI=4896 B=$2.06
INITIAL NET DEBIT TARGET=$10.75-$10.88 TARGET ROI=100% (12 months)


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

****

ASFT - Artisoft  $18.50     *** Network Management *** 

Artisoft is engaged in the design, manufacture, marketing and
support of cost-effective and easy-to-use local area network
(LAN) software systems and communications devices designed to
enhance the productivity of PC users. Artisoft is a recognized
leader in providing easy-to-use, affordable computer telephony
and communications software solutions for small-to medium-size
businesses.

Artisoft's innovative software products have received more than
100 industry awards including "Product of the Year", "Best of
Show" and "Editors' Choice" by PC Magazine, VARBusiness, Computer 
Telephony Magazine and CTI Magazine among others. Recently, their
TeleVantage 3.0 software-based phone system was selected as the
leading software product by a number of industry publications
including C@LL CENTER Solutions Magazine, the original and most 
authoritative source on CRM, e-commerce and teleservices and,
Internet Telephony Magazine, a leading voice, data, fax, and
video convergence publication.

TeleVantage was chosen for its enhanced features including IP
Telephony, Web browser capabilities, Call Center Reporter and
increased scalability. TeleVantage is a powerful software-based
PBX and an impressive IP Telephony system as well. The software
provides intelligent call management, ACD functionality, IP
Telephony, web browser capability and messaging features. It is
a flexible, upgradable software solution that operates with
Windows NT systems and uses off-the-shelf computer, wiring and
telephone hardware. When synchronized with networked desktop PCs,
TeleVantage enables users to see and hear voice messages, and
raphically manage their own calls while integrating e-mail and
phone messaging.

Certainly a lot of hype for one product but it appears to be
working as the stock has climbed steadily higher since departing
the $5 range in early September. The long-term technical outlook
is favorable but a consolidation is definitely in order. We will
plan for a move to the $20 range and protect our position against
downside movement with premium from the (sold) January option. A
disparity in pricing will help us enter the play at a discount.

PLAY (aggressive - bullish/diagonal spread):

BUY  CALL MAY-15 AGQ-EC OI=20  A=$6.38
SELL CALL JAN-20 AGQ-AD OI=185 B=$1.85
MAXIMUM INITIAL NET DEBIT=$4.75 TARGET ROI=50%

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

****

CDN - Cadence Design Systems  $22.81   *** Technicals Only! ***

Cadence Design Systems develops, markets, and supports electronic
design automation ("EDA") software products and services that
automate, enhance and accelerate the design and verification of
integrated circuits and electronic systems. The company combines
its software products and professional services to provide new
customers with highly-optimized electronic product development 
environments. Cadence recently announced the successful delivery
of block-based and platform-based design methodologies and tool
flows to the Alba Centre in Scotland. BBD/PBD are the industry's
first comprehensive set of fully codified, design methodologies
that rapidly transition electronic product development into the
emerging system-on-a-chip (SOC) realm.

The bottom for this company came as recently as August when the
issue hit an all-time low near $9. A recovery to the mid-teens
soon followed and now the stock is on the move again. Bolstered
by an upgrade in mid-December, Cadence has undergone a favorable
change of character. Morgan Stanley Dean Witter said it raised
the company to a "strong buy" and the technicals support a much
higher price target.

We are going to open this position with anticipation of a small
correction to the $20 range. We have no upside risk but as the
January expiration nears, you should plan to buy back the short
options (and roll-forward) to preserve the long-term position.

PLAY (conservative - bullish/diagonal spread):

BUY  CALL MAY-15.00 CDN-EC OI=1260 A=$9.12
SELL CALL JAN-22.50 CDN-AX OI=738  B=$1.81
MAXIMUM INITIAL NET DEBIT=$7.12 TARGET ROI=50%

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


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