Option Investor

Daily Newsletter, Sunday, 01/09/2000

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The Option Investor Newsletter          Sunday  1-9-2000  1 of 5
Copyright 2000, All rights reserved. 
Redistribution in any form strictly prohibited.

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

Entire newsletter best viewed in COURIER 10 font for alignment
         WE 1-07         WE 12-31         WE 12-24        WE 12-17
DOW     11522.56 + 25.44 11497.12 + 91.36 11405.76 +148.33 + 32.73
Nasdaq   3882.62 -186.66  4069.28 + 99.84  3969.44 +216.38 +132.82
S&P-100   783.49 -  9.34   792.83 -  2.73   795.56 + 21.63 + 10.44
S&P-500  1441.47 - 27.78  1469.25 +  7.81  1461.44 + 40.39 +  4.01
RUT       488.31 - 16.44   504.75 + 26.81   477.94 + 11.73 -   .50
TRAN     2964.72 - 12.48  2977.20 + 89.50  2887.70 - 30.72 + 43.48
VIX        23.20 -  3.51    26.71 +  3.59    23.12 +   .11 +  2.09
Put/Call     .50              .51              .47             .43

What was that?

Was that a correction? Profit taking? Tax deferred selling? Who
cares! The major point to consider was the incredible recovery
in the face of major market moving news and events. The Nasdaq
corrected -10% and then rebounded with a +155 point gain and the
largest single day point gain ever. The Dow dropped from an intraday
high on Monday of 11522 to an intraday low on Wednesday of 10938,
a drop of almost -600 points, only to close at a new record high
on Friday of 11521. Simply incredible! Especially when you consider
the earnings warnings from several big name companies and higher
than expected employment numbers on Friday. 



The market shook off the one-two punch of earnings warnings 
from Gateway and Lucent and the the larger than expected numbers
in the jobs report. Liquidity, liquidity, liquidity! The warning
from Lucent, one of the most widely held tech stocks in the 
world, may have knocked -$20 off Lucent's stock price but the
market hardly noticed. Lucent set a one day volume record of
178 million shares for a single stock on the NYSE Friday.
The jobs report provided a small jolt with +315,000 new jobs
created but on the surface the unemployment rate remained steady 
at 4.1%. Actually the government changed the way they calculated
this number this month. Had they not changed the calculation
the number would have been 4.0% and would have caused much
more concern in the market.

The tech buyers roared off the sidelines and the buying was
fierce. The Nasdaq posted the largest point gain ever with +155
points and the Dow posted +269 points and the fifth largest
gain ever. So what happened to all of those gloom and doom
market forecasters last week who were calling for a -20% drop
in the overall market? They got run over by the cash express.
With the tax deferred selling done on Monday and Tuesday and
those investors now ready to buy something new and the flood
of Y2k and retirement cash coming in from the sidelines, words 
were just not enough to hold back the buyers. After setting on
the sidelines in December and watching the train leave the
station they were not going to miss a chance to buy tech stocks
at a -10% discount. Even the threat of an interest rate increase
in three weeks did not slow them down.

There is a superstition in the markets that the first week of
January will set the direction for the rest of the month and
how January goes, so goes the year. If that is the case then
how will we rate the first week? The Dow only managed a +25
point gain for the week and the Nasdaq actually lost -186 points.
Does that mean the techs will go down the rest of the month and
year. I doubt it! With the previous three months of gains and 
the Y2K event I think we were simply due for a pullback and 
now that it is over we have blue skys ahead. No, I don't think
it is a straight line to 12000 on the Dow or 5000 on the Nasdaq.
After moving up +580 points in the last three days, the Dow is
due to rest soon. With the Nasdaq back on track we could start
seeing some new records there again soon. While I am very
positive on the market outlook I would like to remind you 
that next Monday, Jan-10th, last year saw the Dow and Nasdaq
set new highs and then tank for several weeks. In reality I
think we got this same sell off last week and next week will
be highly positive. The Nasdaq is only a little over 200 points
from a new high and I would hope we see that instead of a retest
of last weeks lows. 

The market breadth was good Thursday and Friday with advancers
beating decliners by over 1000 issues on both the NYSE and the
Nasdaq. The markets closed at the high of the day and strength
was increasing.

After saying I thought the market had a better chance to go up
next week than down, I have to tell you that the economic
calendar is stacked against us. Monday and Tuesday are light
with only Wholesale Inventories on Tuesday. Wednesday has Import
and Export Prices but Thursday and Friday are murder. Thursday
has PPI and Retail Sales and Friday will have CPI, Business
Inventories, Industrial Production, Capacity Utilization and
Real Earnings.  Based on this list I could see Monday and Tuesday
with a follow through to this weeks rebound but then a slight
pull back is possible towards the end of the week as traders
take their profits to the sidelines before the PPI and CPI.

While I feel positive about the internals of the market we still
need to remember that we are in earnings warning season. If we
get many more big name warnings the mood of the market could
turn negative again. Secondly, with an expected rate hike in 
February and the slowing of earnings there is nothing to keep
traders interested in the market. I would stay invested as long
as the rally continues but if we start seeing the breadth decline
again then I would take that as a sign of coming weakness. The
real earnings start this week and run for four weeks. Normally
the end of the second week is when the weakness starts. That
would be real close to options expiration Friday and a good time
to look for some current month close to the money OEX puts. Not
now but keep your eyes open. Nothing goes up in a straight line
and not all the profit is out of the market yet.


Check out my Options 101 article this week on Risk Free Trading 
of Internet Stocks.

Sell Too Soon!

Jim Brown

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What a week!  Since two weeks have come and gone since the
last edition of my plays I am not going to try and catch
up with the dozens of trades that were done. I am only going
to list the current plays and the reasons I chose them.

QQQ - JAN-160 Calls

No real need to explain this. Whenever the Nasdaq corrects your
first thought should be QQQ-Calls. This takes the need to be
right on your stock pick out of the equation. By playing the
QQQ you can plan the entire Nasdaq-100 cheaply and easily.
I almost jumped in on the Tuesday dip but I just did not
believe it was over yet. When the breadth started growing
I waited about an hour for confirmation and loaded up. I
will follow these up with a trailing stop in case this is
a cleverly disguised bear trap.

LU Jan-2002-45 leaps

What can I say? Lucent onsale at -25% off, I could not resist.
I bought the Jan-2002 45 calls at a bargain price. Does anybody
not expect Lucent to be over $100 again next year and maybe
$150 the next year. I bought these in my long term account
and I will write covered calls against them until they are
paid for. Whenever a good company takes an undeserved hit you
should always take advantage of it. 170 million shares changed
hands on Friday. You could not sell 170 million shares and
have the price go up unless quite a few people thought is was
a bargain.

GTW - Jan-2002 $50 Leaps

Same story as Lucent. Just because Intel is having problems
shipping chips fast enough des not mean Gateway is not selling
computers. They are gaining on Dell and when Intel gets its
act together they will still be gaining market share. This 
stock will easily be $200 by 2002. I will sell covered calls
against these leaps until they are paid for then hold for my
free stock at the end. They will probably split twice in the
next two years as well.

VOD - APR- $40 calls

Vodaphone is going to be the largest phone company in the world
and it is already in the top ten companies. Do you think that
this size will give them pricing power and cost savings? I do
and I have been waiting for over a month for it to come back
to me. I was beginning to think I would never see $44 again.
I bought the April 40 calls.

BVSN - Covered Straddle

I had sold naked puts on BVSN three weeks ago and did real well.
When the market tanked the Internets I was looking for a good
candidate for a covered straddle. BVSN had the best trend line 
before the correction and the option premiums were very high.
This is a very aggressive play - do not try this unless you
are in the extreme risk category. When BVSN was heading for 
support at $130 on Thursday I set a target shooting order for
BVSN stock at $130.25 (I got a complete fill and the low was
130.06!!) I set it at 130.25 to avoid the tendency of traders
to put a buy just above big numbers. I just got a little above
them. I bought the stock, the $130 calls, and sold the $170
puts. No that is not a typo. $170. I had faith that the market
would turn and BVSN would be above $170 before expiration.
The recent high was $190. I was feeling very cocky after BVSN
climbed +$15 in about 30 min and the market was rebounding
also. I stepped out at about 15 min before the close and almost
died when I came back and saw the $15 had evaporated and the
market was closed. After the Lucent earnings warning it traded
as low as $122 after hours. I had 3000 shares and 30 contracts
of calls and naked 30 contracts of the puts. OUCH!!! 
Fortunately there was never any doubt at the open on Friday
and it rocketed to $148 before rolling over. I sold the 
stock and the calls thinking we might be in a bear trap and
waited. About 1:PM when it rebounded from a higher low I
went long on the stock again at $140. My plan is to sell the 
$170 calls when it gets close. I have already made $15 on the
stock I sold and $8 on the current long position plus $9 on
the $130 call options, plus the premium on the naked puts.
If I closed the play on Monday at the open it would already
be a huge win but I am betting on better than $170 next week!
Time will tell.  

For a better explanation of this strategy see my Options 101
article today.

China - Jan-75 puts

You already know the story on this one. Over 30 million shares
come out of lockup on Monday. Roughly 75% of the available
shares. The trend for the past week had been down with the
market and the possibility of some of these shareholders
wanting to take a little off the table on Monday are good.
After the close on Friday the company announced it was also
selling 3.8 mil shares as well. This should be a quick play.
It will either go down Monday or not. If it does not go down
do not linger. There was some good news about China's (the
country) Internet use in the paper over the weekend. Usage
is now up to only 8 million users. WOW! Talk about a growth
market. If this doesn't move down Monday, get out.

Watch for signs of the market rolling over all week. Wednesday
would be my bet for weakness if it is going to happen.

Good Luck



How To Trade High Risk Internet Stocks Without High Risk
By Jim Brown

Do you watch the highly volatile Internet stocks run up and down
$25, 30 or even $50 a day but are afraid to play them because of
the risk? Have you looked at the options on stocks like QCOM,
YHOO, CMRC or BVSN and passed because you could not see paying
$35 for an out of the money option? 



The following Standard & Poor's 500 companies are expected 
to report quarterly earnings the week of Jan 10-15. 
Reporting dates and analysts' mean estimates are provided 
by First Call/Thomson Financial.

 				        YR AGO EST EPS
1/10 AA   Alcoa Inc.              0.59 0.76
1/11 IP   International Paper Co. 0.21 0.52
1/11 SEG  Seagate Tech. Inc.      0.42 0.08
1/11 STI  SunTrust Banks Inc.     0.86 1.05
1/11 THC  Tenet Health Care       0.40 0.41
1/11 YHOO Yahoo! Corp.            0.07 0.15
1/12 BBT  BB&T                    0.46 0.51
1/12 SNV  Synovus Financial       0.20 0.22
1/13 FNM  Fannie Mae              0.85 0.97
1/13 HBAN Huntington Bancshares   0.39 0.47
1/13 INTC Intel Corp.             0.60 0.63
1/13 KLAC KLA-Tencor              0.11 0.47
1/13 KBH  Kaufman & Broad Home Co 1.02 1.28
1/13 MTG  MGIC Investment Corp    0.88 1.12
1/13 RDC  Rowan Companies, Inc.   0.06 0.01
1/14 BGG  Briggs & Stratton Corp. 1.05 1.38
1/14 FITB Fifth Third Bancorp     0.55 0.64
1/14 FTU  First Union Corp.       1.00 0.86
1/14 FSR  Firstar                 0.24 0.33
1/14 NCC  National City Corp.     0.53 0.55

Stock News

The New Paradigm
By  S.P. Brown

"Stock prices have reached what looks like a permanent high
plateau," so said famed Yale economist Irving Fisher shortly
before the October 1929 stock market crash.  Fisher's
enthusiasm for stocks, though easy to deride now in light of
the stock market debacle that soon followed, is understandable
when placed in contexts of the time.



There is no Ask the Analyst article this weekend.

Market Posture

As of Market Close - Friday, January 7, 2000 

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

DOW Industrials   10,800  11,550  11,523    Neutral   1.04
SPX S&P 500        1,340   1,400   1,441    BULLISH  12.03
OEX S&P 100          700     750     783    BULLISH  12.03
RUT Russell 2000     430     450     488    BULLISH  11.12
NDX NASD 100       3,200   3,800   3,530    Neutral   1.06
MSH High Tech      1,650   1,900   1,766    Neutral   1.06

XCI Hardware       1,250   1,425   1,339    Neutral   1.06
CWX Software       1,210   1,420   1,265    Neutral   1.07  *
SOX Semiconductor    640     660     691    BULLISH  12.21
NWX Networking       820     900     845    Neutral   1.07  *
INX Internet         665     800     701    Neutral   1.06

BIX Banking          645     690     544    BEARISH  11.30
XBD Brokerage        410     450     410    Neutral  11.30
IUX Insurance        625     650     606    BEARISH  11.30

RLX Retail           900     935   1,000    BULLISH  11.23
DRG Drug             380     400     375    BEARISH  12.07
HCX Healthcare       760     790     759    BEARISH  12.07
XAL Airline          180     190     150    BEARISH   5.21
OIX Oil & Gas        280     315     297    Neutral   1.06

Posture Alert    
A relief rally was just what the doctor ordered, as all the 
indexes across the board saw good buying pressure heading into the 
weekend. Leading sectors Friday included Healthcare (+8.06%), 
Drugs (+7.57%), Software (+6.03%), the NASDAQ 100 (+5.65), and the 
Internet (+5.15%).  With Friday's reversal, both the Software and 
Networking sectors were upgraded to Neutral from Bearish. 

Market Sentiment 

Sunday, January 9, 2000

The Start of Great Expectations!

Friday's relief rally was a blessing for the average technology 
investor, because he/she will now get about 16 hours of sleep this 
weekend compared to the 2 hours of sleep that was achieved during 
Tuesday/Wednesday/Thursday combined! So Lucent Technology dropped 
the ball and whiffed on their quarter. At first it looked like 
doomsday for technology, however, executives at the other major 
networking companies were quick to save the day, and stated that 
it was a problem with Lucent, not the industry. Positive comments 
came from or about Nortel Networks, Cisco Systems, Tellabs, JDS 
Uniphase, and even a laggard in the networking group, Newbridge 
Networks. More positive news that came out Friday was that the 
Semiconductor Industry Association (SIA) stated that worldwide 
sales of semiconductors jumped 24.8% to $14.2 billion, which is a 
new record for any month. The SIA also called for continued robust 
growth in the new millennium as well. They went on to state that 
flash memory sales increased 74.2% year-to-date in 1999, thanks to 
wireless communications, while DRAM increased 47.6%, with PC and 
server demand being the major force driving this segment. Pretty 
good timing on all parts!

Below is quick list of equities (that should be reporting their 
earnings this next week) and our Pinnacle Index for those 
particular stocks. The Pinnacle Index is a proprietary product 
that determines current market sentiment and expectations for 
underlying equities and indexes, which is based upon speculation 
in the option markets. Also included are their expected earnings, 
the infamous whisper number (if available), and their estimated 
earnings release date. 

What we look for are liquid stocks/options that garner a lot 
of interest from the investment community. Most of the issues are 
high tech, and are thus more aggressive. We then filter out many of 
the equities, only to show stocks with excessive optimism or 
pessimism. From a contrarian standpoint (a high number is a good 
indication of extreme optimism, and a low number is a good 
indication of extreme pessimism) you should buy when its low, and 
sell when its high. Last quarter, we highlighted some stocks with 
a Pinnacle Index that were stratospheric (as high as the upper 
20's). Needless to say, these stocks had so much pent-up 
enthusiasm, that after their earnings, they tanked. It is the old 
adage, buy the rumor - sell the news. There were also numerous 
companies with a Pinnacle Index less than one. However, once these 
companies came out with their bad quarter, the stocks rallied due 
to the oversupply of pessimism.

If your favorite stock is not listed, the most common reasons are: 
1) there are no options traded on the underlying equity 
2) lack of interest by option speculators in the security 
3) lack of quality information 
4) company already pre-released 
5) insufficient data. Also, as we get closer to the heart of 
earnings season, the list will expand dramatically to reflect 
companies whose earnings are due out shortly.

Company        Symbol  Pinnacle   Expected   Whisper#:  Estimated
                         Index(PI): Earnings:             Date*:

Yahoo          YHOO      3.40      +.15       +.18      1/11
Seagate        SEG       3.52      +.09       +.13      1/11
Intel          INTC      3.06      +.63       +.65      1/13

Looking at the 3 major players that are due out, all expectations 
lean to the bullish side of sentiment. All three have whisper 
numbers that are several cents higher than the expected number, 
and we are even starting to hear whispers for Yahoo that are even 
higher than the 18 cents listed. Unfortunately, the Pinnacle Index 
doesn't currently reflect any extreme bullish or bearish 
sentiment; however, option speculators like to jump in the 
preceding couple of days before earnings, so the Pinnacle Index 
can change dramatically within a few days. We will continue to 
monitor the options montage and let you know of any dramatic 
changes within these issues during the next letter. Look for a 
more expanded list starting next week, as the heart of earnings 
season will be upon us. Have a good trading week! 


Corporate Earnings:
The main corporate earnings season is just around the corner, but 
there have been several positive earnings surprises or comments 
from senior management, including SAP AKTIENGESELL (SAP), 
Peoplesoft (PSFT), Lehman Bros (LEH), Nortel (NT), Cisco Systems 
(CSCO), Newbridge Networks (NN), and Charles Schwab (SCH).

Cash Flow:
The cash that has been sitting on the sidelines was put to use 
Friday, as the NYSE traded 1.22 billion and the Nasdaq traded 
1.63 billion.

Mixed Signs:

Volatility Index (23.20):
The VIX proved once again this last week that the low 30's was a 
great opportunity, as it touched 31.02 on 1/5, which also 
correlated to a near term bottom on technology stocks.


Pre-Release Season:
We are in the pre-release season, in which companies with 
negative earnings announcements spill the beans. We have 
witnessed several such as Gateway Computer, Beyond.com, and now 
Lucent Technology.  

Interest Rates (6.540%):
The yield continues to break new highs, with the next stop being 
6.75-7.00%. The market has already priced a 25 basis point increase 
this February, however the market is also pricing in a 20% chance 
of a 50 basis point hike.

Low price to earnings stocks have been a safe haven so far in 2000, 
while high P/E stocks have gotten blistered. Is value coming back 
into play?
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.

Change in Sentiment:
Bulls will remember this latest sell-off in technology shares, 
which could put a damper on any near-term rallies.

The Power of Sentiment Analysis

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

Pinnacle Index OEX               Friday
Benchmark                        (1/7)

Overhead Resistance (785-810)     3.84

OEX Close                       783.49

Underlying Support  (760-780)     0.93 
Underlying Support  (730-755)     2.38

What the Pinnacle Index is telling us:
Based on January 7, direct overhead is moderate, and underlying 
support is light.

Put/Call Ratio                  Friday
Strike/Contracts                (1/7)

CBOE Total P/C Ratio             .50
CBOE Equity P/C Ratio            .43
OEX P/C Ratio                   1.03

Peak Open Interest (OEX)
Strike/Contracts     (1/7)

Puts                700 / 11,939	
Calls               780 /  8,250
Put/Call Ratio        1.45

Volatility Index    Major
Date                Turning Point       VIX

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

July 16, 1999       Top                 18.13
August  5, 1999     Bottom              32.12
October 15, 1999    Bottom              32.06
January 5, 2000     Bottom?             31.02
January 7, 2000                         23.20

Investors Intelligence
                    Major             Percent     Percent
Date                Turning Point     Bullish     Bearish

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

Oct. 13, 1999       Bottom?           39.2        37.5

December 30, 1999                     55.0        27.0


For the week of January 11, 2000


None Scheduled


Wholesale Inventories    Nov    Forecast: --     Previous: 0.3% 
BTM Schroders            1/08   Forecast: --     Previous: 0.4% 
LJR Redbook              1/08   Forecast: --     Previous: 1.8% 
API Oil Stocks           1/07   Forecast: --     Previous: -1.568M


Import Prices            Nov    Forecast: --     Previous: 0.5% 
Export Prices            Dec    Forecast: --     Previous: 0.2% 
Atlanta Fed Index        Dec    Forecast: --     Previous: 21.7 


Jobless Claims           1/08   Forecast: --     Previous: 309K 
Producer Price Index     Dec    Forecast: 0.3%   Previous: 0.2%  
Retail Sales             Dec    Forecast: 0.7%   Previous: 0.9% 


Consumer Price Index     Dec    Forecast: 0.3%   Previous: 0.1%  
Business Inventories     Nov    Forecast: 0.3%   Previous: 0.2%  
Industrial production    Dec    Forecast: 0.4%   Previous: 0.3%
Capacity Utilization     Dec    Forecast: 81.1%  Previous: 81.0%
Real Earnings            Dec    Forecast: --     Previous: 0.3%

Week of 1/18

1/19 Building Permits - Dec 
1/19 Housing Starts - Dec
1/20 International Trade - Nov
1/20 Philadelphia Fed Index - Jan



First of all, I would like to wish all the readers of OIN a happy 
New Year.  I know it's been a while since my last article on my 
Christmas Vacation strategy, but I told you I needed to visit my 
old aunt before she died, and I did just that!  Now I'm back in 
the saddle and rearin' to go.  

Here's my advice for this new year- don't wait until the end of 
the year to figure your taxes!  My Christmas Vacation Strategy 
got turned upside down, inside out and kicked in its fat little 
jolly ole belly.  On 12/20 I received a call from my accountant 
stating he had some good news and bad news.  The good news was 
that I made a lot of money in 1999.  The bad news was, I didn't 
pay enough taxes.  Because my taxes for 1999 were more than some 
IRS % amount of the previous year they would be subject to penalties, 
interest etc etc etc.  So I had to scramble to review my positions 
and try to implement some last minute tax losses to bring my income 
down this year and postpone it to the next century.  I don't know 
about you, but I really hate to lose money.  So trying to come up 
with losses is like asking Ivana Trump not to wear diamonds or 

To recap, one of my Christmas Vacation strategies was to hold Yahoo 
and my Jan 350 call which I wrote for 18-1/4.  Little did I know 
that Yahoo would turn explosively upward.  The first problem was 
Yahoo went from 322 on December 9 to over 422 by December 22.  Of 
course, it wouldn't have been a problem if I hadn't written a call 
against it.  The second issue was my tax problem.  After much nail 
biting and squirming in my chair, I bought back my Yahoo calls at 
81-1/2 points for a net loss of 63-1/4 points (81-1/2 less 18-1/4).  
Sounds scary, huh?  Herein lies the beauty of covered calls and how 
to unwind.  The 63 point loss on 10 contracts provided me the loss 
I needed for my tax situation.  However, this loss was made up on 
the gain in the stock.  Had I been called out at 350, I would have 
given up 70 points on the stock (420 - 350).  The gain in the stock 
offset the loss in the call I bought back.  I could have at that 
point wrote a new January call for a higher strike price but because 
I couldn't confirm from my accountant if the new strike would be 
considered income in 1999, I decided not to take the chance.  
Besides, the way this stock was running, I didn't want to cap my 
upside (yet).  Rumors were flying about a split and earnings were 
due January 11.  I am still long yahoo and have not covered it.  
I am now waiting for a split announcement.  (This is where I say 
a Hail Mary or two).  

After my Christmas vacation, I returned to trading on Monday January 
3 and most of my stocks were up, up and away.  I had vowed during my 
Christmas vacation break that I would write the calls on my volatile 
stocks to lock in my profits, but good old greed stopped me.  I 
reckoned I could write the calls on Tuesday for even more money. What 
was one more day?  Of course, Tuesday was the first day of the dip or 
do we now call it a correction?  Wednesday was even worse than Tuesday.  
Now what?  The Hail Mary's weren't working and I knew I was in trouble.  
If only, I had written the calls or sold when Yahoo dropped 10% off 
its high.  I really need to implement stops.   My mental stops don't 
work when there are extreme moves.  I freeze and convince myself it
will turn back around later in the day.  By the end of Thursday, Yahoo 
was down to 361.  A trailing stop off the high would have taken me out 
at 429!  Please folks use them!  Don't be a hardheaded woman like me.  
I couldn't bear to watch on Friday so I took the day off.  Apparently 
the Hail Mary's must have kicked in, because Yahoo closed up around 
the high of the day at 407-1/4.  There was a lot of consolidation 
around this level the previous week, so I except it might find 
resistance at this level.  I don't like to hold over earnings, but 
I will probably write calls on half of my position this week if the 
market doesn't look strong to lock in some profits.  The Jan 450 calls 
are currently overpriced at around 23.

In my original Christmas vacation plan, I was going to write the JDSU 
JAN 260 calls for about 23 points on Monday December 20.  Because the 
market was flat in the morning, I decided not to write the calls.  The 
next day JDSU took off like a rocket.  I only peeked at it occasionally 
during the day.  I figured it was making its last split run so I 
decided I would not cover it but sell it on January 3 instead. On 
January 3 JDSU opened at 183-3/4 (367.50 pre-split) and the rest is 

Also included in my Christmas stocking was CMGI, which I bought for 
198-1/4 on 12/15. On Monday December 20, my plan was to write the 
January 230 call for about 25 points.  I didn't like the action on 
CMGI so I sold it for 218.  Unfortunately, the next day it went 
through the roof up to 270.  Oh well, you can't win 'em all.  

My last stocking stuffer was QCOM, which because it split 4:1 on 
December 30 It is too difficult to analyze in the context of this 
article.  Suffice to say, the picture is similar to Yahoo without 
any impending split rumors.   

So folks, my New Year's resolution is to make sure I implement my 
Christmas Strategy at the end of this year, and not turn on my 
computer until the Monday after New Years.   

Contact Support


What a whirlwind week in the market!

A lot of people were caught off guard on Tuesday, Wednesday and 
Thursday at the mini-correction we saw in the tech stocks, only 
to hold their breath before the employment report was announced 
Friday morning. With the rising interest rate environment and 
the warnings from Lucent and Gateway all we needed was a bad 
employment report and a bad reaction to the report as a catalyst 
for what could have been a severe sell off. 

After the employment report was released most of the analysts and 
market announcers were left scratching their heads, puzzled at the 
fact that the S & P futures were up solidly before the opening. The
employment rate came in virtually unchanged at 4.1 percent and wage 
increase rose .4 percent.  More new jobs were created, and we saw a 
slight increase in wages so why wasn't the bond market tumbling? No 
one knows for sure why the market reacts to news, but in my opinion, 
this report was relatively benign considering that December was a 
robust holiday season and the stores had to hire seasonal workers. 
Remove that factor and you have unemployment and wage inflation 
virtually tame.

This market looks for any excuse to rally. Short of a real disaster, 
the market wants to rally. Even the warning from Lucent didn't crash 
the tech stocks. This may be due to the fact that Lucent has large 
institutional holding and also is one of the most widely held stocks 
in America by people who hold it mostly for the long term, not as a 
trading stock..The market for telcommunications and networking 
equipment is expected to grow dramatically over the next several 
years, and the holders of Lucent may think that one disappointing 
quarter is not likely to do any real damage to Lucent's long term 

My trades for this week were not as profitable as I would have 
liked but at least I wasn't wiped out. Why? Because I hedged my 
main position with two puts, and I took relatively conservative 
positions.On December 16th I had sold my last CMGI option and 
purchased shares of stock at a price of 226 ¾. On Monday I sold 
the CMGI at 307, when it had moved up 30 points and felt frustrated 
when it closed up 49 points for the day. The following day I bought 
the stock back at 303. This was a mistake, but not a disasterous 
one. At the time of this writing, CMGI is 267, which means the total 
profit for this position was 45 points, 81 on the upside, 36 on the 
downside. What I would NOT do here is buy a call option again until 
after CMGI splits next week, and settles into a fairly normal daily 
trading range with predictable support and resistance levels.

The last call option position I had taken were Nortel June 95 calls 
which I bought at 20 ¼ on the 29th of December. I sold them on the 
fourth at 21 ½. Not a huge gain, but I was glad I took it when I saw 
the calls trade as low as 13 1/2 later in the week. This is why I 
always take a profit in a call option, even a long term option.

I had also purchased 100 shares of Nextlink stock hedged with two 
at the money Nextlink Feb 80 puts the week of Dec 27. My reasoning 
for this was that Nextlink was likely to move dramatically one way 
or the other once the holidays were over, particularly because 
Nextlink had been added to the Nasdaq 100. This didn't work out quite 
as well as I had expected. When the market started to go down on 
Tuesday afternoon I sold one of the puts for a half point profit. 
I thought this was a temporary fluke, and the stock would go way up 
the next day. The following two days the stock went down as low as 
72. If I had closed out the entire original position at that point 
(stock and puts)  there would have been a bigger profit in the 
account. As it was I did make a small profit

This type of position is best taken during a period of relatively 
low volatility in the market expecting a big increase in volatility.  
It is best taken with a liquid stock with a high trading volume and 
a high market capitalization. A quarter point or half a point 
difference in the purchase and sale price of the option can make a 
big difference in the profit, so watch out for the market makers 
who will try to scalp as much as they can.

In fact, market makers across the board have been having a difficult 
time with certain stocks. The recent volume and volatility in certain 
stocks (ie 50 points in one day) has been unprecedented, and large 
order imbalances and backlogs have affected market makers and 
specialists. In certain circumstances, the market makers are 
determining time windows for execution for market orders. In addition, 
bench mark round lots are not always 1000 shares anymore. If you put 
in an order for 1000 shares at 100 you may very well get the first 
100 shares at 100, then the next lot at 100 1/8, the lot after that 
at 100 ¼, or even 101. Think you have a hard time with these wild 
swings in internet stocks? Imagine trying to make or maintain an 
orderly market in such a stock.

I also bought a long term Jan 2002 leap on Qwest communications at 
11 ¼. I like this because the Jan 2001 leap was only about three 
points less. Qwest has been relatively dormant compared to other 
technology stocks, and I think the odds of this position becoming 
profitable in the next two years are very high.

According to AMG Data Services, for the week ended Jan 5 mutual 
funds took in a total of 2 billion dollars in cash, or an average 
rate of 8 billion dollars a month. This is down from the November 
rate of 14 billion per month, but robust nonetheless. More 
significant, of the 2 billion taken in, 1.7 billion of the money 
went into technology sector funds! This is one of the factors 
supporting the technology stocks. The fund managers can't sit on 
cash very long, they are required to buy in the sector of their 
fund. This may be why the minor cyclical rotation we saw yesterday 
is not necessarily the start of a new trend.

The flows into mutual funds are one of the factors supporting this 
long bull market, and it is not likely to end with the Federal 
Reserve's possible rate increases. Think about it, does anyone 
you know keep their money in a savings account in the bank? The 
traditional thought is that interest rates from bonds, money markets 
and CDs compete with the stock market for investor's money. However, 
with the S & P 500 returning high double digit growth the last five 
years it is unlikely that investors are going to sell their stock 
holdings if interest rates go from 6.5% to 6.75%, particularly 
because interest on government bonds is taxable.. .

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

The Option Investor Newsletter              1-9-2000  
Sunday                        2 of 5



Okay, so now we know Darwin was an option trader. How does it 
feel to be stretched all the way to one side in order to be 
propelled in whiplash style, to the opposite extreme? Sort of 
like a spit-wad in a sling-shot?

If one is a directional option trader, these times really test 
your level of skill. We hear all the time, that "the trend is 
our friend". This is absolutely true for those who actually play 
the trend. For a directional trader, that means you must be able 
to either exit when things turn against you, and/or play the 
downside slide too. Skill comes in being able to anticipate these 
movements, profiting on both sides of the trade. Others may just 
prefer to exit and wait it out. The most predictable part of 
option trading is that these reversals will come. Timing them is 
difficult. Either you prepare your portfolio in advance, or you 
need to watch it VERY carefully. Yes, that means intra-day, 
because carnage can ensue in a matter of minutes. 

The best way to prepare, especially if you pretty well know it 
is coming, is to keep your positions tight. Don't spread your 
attention out to 15 different trades. Also, if you know a 
correction is coming soon, start lightening up on your contracts 
and take your profits. Leave money in cash so that when the 
correction is over, you will have money available and ready to 
buy at the bottom. Concentrating on only a few positions at a 
time, will give you better profits by preventing distractions. 
Also, it allows you to exit trades more rapidly instead of 
fretting over 15 different positions trying to evaluate each 
one. In a fast correction, 5 minutes worth of evaluating can 
cost you thousands and thousands of dollars in lost premiums, 
before you can exit. 

Lately, I have been asked many times about stop losses. Some seem 
to be frustrated that although they are setting their SL, they 
find that once they exit, the stock returns back up. Yes, this 
is a typical problem. But remember, it could very well continue 
down or the return up may be only a momentary cycling before the 
continued sell off. I think the best rule of thumb is if you are 
stopped out, wait. Do not let emotion take over as you see the 
stock reverse course. This is where indicators come in. All stocks 
roll intra-day. Being able to look at these rolls, on a 1 min or 5 
min chart, can greatly improve ones decision-making skills. It 
becomes easy to see if each rolling high, peaks out lower than 
the earlier ones in the day and if the rolling lows are getting 
lower and lower. This tells you the stock is still heading lower.

If on the other hand, the reverse is seen, it is working its way 
down to your stop loss amount (?possibly a 20% stop loss??), you 
exit and then it starts going up with each rolling peak getting 
higher than the last one, while the lower rolls bottom out higher 
each time also, then this does give more indication of the stock 
recovering. Remember, for the conservative types, to be safe and 
not to be faked out, one should wait for the stock to recover to 
the point of closing at or above, the previous days high. To be 
even safer, wait for it to take out a major resistance level above 
that. Of course that takes time and days, which for many high-risk 
option traders, is very, very difficult to wait out. 

It can be hard to evaluate things during meltdown periods. For the 
last two weeks of the year, my concern centered on Y2K and would 
there be a crisis or not? Would it affect the markets around the 
world? Would there be irrational chaos or terrorism? Would it 
affect me at home in any way? I exited my high risk plays just in 
case, in addition to lightening up on the number of contracts I 
had. All weekend I watched, listened and waited, feeling confident 
by Sunday night that all markets were okay. Monday morning, I was 
a happy camper......that is, until I started to exit at the peak. No 
matter how prepared I thought I was, I had not anticipated 
problems entering online orders or delays reaching someone by phone.
I eventually was able to exit but I continued to have problems all 
week including my charting service going out due to the higher than 
usual trading volume. Talk about a distraction and not being able 
to think!!! Without my charts I really felt helpless. 

I lost a few profits I could have kept, but in all honesty, I chalk 
it up to being on the breaking edge of technology. It's up to me to 
cover all my bases. Although it was a minor loss, it did affect my 
trading momentum. The last week before the New Year, I looked at 
buying puts but backed off because of the huge premiums. I evaluated 
my risk and decided to play my investment on the run up into the 
last few days of the year, instead of risking high put premiums for 
a sell off that may not come for a week or two. For me, that was 
the right choice because exiting high risk plays before the New 
Year, gave me cash when the sell off began on Tuesday. I waited for 
what I thought was a recovery bounce on Wednesday, before trying to 
re-enter. OOPS! Wrong timing! It was a bear trap instead. When that 
happens, one exits again and waits. I did not buy Friday's great 
YHOO dip to 364, but waited for it to try and take out the previous 
days high, at the close instead. 

The bottom line is, always take your profits. Those who held their 
YHOO from last week through this week, have not recovered their 
lost premiums. The safest play using stop losses is to exit as 
planned, wait, watch, then re-enter if appropriate. Commissions 
are so cheap these days that the commission charge is nothing 
compared to the potential cost of holding on for dear life. Also, 
although this quick Nasdaq recovery felt good, I will not trust 
it to be anything more than very temporary due to the FOMC meeting 
coming up. My plays will be much more cautious in the weeks ahead 
because I don't want to over-trade during rocky times. I prefer to 
keep the gains I recently made and wait for this period to pass. I 
will enter non-YHOO plays, on the pull back I expect Monday morning.

I will be doing some traveling soon and if possible, I'd like to 
visit some local option clubs if the timing works out. Would the 
organizers of the Seattle, Washington; Durham, North Carolina and 
Austin, Texas clubs please send me an email. Also, I would like to 
hear from any advanced, experienced option traders in the Houston, 
Texas area. 

Renee White
Contact Support


TDG #2: Get Small, Print Black

Instead of waiting until next Thursday to publish the solutions 
to the Trading Decision Games, I will simply put the solution in 
the Sunday newsletter so that readers can stay up to speed on the 
situation and market conditions that formed the background for 
the decision. In Trading Decision Game (TDG) #2, you have just 
taken big profits on Jan4, but are tempted to trade on Jan5 
because of the big sell off, and are getting ready to pull the 
trigger on some QCOM and YHOO calls. Here are 3 solutions, 
followed by a discussion.

Solution 1

I would not trade at all until Friday after the jobs report. The 
fund tax advantage selling may draw out for the full week. QCOM 
I would not consider just yet. There are huge profits to be settled 
and there is good tax advantage to recognizing them in the early 
year for all investors. I anticipate expect a consolidation period 
before legs are found for QCOM (Jim is wise but I am responsible). 
If the jobs report is nice and the market fires a rally back signal 
I may consider a quick 1 & 1/2 day run in YHOO provided the 
Internets are cooking and YHOO is moving up briskly. I would watch 
this play and be ready to jump out at the first hint of roll over 
Monday afternoon. I will not be holding YHOO at the close Monday...
Oh, wait a minute, I'm on a much needed vacation for the next few 
weeks. Time to sleep late and plan a nice date. Watch the market 
for fun. Nothing to decide. Leave the lap top at home. I already 
decided to relax. I ate the cake last month. Leave the frosting 
for the kids. What was I thinking? Oh yeah, I wonder what kind of 
a pop YHOO would have on Friday - Monday if the jobs report is 
benign? Curious.

Solution 2

Now on to the question you posed in your newsletter. It sounds 
remarkably like my strategy, which I believe pretty much 
corresponds to your strategy for this month. I made a lot of 
trades during Nov and Dec and during that two month period I 
increased my portfolio by nearly 40%. I had a lot of good trades, 
the biggest ones being QCOM, both long and short term options.
By late December I started to realize I need a break. It fits 
in nicely with my personal life, as we are going skiing for two 
weeks in late Jan and early Feb. So I decided that I was going 
to exit all of my ST Option positions early in Jan and sit tight 
for a few weeks. I was hoping that the market would zoom for a 
few days in Jan, euphoric over reaching the millenium with no 
major glitches. I would make my entire profit goal for Jan in 
two days. Then on Tues it started to turn. I got out of my YHOO
options when the stock was at 486 for a 115% profit in two days 
(bought them on 31 Dec). Also got out of my ORCL options bought 
the day the split was announced, for a nice profit. Stupidly 
held on to some other positions hoping maybe the market would 
turn, but exited all of them early on Thurs, so overall about 
even with where I was on 31 Dec and no complaints. (Everything 
in this paragraph up to now is real) Then I saw this headline
in Market Wrap saying "get out the checkbook and back up the 
truck". I was really tempted, especially to play YHOO given that 
it has experienced such a big correction and is due to bounce 
Mon and Tues in anticipation of earnings and a 3:1 split. But 
what happens if they only announce a 2:1 split, or no split at 
all. Remember what happened last year? They announced a 2:1 
split, the stock zoomed to 460, then turned on a dime and by 
the time it actually split it was down to 340. And what if 
they suddenly pre-announce a la Gateway and Lucent? No, I am 
not going to do it. I set my rules and I am going to live by 
them. It is called discipline, and I know that if I am going 
to be successful in this game, it will be more because of 
discipline than anything else. I am taking a break, and am not 
trading again until after my ski vacation. The market is due 
for some volatility. It is still sick and still has some 
corrections to undergo before it gets better. The carnage won't 
be over until after the Fed meets in Feb, and maybe not even 
then because once it is over they will immediately start worrying 
about the next rate hike. Anyway, I am comfortable with my decision 
and as tempted as I may be, I am going to stick with it. So my
answer is - I ain't playing!

Solution 3 (Author's Solution)

This is what I actually Did: On the back of the sheet where I 
printed out the Tuesday night "Market Wrap," I wrote down 2 major 
indicators, DOW & NASDAQ, and beside them, I wrote, 10850 and 3800. 
Those were my "weapons free" indicators. If I hit both of those, 
then I could trade the options, which were the YHOO Jan410 and 
QCOM Jan160 Calls. Next to the Option Symbols, I wrote levels of 
support which the newsletter write up had indicated -- YHOO 440 
425 420; QCOM 160 147. I entered the symbols for the options into 
my qcharts quote sheet (I keep one quote sheet for options, another 
for the underlying stocks). When the market opened, I set alerts
for YHOO at 430, 426, 422, 418, and for QCOM at 160, 156, 152, 148. 
I decided on a small number of contracts for each to enter at each 
alert level, and I decided on entering an automatic -15% stop loss 
underneath each contract as it filled. I was all in cash and feeling 
pretty good about my exit on Monday and Tuesday. Even the contracts 
I held (GSTRF) had gone up on Tuesday. As Marty Schwartz (see his 
book, Pit Bull) might point out, after big wins, I was due for some 
reckless plays. The alerts triggered almost immediately, and, to my 
credit, I waited, but not long enough. At about 420 on YHOO and about 
150 on QCOM, I started taking positions. Fortunately, none of my 
YHOO orders filled. But some of my QCOM orders filled. My -15% stops 
took me out literally in minutes as QCOM kept tanking. After two 
rounds of getting filled on buys then stopped out, I made my best 
decision: I turned off the computer, and went back to bed. I
had come up with the plan on the fly on Tuesday evening, and I 
lacked the conviction to carry it through. 


As it turned out, I was just a little patience and about 20 minutes 
from some profitable trades. 20 minutes after I went back to bed on 
Wednesday morning, the NASDAQ bottomed at -167, after its -229 
drubbing on Tuesday. If I had entered the QCOM and YHOO plays then, 
and sold them later that afternoon, I could have had some nice 50 
-100% profits. If, however, I had held them through Thursday, I would 
have suffered losses. The lesson, then, is to know when to trade and 
when not to trade. And here, my hat is off to Solutions 1 and 2. Both 
in their well reasoned and humorous way, these two readers come to 
the right conclusion -- I have just made big profits in the November 
& December periods, now is the time to chill out, plan a date, go
skiing, etc. That said, if I had to execute this trade over again, 
there are two things I would do to improve my performance. 1) I would 
be patient. I actually started executing the QCOM buys before the 
NASDAQ hit 3800, and the DOW was positive from the start. Had I waited, 
I could have found a bottom on QCOM on Wednesday morning. 2) I would 
add an indicator to the DOW and NASDAQ -- the VIX. It closed at 29 on 
Tuesday, having reestablished a range of 20-30, which it had for most 
of 99, but which had been absent in November and December. I would 
have also watched for the VIX to hit 31 - 32, which, in 99, indicated 
a bottom. However, even if I nailed a good entry on Wednesday, I would 
have been in danger of holding too long. The right play would have 
been to take profits on Wednesday afternoon, but how could one know 
that? The market, in Y2K hangover/ tax deferred selling mode was too 
volatile. In any event, the right thing to do was to step aside. 

As Marty Schwartz likes to say, now is the time to "play small, and 
print black." Whether you have made a killing in November/ December 
or just gotten killed in the last week, the right course of action 
is to get smaller, get smaller, get smaller... the market is volatile 
and lacks direction right now. Earnings are right around the corner, 
but so is the Fed. New cash is coming in, but is tax deferred selling 
over? Take cash off the table and wait for better conditions. Go 
skiing, forget about the market, or, if you can't forget about the 
market, get smaller in your trades. If you do trade, print black. 
Make profits, even small profits. After my Wednesday loss, which 
were very small compared to my recent gains, I still felt bad, but 
not nearly as bad as if I had put a large amount of value at risk. 
On Thursday, I started to paper trade in preparation for more 
advanced trading strategies. I sold YHOO Jan340 Puts when YHOO was
crashing down through 380... 370... 360. I sold those puts at 20, 
and by Friday, they had gone down in price to 10 as YHOO righted 
itself and closed at 407. I plan to cover that trade on Monday 
afternoon before YHOO's earnings anouncement. SInce this is only 
a paper trade, the pressure is off. I am as small as I can get, 
but I am printing black. On Friday afternoon, the newsletter came 
out with a trading alert on China.com. I had no intention of 
trading, but a buddy of mine send me a YHOO instant message, asking 
whether I saw the alert. While trading instant messages, we brought 
up the time & sales on the China.com Jan75 and Jan80 Puts. He shot
first and hit the 80s at 10 5/8. I couldn't resist and hit the same
contracts at 10 7/8. By the end of the day, the contracts were 
trading over 15, as volume on the contracts swelled. I was still 
trading small compared to the scale of my November/ December trades, 
and I was printing black. Hadn't closed the China.com Put trade, but 
with the lock up coming off on Monday, there was every reason to hold 
to see how that situation played out.  

I am still sticking to my plan. I am in "rest" mode until about Jan17,
perhaps even a week later. I am paper trading selling puts and calls 
to get ready to sell calls and to buy QQQ Puts when we get closer to 
the Fed. I don't want to totally ignore the markets because I want to 
keep the pulse while I wait for a good opportunity to line up for a 
major commitment of resources. With the markets trending up strongly 
on Friday, I am anticipating a potentially range bound/ sideways 
trading market so I am getting ready to close my short of a YHOO 
put and to sell calls when and if the market bounces off an upper 
bound; these will be paper trades only in the January series. I 
want to be prepared to shoot live rounds in the February series. 

Good Luck
Janar Joseph Wasito

Contact Support


An Osmotic Technical Point of View

Hello...My name is Harrison and I am a Capitalist and I am running 
for President...

Yes sports fans, I actually took a bit of a trading vacation. I 
have some semblance of sanity back and just picked up a few Feb 
95 Calls on Apple (although, there are those that say you can't 
be sane and trade options). Mac World is going on and it is taking 
a bit of a dip today for some reason.
Just checked the ticker and I am up a buck in the time it took me 
to write the above paragraph. Man, I love this game sometimes.
Which brings me to my point. I have decided to join the political 
fracas. I have decided to join the Capitalist Party. As far as I 
know, it does not exist, at least officially. But, I am signing 
myself up anyway.
While everyone talks of ideology, we of the Capitalist Party speak 
of cash. Even when it comes to ideology it comes down to cash. Try 
building schools or parks or even governments without it! Heck, I 
might even run for President on the new platform. Let me lay it out 
for you.

Our tax plan will be the "Reverse Curve Tax". I came up with this 
plan in my teen years the first time I worked a bunch of over-time 
and actually took home less than when I worked 10 hours less. 
I had really busted my hump that week and took the 2 hours a day 
over-time every day. There was a really nice set of skis that I 
just had to get. Well the paycheck came and I ended up with less 
money than some of my lazy compatriots who did not work any overtime. 
What kind of screwed up system is this that rewards people for 
working less I asked? They were laughing at my consternation! They 
already new what I had just learned! Progressive tax my eye! 
I could not believe it. What kind of idiot came up with that plan 
I asked myself. That was my introduction to the "logic" of 
governmental thinking. 

Logic? Try getting sales people to work using the same plan and 
your company will go broke. You try telling them "OK, the more 
you sell, the less you will make!" The company would be out of 
business is a week. Yet, that is exactly what I found our 
government doing several decades ago. I was dumbfounded!
With the new "Reverse Curve Tax" the harder you work, the less 
you pay percentage wise! Now there is an incentive to actually 
work harder instead of being penalized for it. 

So for the first $100,000 you would pay $20,000 in taxes and then 
if you made $200,000 it would go down to lets say 15% on that 
$100,000. Then if you do really good, it would go down to 5% or 
so. Now there is some incentive to really get to work! Everyone 
would benefit! The government would get extra money that they 
would not have otherwise had and then you have all of the 
ancillary benefits of the extra money being put to good use 
somewhere else in the economy. Talk about a booming economy! 

So, what do you think? Let me know. I like getting e-mail! 
Ahh, but then again I am reminded of a quote by Hubert Eaton. 
"Capitalism is the only system in the world founded on credit 
and character". I guess I might not fit in too well with 
politicians after-all.

Oh, but to dream of the Reverse Curve Tax. It keeps me warm 
at night. That and paying my electric bill on time! In the 
meantime, go Apple go!

But then again, just maybe....Hello...My name is Harrison and 
I am a Capitalist and I am running for President.... has kind 
of nice ring to it. Don't you think?

Happy Trading!
Contact SupportHarrison

PS You might be a Option Trader if:
When at the grocery store you find yourself digging all the 
way to the back of the Dairy section to find the carton that
has one extra day until expiration!
PPS For those of you in doubt, this is supposed to be satire!


Selling Puts

My name is Rob Norman. I work at a full service brokerage 
firm called J. Michael Patrick that is based in St. Louis, Mo. I am 
frequently asked what trading strategy have I been most successful 
using, the answer is always the same-selling naked puts! Selling a 
put is a strategy where you are selling the right to someone to sell 
(put) a specified stock to you at a specific price. Because you're 
on the selling side you get to keep the premium that was captured 
for the sell. The buyer in turn will have to pay the premium for 
the right to sell (put) the stock to you. 

Here is an example: Qualcomm is selling at 180. You could go out 
and sell  a 150 put for January and receive a premium of $5.00. 
Therefore if you sold 10 contracts you would bring in $5,000.00 
minus commissions! So if by the third Friday of January Qualcomm 
(QCOM) had sold off by 29 points down to 151 you would keep your 
entire profit! If (QCOM) had dropped more than 30 points you would 
have the obligation to purchase 1,000 shares at 150. Keep in mind 
you already received 5 points so your actual cost on (QCOM) would 
be 145, 35 points below the current bid! Also keep in mind you 
have the ability to purchase your put back at any time, you don't 
have to keep it until expiration.  

This is a strategy where you can win three different ways: YOU WIN 
if the stock goes UP, STAYS FLAT (unchanged), or goes DOWN a little. 
That's right, the only way you lose is if the stock goes DOWN a lot 
(5-10 points) approximately! Hard to believe but true. There is one
rule to never break when using this strategy NEVER SELL A PUT ON A 
STOCK THAT YOU DON"T WANT TO OWN! This way if the stock does get 
killed after we sell a put on it you won't mind owning it.  In fact 
when a client calls me and says I want to buy XYZ stock I always 
check the puts on it, have you ever heard of being paid to buy a 
stock that you want to buy anyway! There are many versions of this 
strategy, like taking half the premium you received for selling the 
put and buying a call with it and so on, I won't go into all that 
now, but you can use your imagination! 

Good Luck and Good Trading! 
If you have questions on this strategy 
please call me at (888) 432-5671
Contact Support


Daily Results

Index       Last    Week
Dow      11522.56  156.05
Nasdaq    3882.62 -186.69
$OEX       783.49   -9.34
$SPX      1441.47  -27.78
$RUT       488.31   -5.08
$TRAN     2964.72   57.24
$VIX        28.02   -3.10

Calls               Week

VIGN       175.19   12.19  VIGN just keeps on moving faster
AMGN        68.00    7.94  Was a relative monster last week!
HGSI       160.31    7.69  Weathered the storm well last week
GO          28.00    4.25  Call option volume picks up momentum
XCED        45.75    4.25  New, a visionary in a hot sector
CMTN        52.00    3.25  Renewed interest for a good Q1
EMC        107.38    2.69  More good news and a new $140 target
GMH         98.00    2.00  New, buzzwords for tingly investors
INKT        89.38    0.63  New, we just can't leave INKT alone
MSTR       210.38    0.38  New, MSTR is set to split Jan 26th
CSCO       105.88   -1.25  New, buyers stepping to the plate!
CMVT       139.00   -5.75  New, CMVT has regained its footing
ADI         86.88   -6.13  Starts the new year with a breather
CHKP       191.88   -6.88  An earnings and split run for CHKP!
GSTRF       35.56   -8.44  Dropped, sentiment not on our side
ORCL       103.38   -8.69  New, let the split run begin!
CMRC       187.50   -9.00  A lot events to fuel this ride!
TTN         36.00  -11.31  Dropped, TTN trips and falls off
NOK        171.00  -16.06  Makes Merrill Lynch's Top Ten List!
AFFX       153.25  -16.44  An Intriguing way to play the hype
MOT        128.81  -18.44  New, some outstanding opportunities
BVSN       148.34  -21.72  See? No reason to worry about BVSN!
QCOM       150.00  -26.12  You just can't get rid of it!


SCNT        66.50  -19.94  A whole lot of sellin' goin' on!
GTW         61.63  -10.44  Dropped, looks like the news is out
SANM        91.75   -8.13  New, slips down to meet its maker
WCOM        47.19   -5.88  Much ado about nothing was the theme
CHINA       76.50   -2.13  New, Friday's Trading Alert!
HNZ         39.00   -0.81  Still bad taste in investors mouths
SPLN        60.06   -0.06  Dropped, SPLN gets a first down
CIEN        57.75    0.25  Dropped, a little bottom fishing
JNJ         96.50    3.25  Dropped, climbs out of the trenches



XCED - Xceed, Inc.
GMH  - Hughes Electronics Corp.
CMVT - Comverse Technology
MSTR - MicroStrategy Inc.
ORCL - Oracle Corp.
CSCO - Cisco Systems
MOT  - Motorola Inc.
INKT - Inktomi Corp.


SANM - Sanmina Corp


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.


TTN $36.00 (-11.31) Titan tripped and fell back to earth on 
Friday, forcing us to stop coverage.  We had mentioned in 
Thursday's report that a drop below support in the low $40's 
could lead to a lot of profit-taking to the next support level 
of $34.  That's exactly what happened.  We had suggested that 
$34 might be a good entry point.  So if you got in there give 
it a chance to go back to $42 where you might want to take a 
profit.  If you are long the stock, keep your stops in there 
because the stock could easily drop to $31.  There was no news 
to explain TTN's very weak performance during Friday's very 
strong market.

GSTRF $35.56 (-8.44) Even with a nice market rebound on Friday, 
GSTRF lost ground below the $37 support level.  The final 15 
minutes with a small volume surge that tacked on $0.75 is only a 
consolation prize.  While GSTRF may have found a bottom, the lack 
of movement with the rest of the market tells us that sentiment 
is not currently on our side.  Some readers forwarded us an 
article that appeared in the Yahoo! news that espoused dumping 
the shares while you still can.  In our opinion (sometimes 
unhumble), the author betrays his fairly complete lack of 
understanding of the concept, the target market, and the 
business.  Correct or false, the content still influences 
thousands of opinions - in this case, negatively.  While we think 
GSTRF is a fine company with great long term prospects going 
forward, there are other plays with a better chance of success, 
at least for now.  $30 is the next support level; resistance is 
$37.  A retest of $30 is not out of the question.  Accordingly, 
we're dropping GSTRF from the lineup.


CIEN $57.75 (+0.25) On Thursday we said that we were unsure as 
to how CIEN would react to Lucent's earnings shortfall.  We 
further stated that we figured the market would tell us.  
Smaller investors sure do love to bottom fish!  Hopefully put 
holders took their profits immediately after CIEN traded above 
resistance at $50, which was our suggestion.  It is evident 
that the market believes that Lucent's problems are Ciena's 
gains so we definitely need to stop coverage of CIEN as a put 

SPLN $50.06 (-0.06) Well, it doesn't look like we are going to 
get the close below $45 that we have looking for any time soon.  
SPLN made another move in the wrong direction, for us anyway.  
SPLN traded up nearly four points on Friday and managed a close 
above $50.  SPLN has also re-enlisted the support of its 10-dma 
at $49.50.  There was no new news to fuel this run and therefore 
we believe that SPLN is gaining some positive momentum and may 
try and run for a bit.  SPLN is scheduled to announce earnings 
on the 20th of this month.  Though the volume was not impressive, 
we are tired of waiting around for SPLN to take a plunge and
dropping it from our put play list. 

JNJ $96.50 (+3.25) The gains continued on Friday after a 
stronger-than-expected Jobs Report reassured traders all was 
not so bad.  The rally was broad and JNJ confidently climbed out 
of its trenches for the third consecutive day.  Needless to say 
the yellow caution flag has been taken down and is now flying 
red.  The definitive reversal was unfortunately ill timed for 
our play, but instead of "hoping" the course will change 
direction we're exiting the play this evening.

GTW $61.63 (-10.43) Thursday, we cautioned that with GTW's 
earnings warning immediately followed by an analyst's cautionary 
comment on DELL may have caused GTW to find a bottom, but that a 
bounce down from $61 resistance could make a good entry.  GTW 
gapped up right through it on Friday and continued to find 
support just under $61 before a strong finish at $61.63.  Does 
this sound like a good entry for a put?  Nope, we don't think so 
either.  In fact, following a SG Cowan upgrade to Buy, and 
earnings scheduled for release on January 20, we'll be watching 
GTW as possible addition to our call list later this week.  This 
is not an invitation for a game of "Dog Pile on Gateway" - there 
are still many hurdles to clear before it makes it on the play 
list.  But we're dropping it as a put for now.


CMRC - Commerce One
NOK  - Nokia
BVSN - BroadVision
CSCO - Cisco Systems
GMH  - General Motors
AFFX - AffyMetrix
MOT  - Motorola
VIGN - Vignette Corp
EMC  - EMC Corp
CMVT - Comverse Technologies
Split Candidates that aren't current plays
YHOO - Yahoo!
VRTS - Veritas Software
IMNX - Immunex Corp
STM  - STMicroElectronics
BRCM - BroadCom
NT   - Nortel Networks
TMPW - TMP Worldwide
Recent Announcements we predicted
HGSI - Human Genome (most recent pick)


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

Symbol - Stock          Splits/Date  
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
DCLK - DoubleClick      2:1 01-10-00 ex-date 01-11
CMGI - CMG Info         2:1 01-11-00 ex-date 01-12
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
VITR - Vitria Tech      2:1 01-17-00 ex-date 01-18
SIFY - Satyam Infoway   4:1 01-17-00 ex-date 01-18
KLAC - KLA-Tencor       2:1 01-18-00 ex-date 01-19
ORCL - Oracle Corp      2:1 01-18-00 ex-date 01-19
BVF  - Biovail Corp     2:1 01-19-00 ex-date 01-20
PRSF - Portal Software  2:1 01-19-00 ex-date 01-20
BOBJ - Business Obj     2:1 01-20-00 ex-date 01-21
CYCL - Centennial Cell  3:1 01-20-00 ex-date 01-21
SCII - Sensar Corp      2:1 01-20-00 ex-date 01-21
PRGS - Progress Soft    2:1 01-21-00 ex-date 01-24
GE   - General Elec     3:1 01-25-00 ex-date 01-26
MWD  - Morgan Stanley   2:1 01-26-00 ex-date 01-27
MSTR - Micro Strategy   2:1 01-26-00 ex-date 01-27
CHKP - CheckPoint Soft  2:1 01-28-00 ex-date 01-31
CYTC - CYTYC Corp       2:1 01-28-00 ex-date 01-31
HGSI - Human Genome     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
ASYT - Asyst Tech       2:1 02-04-00 ex-date 02-07
MCHP - Microchip Tech   3:2 02-07-00 ex-date 02-08
INFY - Infosys          2:1 02-11-00 ex-date 02-14
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
MGG  - MGM Grand        2:1 02-25-00 ex-date 02-28
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
GTLL - Global Tech      3:2 02-29-00 ex-date 03-01
JDSU - JDS Uniphase     2:1 03-10-00 ex-date 03-13
SNE  - Sony Corp        2:1 05-19-00 ex-date 05-22

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


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

Call plays of the day:

AFFX - Affymetrix $153.25 (-16.44)(+40.16)

See details in sector list

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


AMGN - Amgen, Inc. $68.00 (+7.94)(+5.88)

See details in sector list

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

Put play of the day:

SCNT - Scient Corp $66.50 (-19.94)

See details in put list

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


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

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

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

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

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

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

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


CSCO - Cisco Systems $105.88 (-1.25)

Cisco is the number one electronic/Internet networking and 
equipment company.  If you surf the Net, mine for data, or 
just exchange e-mail, somewhere in the transmission is likely 
a Cisco switch or router.  While they are slightly behind 
in the move into optical networking, purchases of Monterey 
Networks, Cerent, and most recently Pirelli Optical Networks 
are helping to bring Cisco into the competitive arena with 
Nortel Networks and Lucent.   

CSCO hit a new high on Monday in excess of $110 before falling 
back, wherein it tested $97 on Thursday, then came roaring back 
on Friday on 1.5 times its ADV of 20.5 mln shares.  Buyers were 
stepping up to the plate in droves.  While CSCO is a great 
company and already known as a leader in the field, news that 
Lucent would fall short of its earnings initially tarred CSCO 
with the same negative brush, sparking a wave of investor 
selling without stopping to think of the ramifications.  Almost 
immediately CSCO defended itself by announcing they would not 
change any of their guidance to analysts.  Translation:  what 
ills Lucent doesn't ill CSCO.  In fact, it gives a window of 
opportunity for CSCO to muscle into Lucent's turf while their 
guard is down.  February 8 is the next earnings report 
(confirmed).  In CSCO's refusal to change its guidance to 
analysts, there may be an earnings surprise that they'd currently 
like to remain a surprise.  CSCO is also in split territory 
again and may announce at the same time.  Assuming the market 
cooperates, look for a run to take place prior to that date.  
Support is at $102; resistance at $110.  Target shoot where 
your comfort level lays or wait for the breakout over $110 
with volume.

The news is contained above.  Just know that Lucent's misfortune 
is its competitors' gain, including CSCO's.

***January contracts expire in two weeks***

BUY CALL JAN-100 CWY-AT OI=20852 at $8.00 SL=6.25
BUY CALL JAN-105*CWY-AA OI=18930 at $4.75 SL=3.00
BUY CALL JAN-110 CWY-AB OI=14574 at $2.63 SL=1.25
BUY CALL FEB-105 CWY-BA OI= 3084 at $8.38 SL=6.50
BUY CALL FEB-110 CWY-BB OI= 3386 at $6.25 SL=4.50

Picked on Jan 9th at    $105.88     P/E = 168
Change since picked       +0.00     52-week high=$110.25
Analysts Ratings    22-16-0-0-0     52-week low =$ 44.94
Last earnings 11/99   est=  N/A     actual= 0.24 
Next earnings 02-08   est= 0.23     versus=  N/A
Average Daily Volume = 20.5 mln
Chart = http://quote.yahoo.com/q?s=CSCO&d=3m


EMC - EMC Corporation $107.38 (-1.88)(+8.13)

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.

Fortunately, EMC remembered its support at $98 and recovered
from there on Wednesday to close at $102.  Investors tested
this level a couple of times on Thursday, but the recovery on
the NASDAQ could not be ignored.  Moving up strongly on Friday,
EMC added $7 to close solidly above resistance at $105 and the
10-dma at $106.  The move, on nearly double the ADV, filled
the gap left at the open on Wednesday, turning this resistance
level into mild support.  The sentiment in the broad markets
will continue to affect this play, so further weakness could
cause a retest of support at $102.  Any bounce, confirmed by
strong volume is buyable going forward as EMC investors will
be focusing on earnings on January 26th (confirmed).  Continuing
strength in the NASDAQ should enable EMC to test resistance 
at the recent 52-week high of $110.31.  If you had the good
fortune to enter new positions when EMC bounced mid-week, keep
your stops in place.  As we saw this week, investor sentiment
can turn on a dime, and you don't want to be left holding the

Good news continued for EMC on Friday as David Bailey at Gerard
Klauer Mattison rated the issue a Buy with a price target of
$140.  In the news Thursday, Merrill Lynch added EMC to its top
10 technology list.  On Monday, John C. Dean at Salomon Smith
Barney added EMC to his "top pick" list, raising his price
target from $91 to $140.

***January contracts expire in two weeks***

BUY CALL JAN-105*EMB-AA OI=3374 at $6.13 SL=4.25
BUY CALL JAN-110 EMB-AB OI=3056 at $3.75 SL=2.25
BUY CALL JAN-115 EMB-AC OI=3157 at $2.31 SL=1.25
BUY CALL FEB-110 EMB-BB OI= 544 at $7.75 SL=6.00
BUY CALL FEB-115 EMB-BC OI= 536 at $6.13 SL=4.00

Picked on Dec 30th at   $110.31     P/E = 109
Change since picked       -2.94     52-week high=$110.31
Analysts Ratings     14-7-3-0-0     52-week low =$ 40.81
Last earnings 10/20   est= 0.24     actual= 0.27
Next earnings 01-26   est= 0.32     versus= 0.24
Average Daily Volume = 3.73 mln
Chart = http://quote.yahoo.com/q?s=EMC&d=3m


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The Option Investor Newsletter          1-9-2000  
Sunday                        3 of 5


MOT - Motorola Inc. $128.81 (-18.44)

Motorola is a leader in the telecommunications industry 
providing integrated communications solutions and embedded
solutions.  Cellular products make up about 40% of Motorola's
sales.  Semiconductors, two way radios, pagers, computers,
and network peripherals are among MOT's other business interests.
Motorola recently purchased General Instrument, a set-top box
maker.  This will help MOT continue its expanding focus on 
the broadband communications market.  The company is also
expanding is software business.  

Shares of MOT took a bath this week, and are providing traders
with some outstanding opportunities.  After making a new 52-week
high Monday at $153.63, shares of the telecommunications giant
dropped like a rock as the Nasdaq began its correction.  MOT lost
over 20% of its market cap hitting a low of $118 late Thursday 
afternoon.  Part of the decline came as result of being in the 
same industry as Lucent.  In case you have been living in a 
cave this week, Lucent announced it would miss earnings.  The 
announcement drove most stocks in the telecom sector south in a 
big way.  MOT recovered a bit in the final two hours of trading 
on Friday.  Most analysts believe the sell-off was way over done, 
and the earnings problem, at this time, should only be seen by 
Lucent.  We see the decline in shares of MOT as a great 
opportunity to buy calls.  MOT fell to a minor support area near 
$119 and bounced back Friday to over $125, which had previously 
provided solid intraday support.  MOT announces earnings Jan 17th, 
and we believe MOT will begin a move higher into the earnings 
period.  Analysts expect MOT to beat last years' earnings by a 
mile.  Last quarter they came in right on target earning $0.53 
per share.  This quarter the consensus estimate calls for $0.83 
per share.  The volume picked up Friday, to just under 8.0 mln 
shares which indicates traders and investors alike want to own 
MOT.  Next week brings the release of more economic data which 
could light a fire under our play, or knock the legs out from 
underneath it.  As always confirm the market direction prior to 
entering any new play.

Wednesday and Thursday analysts at Gruntal & Co. and DB Alex Brown
reiterated strong buy ratings on MOT, especially now that the 
purchase of General Instruments is complete.  Gruntal projected
a short-term price target of $150 and a long term price of $200 
for Motorola.  Both see the potential for MOT in broadband arena.

***January contracts expire in two weeks***

BUY CALL JAN-120*MOT-AD OI=3556 at $13.13 SL=10.63
BUY CALL JAN-125 MOT-AE OI=2113 at $10.00 SL= 7.50
BUY CALL JAN-130 MOT-AF OI=3886 at $ 7.50 SL= 5.75
BUY CALL JAN-135 MOT-AG OI=2598 at $ 5.50 SL= 3.75

Picked on Jan 09th at   $128.81    P/E = 126
Change since picked        0.00    52-week high=$153.63
Analysts Ratings    15-12-7-0-0    52-week low =$ 63.31
Last earnings 10/99   est= 0.53    actual= 0.53 
Next earnings 01-17   est= 0.81    versus= 0.26
Average daily volume = 3.67 mln
Chart = http://quote.yahoo.com/q?s=MOT&d=3m


HGSI - Human Genome Sciences $160.31 (+7.69)(+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.

HGSI weathered this week's storm pretty well, and ended the week
in the black.  The fact they announced a 2-for-1 split of their
stock, helped the biotech company get back on track.  The split
is scheduled to take place January 28th.  The Biotech sector
had been strong going into the new year, but fell prey to the
selling at the Nasdaq early in the week.  Our confidence is this
play was strengthened by the lack of volume in the declines seen
in HGSI.  We mentioned earlier the use of trailing stops, as HGSI
has provided opportunities for a very good profit in a short 
amount of time.  After being selected to our play list, HGSI made
a high at $172.56, in only two days.  A move of over $33 in two 
days.  We are not patting ourselves on the back, rather wanting 
to illustrate the importance of trailing stops.  HGSI provided 
a great return by any standards, but you needed to be diligent
in protecting the bottom line, as profit taking set in at the
high, dropping the price back $13.00 from the high of the day.
Although HGSI did trade over $17 lower this week making a low 
of $135.38, we saw a couple of good opportunities to jump back 
on board this play.  HGSI spent most of Tuesday and Wednesday 
in the bottom of the week's range near $136 and began to gain 
momentum as rumors of the split surfaced, and jumped $10 as the 
news hit the wires.  The split run has began.  We would view 
further momentum as an opportunity to buy calls.  Support for 
HGSI is seen at $155, $150 and $145.  As always assess your 
risk profile prior to entering a new play.

Other than the split announcement, HGSI CEO William Haseltine, 
appeared on CNBC this week and said that it will not be long 
before the company introduces marketable drugs.  The company 
has a number of clinical trials underway for its genome-derived 
drugs for medical purposes.  He went on say "it should be a 
great year for people interested in seeing results of Human-
genome studies."

***January contracts expire in two weeks***

BUY CALL JAN-145*HHA-AK OI=224 at $15.63 SL=12.25
BUY CALL JAN-150 HHA-AL OI= 13 at $13.13 SL=10.50 low OI
BUY CALL JAN-155 HHA-AM OI= 24 at $10.38 SL= 7.88 low OI
BUY CALL FEB-155 HHA-BK OI= 49 at $24.25 SL=19.00 low OI
BUY CALL FEB-160 HHA-BL OI= 18 at $23.25 SL=18.38 low OI

Picked on Dec 28th at $138.88    P/E = N/A
Change since picked    +21.50    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 =  383 K
Chart = http://quote.yahoo.com/q?s=HGSI&d=3m


AMGN - Amgen, Inc. $68.00 (+7.94)(+5.88)

Amgen is one of the elite companies in the biotechnology 
industry.  Amgen develops products to treat cancer, 
arthritis, blood disorders, Parkinson's, Alzheimer's, other 
infectious disease and many more.  Its current drugs 
include: Neupogen (used for cancer and AIDS patients), 
Infergen (for treating hepatitis C), and Epogen (for the 
production of red blood cells).  It has several alliances 
with other key companies that help Amgen maintain its 
position as world's largest biotechnology company.  Current 
drugs under development include Stemgen, an early acting 
blood cell growth factor, and Leptin, the protein produced 
by the obesity gene used to help regulate the amount of fat 
stored by the body.

Amgen was a relative monster last week as investors infused 
this leading biotech with cash.  Investors who wanted to put 
money to work last week abandoned the tech stocks, but fell 
in love with the Biotech's.  There are two major fundamental 
reasons why the stock of Amgen is doing well.  Amgen has a 
very strong drug pipeline and Amgen has had great success in 
finding new uses for its old stalwarts, Epogen and Neupogen,
especially Neopogen, which is being used with chemotherapy 
patients.  Together these drugs should continue to generate 
enormous profits for Amgen for many years to come.  In the 
pipeline are Kinaret, a drug for treating rheumatoid arthritis 
and NESP a drug for treating anemia.  Kinaret is currently 
under review by the FDA and NESP will soon be submitted for 
approval.  NESP could generate over a billion dollars in 
revenues for AMGN.  On top of the strong fundamentals driving 
the share price, AMGN has a history of reporting excellent 
earnings in January.  It is possible that the shares of AMGN 
will continue to appreciate all the way up to the report date 
of January 20th.  Hopefully you jumped on the buypoint of $62 
pointed out in our initial write-up on AMGN on Thursday.  
Friday, the stock opened just above $62 and steadily gained 
strength through the rest of the day.  $70, the old high, is 
the next breakout point.  Aggressive investors can buy there.  
If there is any profit taking on Monday, look to get long 
around $64-$66, barring any market meltdown.  

There have been several recent upgrades and price target 
revisions for Amgen.  On Tuesday, Paine Webber raised its 
price target from $60 to $80.  Dennis Harp, the analyst at 
Deutsche Banc Alex Brown termed the company "a bargain" 
relative to the earnings multiples of its peers in the 

***January contracts expire in two weeks***

BUY CALL JAN-60*YAA-AL OI=4571 at $9.25 SL=6.75
BUY CALL JAN-65 YAA-AM OI=4688 at $5.38 SL=3.75
BUY CALL JAN-70 YAA-AN OI=1211 at $2.75 SL=1.50
BUY CALL FEB-65 YAA-BM OI=1370 at $8.13 SL=6.25
BUY CALL FEB-70 YAA-BN OI=1292 at $5.63 SL=3.75

Picked on Jan 6th at     $61.00    P/E = 63
Change since picked       +7.00    52-week high=$70.00
Analysts Ratings    14-12-8-0-0    52-week low =$25.69
Last earnings 10/99   est= 0.25    actual= 0.25
Next earnings 01/20   est= 0.25    versus= 0.22
Average Daily Volume = 6.79 mln 
Chart = http://quote.yahoo.com/q?s=AMGN&d=3m 


AFFX - Affymetrix $153.25 (-16.44)(+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.

Affymatrix is an intriguing way to play the hype in the Human 
Genome Research Project.  AFFX provides the tools that 
researchers need to complete the project.  Whether the 
researchers are successful or not in bringing new drugs to 
market, they will continue to buy product from AFFX, as long as 
the researchers continue to receive funding.  This symbiotic 
relationship has made AFFX a very desirable stock to own in 
the past two months.  The current uptrend began when several 
Wall Street analysts started a string of new coverages and 
upgrades.  Some of the influential heavyweights include; CSFB, 
Dain Rauscher and Robertson Stephens.  When AFFX broke above 
$130 two weeks ago it ran all the way to just under $200.  
Like so many high flyers, AFFX suffered very strong profit- 
taking.  The good news is that support has been re-established 
at $143 which could prove to be the launching pad for another 
run to $200 and possibly beyond.  A good entry point is in the
$150-$152 range.  All last week the stock seemed to target 
this price area and it developed some support.  In the 
unlikely event that the market sells off next week you may be 
able to go long in the mid $140's.  Do not get stuck in this 
stock if it trades below critical support of $140.  Momentum 
investors may wish to wait for AFFX to take out Friday's high 
of $157.50 before going long.  A trade through that level 
could get the stock into the $170's pretty quickly.

On Tuesday Robertson Stephens downgraded Affymatrix to a Buy 
from a Strong Buy.

***January contracts expire in two weeks***

BUY CALL JAN-150 FIQ-AZ OI=50 at $16.00 SL=12.50
BUY CALL JAN-155*FUE-AK OI=20 at $13.63 SL=10.63 low OI
BUY CALL JAN-160 FUE-AL OI=31 at $ 8.75 SL= 6.50 low OI
BUY CALL JAN-165 FUE-AM OI=11 at $ 7.25 SL= 5.25 low OI

Picked on Jan 2nd at    $184.75    P/E = N/A
Change since picked      -31.50    52-week high=$195.13
Analysts Ratings      2-6-2-0-0    52-week low =$ 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 =    417 K
Chart = http://quote.yahoo.com/q?s=AFFX&d=3m 


ADI - Analog Devices $86.88 (-6.13)(+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 is a momentum play that recently has taken a breather after 
powering upwards to a new 52-week record ($94.50) during the 
last trading session of 1999.  Previously support was firm at 
$80 and $81, but now near-term support has risen to $85 and $86.  
This newly established level is in-line with the converging 5-
dma ($86.81) and the 10-dma ($87.01) technical indicators.  At 
this point $88 seems to be the first line of opposition.  We've 
kept ADI on our call list as it held up well this week while 
many investors were moving out of the techs on interest-rate 
concerns and quite honestly, profit-taking.  On Friday we saw 
a glimmer of hope as ADI tacked on $2.38, or 2.8% and managed 
to penetrate $88 on a spike.  It's likely money will return 
to the tech sector next week after the positive Jobs Report 
reassured many investors that the interest-rate hike will be 
minimal.  However, wait for a definitive move through that 
resistance for better confirmation that ADI make a charge 
towards its all-time high.

The Semiconductor Industry Association announced this week that 
global semiconductor sales rose 25% to a record $14.2 bln in 
November as a result of an increasing demand for memory chips 
used in computers and mobile phones.  ADI also reported its 
Othello chipset was awarded the Electronic Products Magazine's 
"Product of the Year" for 1999.  The Othello is the world's 
first open-market GSM (Global System for Mobile Communications) 
direct conversion radio chipset.

***January contracts expire in two weeks***

BUY CALL JAN-80 ADI-AP OI=1237 at $9.13 SL=6.75
BUY CALL JAN-85*ADI-AQ OI= 456 at $6.13 SL=4.25
BUY CALL JAN-90 ADI-AR OI= 414 at $3.50 SL=1.75
BUY CALL FEB-85 ADI-BQ OI=1039 at $8.75 SL=6.75
BUY CALL FEB-90 ADI-BR OI= 185 at $7.00 SL=5.25

SELL PUT JAN-85 ADI-MQ OI=  33 at $3.75 SL=5.50
(See risks of selling puts in play legend)

Picked on Dec 30th at    $90.44    P/E = 79
Change since picked       -3.56    52-week high=$94.50
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 = 1.71 mln
Chart = http://quote.yahoo.com/q?s=ADI&d=3m


CMTN - Copper Mountain Networks $52.00 (+3.25)

Copper Mountain Networks develops and markets a comprehensive
family of DSL solutions that enable high-speed internetworking 
over existing copper facilities.  CMTN has partnered with 3Com,
Intel, and Lucent.  In addition to selling DSL communications
products for telecommunications and Internet service providers,
CMTN sells its products CopperEdge DSL Access Concentrators,
CopperRocket DSL Customer Premise Equipment, and CopperView 
Network Management Tools through direct sellers, manufacturers,
and distributors.  NorthPoint Communications accounts for about
60% of CMTN's sales.  CMTN had their IPO in May of 1999 and
competes with Cisco Systems, Alcatel, and Paradyne Networks.

Since the 2-for-1 split of the company's stock on December 10th,
shares of CMTN have gathered momentum, carrying the price of the 
company's stock past the $50 market.  CMTN has renewed interest
from the brokers that follow the company, citing the visibility 
of the company and the potential for a good first quarter.  CMTN
saw shares of their stock fall Thursday after Lucent announced 
their earnings warning.  CMTN has a strategic partnership with
LU and investors became a bit skittish of anything that was 
connected to Lucent.  The fall Thursday came on average volume
and indicates the pullback is probably temporary.  CMTN is well 
positioned in its industry and should have an outstanding 
first quarter.  They are scheduled to report earnings on January
18th, and we believe CMTN will catch its breath and make a run
into the earnings date.  Technically CMTN has support at $50.
CMTN dropped to $47, Friday morning right out of the gate, but
traders quickly bid the price back over $50, to finish the day
down, just $0.13 for the session.  Another pullback, and bounce 
off $50, accompanied by solid volume would provide a good entry 
point for this play.  Continued momentum to the upside would
also be an opportunity to participate.  As always asses your 
risk profile prior to entering a new play.

CMTN was a equipment vendor at the Consumer electronics show in
Las Vegas.  CMTN joined a group of leading broadband vendors, 
as they demonstrated their G.Lite solutions at the DSL Forum 
Interoperability booth.  Their 24-port G.lite linecard will 
enable telecommuters and consumers cost-effective, high speed,
access on a single copper loop.

***January contracts expire in two weeks***

BUY CALL JAN-45 KUA-AI OI=1625 at $8.63 SL=6.50
BUY CALL JAN-50*KUA-AJ OI=1871 at $5.38 SL=3.25
BUY CALL JAN-55 KUA-AK OI= 943 at $3.13 SL=1.50
BUY CALL FEB-50 KUA-BJ OI= 560 at $8.25 SL=6.38
BUY CALL FEB-55 KUA-BK OI= 243 at $6.00 SL=4.25

Picked on Jan 4th at     $52.00    P/E = 520
Change since picked       +0.00    52-week high=$67.50
Analysts Ratings      2-4-0-0-0    52-week low =$25.25
Last earnings 10/99   est= 0.06    actual= 0.08 surprise=+33.3%
Next earnings 01-18   est= 0.09    versus= N/A
Average daily volume = 1.43 mln
Chart = http://quote.yahoo.com/q?s=CMTN&d=3m


XCED - Xceed, Inc. $45.75 (+4.25)

Xceed helps companies develop e-commerce and e-business 
solutions, improving people and business performance through 
communication tools, techniques, and technologies.  Xceed also 
owns several companies and was once primarily engaged in the 
development, manufacturing and marketing of emergency first 
aid products for burn injuries, this division, Water-Jel, is 
still a revenue generator but Xceed is planning to sell all 
non-Internet related businesses.  In 1998 the company began to 
shape its current form as a fully integrated marketing and 
communications company with Internet and interactive services 
its main emphasis.

Xceed is a visionary company that has re-invented itself to be 
in the hottest sector in the market.  An active stream of press 
releases confirms that Xceed is determined to be at the 
forefront of the e-business solutions market.  On December 21st, 
Xceed announced the launch of a Linux Solutions Team which will 
help their clients develop Linux based business solutions.  On 
the 28th, the company announced an alliance with iMedium 
allowing Xceed to offer iMedium's commerce technology to its 
clients.  On January 4th, Xceed won a contract to help expand 
InvestPrivate.com's Web presence and develop a marketing program 
for the online private placement brokerage concern.  Investors 
have rewarded this very active company with a strong stock 
price.  If the good news keeps coming they will keep buying.  
Technicals confirm a strong interest in the stock.  A break above 
$34 in early December led to a consolidation between $36 and 
$44.  On Friday it appears the consolidation phase is over, with 
the stock breaking out again into new high ground.  Any trading 
above $47.50 would be a good entry point for momentum investors.  
A little patience may allow an investor to pick up the stock 
around $43, but you may miss the next move if the market is 
strong early next week for Internet issues, especially Web 
Builders.  Support prices are at $40 and $36.

On December 29th Paine Webber raised the target price for 
shares of XCED to $65 from $35.

***January contracts expire in two weeks***

BUY CALL JAN-40 XCU-AH OI=419 at $7.13 SL=5.25
BUY CALL JAN-45*XCU-AI OI=385 at $3.88 SL=1.75
BUY CALL JAN-50 XCU-AJ OI=160 at $1.69 SL=0.75
BUY CALL FEB-45 XCU-BI OI=129 at $6.38 SL=4.25 

Picked on Jan 9th at   $45.75    P/E =  N/A
Change since picked     +0.00    52-week high=$47.50
Analysts Ratings    1-0-0-0-0    52-week low =$ 8.00
Last earnings 11/99 est=  N/A    actual=  N/A
Next earnings N/A   est=-0.48    versus=-0.10
Average daily volume =  295 K
Chart = "http://quote.yahoo.com/q?s=XCED&d=3m


GO - GO.com $28.00 (+4.25)

GO.com is a newly formed Internet company -- the result of a 
merger between Infoseek and The Walt Disney Co.'s online 
unit, Buena Vista Internet Group (BVIG).  Basically GO is a 
tracking stock for Disney's Internet venture.  They provide 
Internet services to Disney-related Web sites including the 
GO.com portal, ABC.com, Disney.com, ESPN.com, NFL.com, NASCAR 
Online, and Family.com to name a few.  The GO Network derives 
nearly 90% of revenue from advertising and has over 21 mln 
visitors each month.

After a disappointing IPO in November, whispers could be heard 
by the end of 1999 that GO was poised to move off its firm 
support ($24) and climb.  GO.com's well-timed announcement 
that its ABC.com's Web traffic doubled in the past 12 months 
and its Internet reach had exceeded rival competitor CBS by 
a significant 85% was paramount in the stock's subsequent 
progress.  This news event coupled with reports that its suite 
of e-commerce sites had three times more sales than same time 
last holiday season really piqued investor's interest.  GO 
sprung into the millennium on strong volume and made its move.  
First stop was $26 before flirting with the psychological 
resistance at $30.  Near-term support is now evolving at $28 
and this is a good entry point into this momentum play, but wait 
for a definitive bounce off the current level for validation.  
Now granted GO is a cheaper stock than most are accustomed to 
seeing on our call list.  However, the call option volume is 
picking up momentum which is no doubt a bullish sentiment.  
Plus technically GO has promise.  The MACD and Stochastic are 
pointing north and the 5-dma ($27.99) and 10-dma ($26.20) are 
at relatively satisfactory levels.   

Now we know rumors are just hearsay, but here's a tid-bit that 
may interest you.  An OIN reader recently whispered to us that 
GO.com may soon become an ISP!  Now we have no information that 
confirms this rumor and it certainly doesn't have any bearing 
on our current play, but we thought we'd share the scuttlebutt.  
In the news this week, the GO Network was fastest growing Web 
site from August to November 1999 with a 31% growth spurt easily 
surpassing its nearest competitor by an 11% margin according 
to a Nielsen/NetRatings report.  The GO Network also announced 
an arrangement that provides it with more access to consumers 
through an affiliate program.  Affiliate.go.com now allows 
business or personal Web sites to add certain GO Network content 
such as Web search, daily weather forecasts, or stock quotes, 
free of charge. 

**January contracts expire in two weeks**

BUY CALL JAN-25*GO-AE OI=1323 at $3.88 SL=2.25
BUY CALL JAN-30 GO-AF OI=2298 at $1.25 SL=0.50
BUY CALL FEB-30 GO-BF OI= 549 at $2.94 SL=1.50
BUY CALL FEB-35 GO-BG OI= 374 at $1.50 SL=0.75

Picked on Jan 6th at   $29.00    P/E = N/A
Change since picked     -1.00    52-week high=$37.69
Analysts Ratings    1-0-0-0-0    52-week low =$21.50
Last earnings 10/99 est=  N/A    actual=-0.34
Next earnings 01-29 est=-0.45    versus=-0.39
Average Daily Volume =    N/A
Chart = http://quote.yahoo.com/q?s=GO&d=3m


CHKP - Check Point Software $191.88 (-6.88)(+13.75)

Check Point provides Internet security.  The company provides
secure enterprise networking solutions that enable customers
to implement centralized policy-based management with enterprise-
wide distributed deployment.  Simply put, CHKP has benefited
from rising demand for its virtual private networks software
which lets remote workers, business allies and customers
securely access corporate computer networks.

The main catalyst for our play on CHKP, is a run towards
earnings with the added bonus of a split.  The split date should
be announced after the shareholder meeting on January 13, and 
we think it could coincide with earnings, now confirmed for
February 1.  Once investors finished punishing the Internets,
they refocused on these facts and helped CHKP recover nicely on
Friday.  Trading as low as $174.50 on Thursday, CHKP was saved
from the grim reaper's scythe by bouncing right at the $175
support level.  Money began flowing in Friday morning, but the
stubborn bears demanded one more test of support around noon.
After that, CHKP was off to the races, adding almost $16 from
the low of the day to close just below resistance ($194) which
is also the site of the 10-dma.  Going forward, we may need to
see CHKP test support near $184 before powering forward and a
bounce here accompanied by strong volume should provide a good
entry.  If CHKP remains strong next week, a move through $194
is buyable as long as it is confirmed by volume.  We may see
additional resistance near $205 on the way to the 52-week high,
set only a week ago at $218.50.  Keep in mind, this is a
volatile issue, with wide daily price swings, so entry points
should be abundant and stops are a must.

James Pressler, an Internet analyst at PaineWebber, speaking
Thursday on CNBC, included CHKP as one of his favorites in the
new year, referring to it as the standard in internet security.
CHKP announced Tuesday that its FireWall-1 Internet security
solution and IBM's HACMP high availability software have both
met the rigorous integration standards, enabling IBM to
strengthen its security offering.  This provides customers with
the protection and availability that e-businesses require.

***January contracts expire in two weeks***

BUY CALL JAN-190*KEV-AR OI=105 at $17.00 SL=13.25
BUY CALL JAN-195 KEV-AS OI=109 at $14.75 SL=11.75
BUY CALL JAN-200 KEV-AT OI=248 at $11.00 SL= 8.75
BUY CALL FEB-190 KEV-BR OI= 60 at $28.00 SL=21.75
BUY CALL FEB-200 KEV-BT OI= 98 at $24.00 SL=18.75

Picked on Jan 4th at  $198.75     P/E = 95
Change since picked     -6.88     52-week high=$218.50
Analysts Ratings    7-6-3-0-0     52-week low =$ 26.75
Last earnings 10/99 est= 0.56     actual= 0.60
Next earnings 02-01 est= 0.65     versus= 0.47
Average Daily Volume =  517 K
Chart = http://quote.yahoo.com/q?s=CHKP&d=3m


VIGN - Vignette Corporation $175.19 (+12.19)(+12.50)

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 everything is moving faster and VIGN is no exception.
Tagging a new 52-week high of $188.56 on Monday, the popular
B2B e-commerce issue got hammered with the rest of its sector,
trading as low as $155 late Thursday afternoon.  Turning on a
dime Friday morning, VIGN quickly moved up to resistance at
$170, where the battle between buyers and sellers continued for
most of the day.  The bulls finally won out, pushing VIGN up 
to close above $175.  The test of the $155 support level on
Thursday filled in the opening gap from December 30th, which
makes the chartists happy.  Volume has been on the light side
the past 2 days, and we would like to see it pick up to confirm
a further move to the upside.  Market permitting, VIGN will be
setting its sights on resistance near $190.  Barring a repeat
of last week's wild gyrations, VIGN should have good support
in the $165 area.  Any bounce here would provide an excellent
entry point as we set up for our run to earnings which are 
about 2 weeks away.  Keep in mind the volatility of this issue; 
the faint of heart need not apply, and stops are mandatory.

Positive comments and upgrades were the news of the week for
VIGN.  Greg Vogel of Banc of America maintained his Strong Buy
rating and raised his price target from $133 to $265 on Tuesday.
Also on Tuesday, Aaron Scott of Advest Inc., increased his 
rating from Buy to Strong Buy and raised his price target 
from $130 to $275.

***January contracts expire in two weeks***

BUY CALL JAN-170*UOJ-AN OI=342 at $17.00 SL=13.25
BUY CALL JAN-175 UOJ-AO OI= 51 at $13.88 SL=11.25
BUY CALL JAN-180 GGV-AP OI= 36 at $12.13 SL= 9.50 low OI
BUY CALL FEB-170 UOJ-BN OI= 84 at $26.25 SL=20.50
BUY CALL FEB-180 GGV-BP OI= 18 at $22.00 SL=17.25 low OI

Picked on Dec 30th at  $163.75     P/E = N/A
Change since picked     +11.44     52-week high=$188.56
Analysts Ratings     9-4-0-0-0     52-week low =$ 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 = 1.20 mln
Chart = http://quote.yahoo.com/q?s=VIGN&d=3m


CMRC - Commerce One Inc $187.50 (-9.00)

Commerce One is a provider of B2B electronic commerce solutions 
that enables buyers and suppliers of goods and services direct 
access to trading communities over the Internet.  Its BuySite 
software simplifies the buying process by providing product 
catalogs from different suppliers, automating approvals, and 
enforcing buyer- and seller-specific policies.  The company's 
MarketSite.net Web site enables buyers and sellers using 
different software applications to seamlessly connect and 
perform e-commerce transactions.

There have been lots of events that have effected the stock's 
recent roller coaster ride.  CMRC was trading as high as $331 
following its 3:1 stock split on December 27th only to dive to a 
$196.50 close by the week's end.  It wasn't merely "post-split" 
depression that began on December 29th, but rather an influx of 
insiders who were now able to sell their millions of shares 
which had been restricted during the 180-day IPO lockout period.   
In the trading sessions that followed a firm support base was 
established at $200 and marked for us a solid buying 
opportunity.  On Tuesday CMRC shot up $14.88, or 7.3% while the 
market was in an obvious sell-off confirming our belief the 
stock is poised for a profitable momentum run.  Although it's 
likely too that the news that rival Freemarkets (FMKT) was 
losing General Motors' (GM) contract within 90-days incited 
the surge.  Ok let's retrace a bit for a better understanding.  
Back in November GM and CMRC struck a crucial deal.  According to 
the terms, together they will create a B2B e-commerce site called 
TradeXchange and GM will take a 19.9% stake in CMRC.  Now 17% of 
FMKT's FY99 revenues were a direct result of GM's business, so 
guess who gets it now?  Yup, the answer is obvious.  CMRC is the 
ultimate beneficiary with a significant increase to its revenue 
stream!  For the remainder of the week CMRC was brought down a 
few notches as a result of its announcement that it will issue 
approximately 870 K shares of common stock and $10 mln in cash 
to acquire privately held Mergent Systems, a leading developer 
of distributed product information management systems for B2B 
portals in the first quarter of this year.  That announcement 
and the resurfacing interest-rate fears put CMRC under the gun.  
However we're anticipating investors will be bringing their cash 
back into the lucrative technology sector and see CMRC as a 
likely recipient.  Be patient and watch for a definitive move 
through the 5-dma ($202.50) for confirmation.  The next step 
of resistance is the 10-dma ($212.84) before it faces $220.  
Please consider your tolerance for risk before opening any new 
positions.  This is a HIGH-RISK INTERNET play that is blatantly 

In other news this week, Commerce One entered into a joint 
venture with Banacci, Mexico's main financial group, and will 
offer a B2B electronic marketplace to Latin America.  The 
company also announced the formation of its Public Sector Group 
that is dedicated to providing e-commerce solutions to federal, 
state, and local governments as well as higher education 
institutions.  On the analyst front, Dresdner Kleinwort Benson 
Securities reiterated a Buy rating and issued a $333 price 

**January contracts expire in two weeks**

BUY CALL JAN-190 RUC-AR OI= 88 at $15.63 SL=12.25
BUY CALL JAN-195*RUC-AS OI= 37 at $13.75 SL=11.00 low OI
BUY CALL FEB-190 RUC-BR OI= 24 at $28.63 SL=22.25 low OI
BUY CALL FEB-195 RUC-BS OI= 45 at $26.50 SL=20.75 low OI

SELL PUT JAN-185 RUC-MQ OI= 33 at $13.88 SL=17.75 low OI
(See risks of selling puts in play legend)

Picked on Jan 4th at    $218.50     P/E = N/A
Change since picked      -31.00     52-week high=$331.00
Analysts Ratings      2-6-0-0-0     52-week low =$  8.83
Last earnings 10/99   est=-0.42     actual=-0.45
Next earnings 01-19   est= 0.15     versus= N/A
Average Daily Volume = 1.48 mln
Chart = http://quote.yahoo.com/q?s=CMRC&d=3m


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The Option Investor Newsletter             1-9-2000  
Sunday                        4 of 5


INKT - Inktomi Corp. $89.38 (+0.63)

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

We just can't leave INKT alone.  Call it one of our favorites,
call it what you want.  We call another exciting opportunity.
INKT was on our play list up until last weekend, when shares 
the software company split 2-for-1.  This week, during the
tech decline at the Nasdaq, INKT fell back to support at the
$80 level.  Stocks normally pullback a little after a split
anyway.  INKT appears to be on the move again.  Friday INKT
surged $8.88 on strong volume of 3.2 million shares.  We are
adding INKT to our list of plays, for several reasons.  The
pullback has provided us with a good buying opportunity.  There 
is a tremendous amount of money on the sidelines waiting to 
enter the markets.  INKT is not only one of our favorites, it
has been a stock traders and investors look at, to produce 
fantastic returns.  When the money begins to enter the market,
we believe INKT will be among the top stocks on investors list.  
Another reason for adding INKT to our play list is earnings.  
INKT is scheduled to report earnings Jan. 20th.  Most analysts 
are expecting a loss of -$0.04 compared to $0.06 last year.  
Granted they aren't profitable yet, but they are one of the few
Internet stocks that are headed in the right direction.  INKT
is a great play but obviously can be a volatile play.  We have
a slew of economic data coming out next week.  Prior to entering
this play confirm the direction of the Nasdaq, the Internet 
sector, and INKT itself.  Continued momentum would be a chance 
to buy calls.  Should we see a decline look for a bounce off the
$80 area would also be viewed as a buying opportunity.  As always
assess your risk profile before entering any new play.

Tuesday, Banc of America resumed its coverage of INKT with a Buy 
rating.  They view Inktomi as a leading provider of Internet 
infrastructure software that improves the process of locating 
and retrieving information.  Analysts set a price target of $120 
for INKT. 

***January contracts expire in two weeks***

BUY CALL JAN-80 KYQ-AP OI=6375 at $11.63 SL=9.25
BUY CALL JAN-85*KYQ-AQ OI=2042 at $ 8.00 SL=6.25
BUY CALL JAN-90 KYQ-AR OI=1310 at $ 5.50 SL=3.75
BUY CALL JAN-95 KYQ-AS OI=3461 at $ 3.50 SL=7.75

Picked on Jan 9th at     $89.38    P/E = N/A
Change since picked       +0.00    52-week high=$104.00
Analysts Ratings      7-7-2-0-0    52-week low =$ 26.03
Last earnings 10/99   est=-0.10    actual=-0.09 surprise=+10.0%
Next earnings 01-20   est=-0.04    versus=-0.06
Average daily volume = 2.01 mln
Chart = http://quote.yahoo.com/q?s=INKT&d=3m


MSTR - MicroStrategy Inc. $210.38 (+0.38)

MicroStrategy is a worldwide provider of enterprise DSS 
software applications and related services.  DSS software 
enables users access to and the analysis of information 
stored in large relational databases through various devices 
like the Internet, e-mail, telephones, pagers and other 
wireless communications devices.  Through this software clients 
can improve operations, analyze marketing effectiveness and 
create and deliver targeted one-to-one marketing campaigns to 
customers.  MicroStrategy also provides customers with 
professional and customer support services.  

MSTR is among one of the favorite industry groups for investors.  
The feeling is that e-business development companies will have 
no shortage of business and hopefully profits during this age 
when every company out there is trying to establish a major 
Internet presence as well as cutting edge information access 
and tools.  To add fuel to the fire of an already hot stock, 
MSTR announced on January 4th a 2:1 stock split for shareholders 
of record by January 20th.  Delivery is set for the 26th.  
Strategic new partners and clients announced in the past six 
weeks include Ameritrade, Sybase, ePlus, Net Perceptions, 
Questra and Dimension Data.  This is a very active company and 
each new deal has been met with investor enthusiasm.  After a 
breakout in early December above the psychologically important 
$150 point, the stock had green lights and straight ahead to 
over $230.  The subsequent pullback and consolidation back down 
to the $160-$190 range was a healthy reprieve enabling new 
investors to get in.  If MSTR can trade above $217 look for a 
run to the old highs.  If that does not happen on Monday look 
to enter a call position in the middle of Friday's range around 
$207.  Be wary of support levels.  A recently established 
important support level is $195-$197.  Further down you can 
find support at the $166 level.

MSTR is looking to add to its profile by advertising at the 
Super Bowl.  MSTR was also named by Fortune as one of the "Top 
100 Best Places to Work", lets hope the employees buy the 
stock out of appreciation.

***January contracts expire in two weeks***

BUY CALL JAN-195 EUU-AS OI=18 at $28.00 SL=21.75 low OI
BUY CALL JAN-200*EUU-AT OI=63 at $25.13 SL=19.50
BUY CALL JAN-210 EUU-AB OI=62 at $20.00 SL=15.50
BUY CALL JAN-220 EUU-AD OI=85 at $15.63 SL=12.25

SELL PUT JAN-190 EUU-MR OI=20 at $11.38 SL=15.13 low OI
(See risks of selling puts in play legend)

Picked on Jan 9th  at  $210.38    P/E = 715
Change since picked      +0.00    52-week high=$234.56
Analysts Ratings     5-3-1-0-0    52-week low =$ 14.69
Last earnings 10/99  est= 0.08    actual= 0.09 
Next earnings 01-27  est= 0.11    versus= 0.07
Average daily volume  =  354 K
Chart = http://quote.yahoo.com/q?s=MSTR&d=3m 


ORCL - Oracle Corp. $103.38 (-8.69)

Oracle is world's largest producer, seller, and supporter 
of database management systems.  If you need the ability to 
simultaneously access the same data for different applications 
all at the same time from mainframes to wireless handsets, 
Oracle has your software.  Oracle's most eligible billionaire 
bachelor and CEO, Larry Ellison has developed the latest 
versions to support Internet appliances and PC's using Web-
based programs.  Despite spending millions on toys, including 
the coolest airplanes, boats, automobiles, and the authentic 
replication of a Japanese mansion in which he lives, he still 
owns about 24% of the company.

The last time we played ORCL in early November, it traded at 
half its current value, and had just received a boost on Larry 
Ellison's strong forward looking comments.  December 14th, the 
proof was in the pudding as ORCL reported $0.26 earnings vs. 
$0.22 estimates.  On December 20, ORCL also reported a 2:1 stock 
split which effects on January 18 after the close, and will begin 
split adjusted trading on January 19.  After correcting 25% since 
reaching its high on Monday of $125, let the split run begin!  
Friday's bounce off $93 was encouraging since it came with 50% 
greater volume than the ADV of 14.4 mln shares, indicating large 
buying interest.  Don't look for earnings to help out anytime 
soon since they won't be announced again until mid March.  If 
the Friday's recovery remains even somewhat intact, support is 
at $97.50, then $94.  Resistance is at $105 and $110, but could 
easily break that with any volume.  Target shoot to your level 
of risk tolerance.

In the news, Merrill Lynch removed ORCL from its Top 10 List - 
looks like a case of bad timing.  The good news is that B of A 
Securities upgraded ORCL to a Buy, while Paine Weber added it 
to its list of 30 highlighted stocks.  Though it was announced 
earlier in the week that ORCL insiders were selling $113 mln of 
their shares, the selling had already been done, and nobody 

***January contracts expire in two weeks***

BUY CALL JAN-100*ORQ-AT OI=8107 at $ 9.38 SL=7.00
BUY CALL JAN-105 ORQ-AA OI=4986 at $ 7.38 SL=5.50
BUY CALL JAN-110 ORQ-AB OI=5597 at $ 5.13 SL=3.25
BUY CALL FEB-105 ORQ-BA OI= 861 at $12.00 SL=9.50
BUY CALL FEB-110 ORQ-BB OI=1664 at $ 9.75 SL=7.50

SELL PUT JAN- 90 ORQ-MR OI=3643 at $ 2.56 SL=4.25
(See risks of selling puts in play legend)

Picked on Jan 9th at    $103.38     P/E = 100
Change since picked       +0.00     52-week high=$125.19
Analysts Ratings    12-18-3-0-0     52-week low =$ 21.00
Last earnings 12/99   est= 0.22     actual= 0.26 surprise=18.2%
Next earnings 01-25   est= 0.00     versus= 0.00
Average Daily Volume = 14.4 mln
Chart = http://quote.yahoo.com/q?s=ORCL&d=3m


BVSN - Broadvision $148.34 (-21.72)(+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.

See?  No reason to worry about good old Broadvision.  The 
beautiful thing about BVSN is that, even though it was down 
nearly $22 for the week, we are still up on this play.  BVSN 
participated in Friday's record breaking rally, gaining nearly 
20 points for the day.  It turns out that the $130 level did 
provide room for some great points of entry and hopefully 
everyone was able to take advantage of the "correction" that 
we saw last week for a new entry.  BVSN closed out Friday's
session near the high of the day and looks poised to regain 
more of the ground it lost during last weeks debacle.  Being 
that Friday's positive Jobs Report has alleviated some of the 
interest rate fears which helped fuel last weeks decline, we 
are looking for more positive days in BVSN's near future.  BVSN 
has plenty of room to do a little leg stretching.  BVSN may 
encounter a bit of resistance at $150 though we believe the 
more formidable resistance will be met at $170.  BVSN found some 
nice support right around $141 back toward the end of December 
when it traded through this level.  BVSN has also regained the 
support of its 30-dma of $132.50 which is backed by what has 
proved to be some solid support at $130.  Should BVSN retain 
the momentum it picked up on Friday and manage to trade through 
$150, we could be cleared for a nice run back up.  $150 looks 
to be another good potential entry level.  Though it probably 
isn't necessary to mention this after last weeks roller coaster 
ride, I am going to say it anyway.  USE YOUR STOPS!!  BVSN is 
known for making big moves quickly so remember to keep your 
stops tight if you are going to play.

An article released on Friday quoted Internet analyst Michael 
Graham of BancBoston Robertson Stephens as saying "There appears 
to be a lot of institutional cash waiting for an Internet 
opening once the quarterly sell-off and interest rate fears are 
behind us."  I would say that BVSN certainly qualifies as an 
"Internet opening".  Another item to brighten the BVSN future 
is an upcoming earnings announcement on January 26th.

***January contracts expire in two weeks***

BUY CALL JAN-145*BZV-AI OI=300 at $20.13 SL=15.75
BUY CALL JAN-150 BZV-AJ OI=526 at $17.75 SL=13.75
BUY CALL JAN-155 BZV-AK OI=500 at $15.50 SL=12.00
BUY CALL JAN-160 BZV-AL OI=830 at $13.63 SL=10.50
BUY CALL JAN-165 BZV-AM OI=129 at $12.38 SL= 9.50

Picked on Dec 16th at   $131.69     P/E = 861
Change since picked      +16.65     52-week high=$193.00             
Analysts Ratings     5-16-2-0-0     52-week low =$  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 = 2.29 mln
Chart = http://quote.yahoo.com/q?s=BVSN&d=3m


GMH - Hughes Electronics Corp. $98.00 (+2.00)

Hughes Electronics Corp., is a manufacturer of communications 
satellites and a provider of satellite-based services, owning 
and operating a fleet of geostationary satellites and 
providing direct broadcast services through DIRECTV, the 
world's leading digital direct broadcast satellite service. 
Subsidiaries include; PanAmSat which owns and operates the 
largest commercial satellite fleet in the world, Spaceway 
which is a planned satellite-based broadband communications 
company which is planning to begin multi-media transmission 
services in 2002, Hughes Network Systems a provider of 
satellite and wireless communications ground equipment and 
services, and Hughes Space and Communications a leading 
satellite manufacturer.

You can hardly go on a spacewalk these days without banging 
into a Hughes product.  For years, GMH did not seem to be 
getting the respect it deserves for being one of the largest 
and most significant technology companies in the world.  In 
the past year investors have finally taken notice of this very 
influential communications company.  The very high profile 
DIRECTV is becoming a household name not to mention actually 
being in a leading 8 million homes.  Last year Hughes increased 
their subscriber growth rate by 39 percent.  If that was not 
enough, Hughes plans to be a leading provider of satellite 
based broadband multimedia communications.  Hughes has more 
buzzwords to make investors feel all tingly inside than just 
about any other company.  All they need to do is add .com 
(or .sat) to their name to complete the package.  Hughes began 
its most recent uptrend back in mid October at $70.  Since then 
GMH has been developing a textbook channeling pattern.  After 
bouncing off of the lower band this week, GMH seems poised to 
rally to a new high above $100.  If it could break above the 
upper band, it could really move.  If GMH gaps up on Monday, 
be a little patient and see if you can get a pullback.  Support 
is $92-$93.

In a press release from the ICES show in Vegas, DIRECTV and 
TiVo announced a jointly developed device that integrates 
their respective technologies.

***January contracts expire in two weeks***

BUY CALL JAN-85 GMH-AQ OI= 162 at $13.88 SL=10.75  
BUY CALL JAN-90*GMH-AR OI=1203 at $ 9.38 SL= 6.75
BUY CALL JAN-95 GMH-AS OI= 781 at $ 6.00 SL= 4.25
BUY CALL FEB-90 GMH-BR OI=1024 at $12.13 SL= 9.50
BUY CALL FEB-95 GMH-BS OI=1277 at $ 8.75 SL= 6.50

SELL PUT JAN-95 GMH-MS OI= 286 at $ 2.31 SL= 4.00
(See risks of selling puts in play legend)

Picked on Jan 9th at    $98.00    P/E = 231
Change since picked      +0.00    52-week high=$104.00
Analysts Ratings    10-6-3-0-0    52-week low = $38.50
Last earnings 10/99 est= -0.14    actual= -0.13
Next earnings 01-19 est= -0.28    versus=  0.03
Average Daily Volume =   916 K
Chart = http://quote.yahoo.com/q?s=GMH&d=3m 


CMVT - Comverse Technology $139.00 (-5.75)

Comverse is the world leader in multimedia telecommunications
applications.  Through its Comverse Network Systems division,
the company markets its Access NP and TRILOGUE INfinity Enhanced
Services Platforms, which enable wireless, wireline, and
internet companies to offer enhanced telecommunications services
to business and residential customers.  Among these services
are voice and fax messaging, call answering, and web
information services.  Comverse also offers Intelligent 
Peripheral/Service Node, supporting next-generation personal 
communication services such as pre-paid wireless, mobile number 
portability, call screening, and mobile attendant functions.

CMVT continues to add to its extensive customer base, which
currently numbers more than 290 telecommunications operators
worldwide.  More than 150 of these are in the rapidly growing
digital wireless market.  CMVT began a strong move up in late
December, driven by the co-marketing alliance with Genesys
Telecommunications on December 22 (see below).  Considering the
wild week on the NASDAQ, CMVT did pretty well.  Moving up with
everything technology at the open on Monday, it followed the
rest of its sector during the wild selloff that ensued.  Hitting
a low near $123 early Friday morning, CMVT recovered nicely
throughout the day.  Regaining most of its losses on strong
volume Friday, CMVT turned a $21 bloodbath into a much more
acceptable loss of only $5.75 on the week.  What was really
encouraging was the strong bounce at the $123 support level,
the area where prices bounced in early December and then
consolidated before taking off in the last two weeks of the
year.  This level looks to be very strong support going forward.
Now that CMVT has regained its footing, we are looking for the
late December momentum to return, as the catalysts for the move
up remain unchanged.  With positive sentiment returning to 
the Telecom sector, we expect CMVT to move up and challenge
resistance at the 52-week high ($155.88) set last Monday.  Look
for a bounce between $134 (resistance Thursday and support on
Friday) and $136 (the 10-dma) to provide a good entry. If the
market remains strong next week, aggressive traders can open
new positions as long as volume remains robust.  A quick look
at a daily chart shows the large daily price swings that can
occur in this issue, providing good entry points and
underscoring the need to use stops.  Also, CMVT has been a 
split candidate since December when the company increased the 
number of authorized shares and the CEO said a split would be 
coming in a matter of weeks or months.

On December 22, CMVT and Genesys Telecommunications announced a
co-marketing alliance and technological partnership in the
Asia-Pacific region.  The alliance will focus on promoting the
integration of CMVT's Intelligent Recording platform, ULTRA,
and the Genesys T-Server to provide call centers with improved
Customer Relationship Management.  On Radio Wallstreet Friday,
an analyst with Suntrust Equitable Securities had good things
to say about CMVT, citing the strength of their business model
and their consistent track record of beating earnings estimates.
He also highlighted their broad customer base, consistent
earnings growth and a strong balance sheet with over $750 million
in cash.  He expects 20-25% earnings growth over the next year.

***January contracts expire in two weeks***

BUY CALL JAN-135 CQV-AG OI= 309 at $ 9.00 SL=6.75
BUY CALL JAN-140*CQV-AH OI=1004 at $ 6.00 SL=4.25
BUY CALL JAN-145 CQV-AI OI= 208 at $ 4.38 SL=2.75
BUY CALL FEB-140 CQV-BH OI= 202 at $11.00 SL=8.75
BUY CALL FEB-145 CQV-BI OI= 119 at $ 8.75 SL=6.75

Picked on Jan 9th at  $139.00     P/E = 72
Change since picked     +0.00     52-week high=$155.88
Analysts Ratings   10-4-0-0-0     52-week low =$ 43.63
Last earnings 11/99 est= 0.53     actual= 0.56
Next earnings 02-29 est= 0.54     versus= 0.44
Average Daily Volume =  891 K
Chart = http://quote.yahoo.com/q?s=CMVT&d=3m


NOK - Nokia $171.00 (-20.06)(+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? 

Ouch, this was a rough week for NOK, which, despite a nice 
recovery of $18, still remains $20 below last week's close.  
Support is at $155, $160, $165, and as of Friday, mildly so at 
$170.  While NOK remains a few $$$ shy of its 10-dma of $174.63, 
the recovery on strong volume from it's $154 low on Thursday 
was promising as long as the market doesn't head back into the 
dunking tank.  Fortunately, NOK reported Friday that they are 
having a hard time keeping up with demand for their wireless, 
Internet-ready handsets, and they emphasized that it was NOT 
from manufacturing problems.  Adding to their good fortunes, 
they currently have the only one available on the market while 
Ericsson, Siemens, and Motorola play catch-up.  They knew 
demand would be strong based on their earlier announcements 
that they would reach their 3-year revenue growth within 2 years 
(50% growth).  But noting that lofty demand beyond their highest 
announced expectation whispers "surprise" in our ears.  Earnings 
will be announced on February 1 after the close (confirmed, but 
subject to change per IR), wherein we may also get a split 
announcement, since they historically announce in the $150 

In the news, Merrill Lynch added NOK to its Top 10 List, and 
CSFB reiterated NOK as a Strong Buy.  

***January contracts expire in two weeks***

BUY CALL JAN-165 NZY-AM OI=1677 at $11.00 SL= 8.75
BUY CALL JAN-170*NZY-AN OI=6349 at $ 8.25 SL= 6.25
BUY CALL JAN-175 NZY-AO OI=3856 at $ 6.00 SL= 4.25
BUY CALL FEB-175 NZY-BO OI= 865 at $12.63 SL=10.00
BUY CALL FEB-180 NZY-BP OI=1044 at $10.63 SL= 8.25

SELL PUT JAN-160 NAY-ML OI=1836 at $ 3.13 SL= 1.50
(See risks of selling puts in play legend)

Picked on Nov 14th at  $122.25     P/E = 69
Change since picked     +48.75     52-week high=$196.00
Analysts Ratings    13-8-0-0-0     52-week low =$ 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 = 3.4 mln 
Chart = http://quote.yahoo.com/q?s=NOK&d=3m


QCOM - Qualcomm Inc. $150.00 (-26.13)

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

You just can't get rid of it!  We picked up QCOM again this 
week.  It showed us all that it can take the good with the bad.  
All QCOM needed was the market to be on it's side and it is 
making it's come back.  All week, even with the market tanking, 
QCOM held at different support levels, showing that investors 
are still looking to by the dips.  While it did go down as the 
market got the blues out of its system, on Friday we saw how 
investors truly are on QCOM's side.  Now that it is more 
affordable, nobody wants to be left out of the next move up.  
Proof of this is the strong volume QCOM had on Friday.  With 
the 10-dma at $154 expect that to be possible resistance, but 
it will likely run to $160 before finding real resistance.  A 
good point to look at entry would be Friday's low of $133 if 
the Nasdaq has another bad week.  With just over a week until 
earnings (due out on the 19th) QCOM might not get that low again 
so to jump in on the intraday dips if the momentum has the stock 
trading higher.  However, remember to be cautious in case the 
market still hasn't shaken the blues and watch the Nasdaq.  
Friday's rally may have just been a bear trap.

Others see the same thing we do.  QCOM got an analyst upgrade 
on Thursday when Argus Research raised it from a Hold to a Buy.  
QCOM also announced calling some of their Trust Convertible 
Preferred Securities, but that it would have no effect on the 
upcoming earnings.  

***January contracts expire in two weeks***

BUY CALL JAN-145 AUA-AI OI= 2933 at $15.63 SL=12.00
BUY CALL JAN-150*AUA-AJ OI=10576 at $12.38 SL= 9.50
BUY CALL JAN-155 AUA-AK OI= 2507 at $11.50 SL= 9.00

SELL PUT JAN-135 AUA-MG OI= 1372 at $ 5.00 SL= 7.00
(See risks of selling puts in play legend)

Picked on Jan 4th at    $162.06    P/E = 523
Change since picked      -12.06    52-week high=$200.00
Analysts Ratings      7-7-5-0-0    52-week low =$  6.53
Last earnings 11/99   est= 0.88    actual= 0.91
Next earnings 01-19   est= 0.24    versus= N/A
Average Daily Volume = 21.5 mln
Chart = http://quote.yahoo.com/q?s=QCOM&d=3m


The week's trading activity in the Dow and Nasdaq left many
traders and investors scratching their heads.  It was wild close
to a volatile week.  After making it through Y2K with no major 
problems, investors dumped the tech stocks at the Nasdaq for 
three days.  Friday saw the Dow make a new all-time high, while 
the Nasdaq managed to recoup more than half of its losses from 
earlier in the week.  A stronger than expected employment report
didn't detour traders enthusiasm for buying stocks.  It was a 
broad-based event as drug, health care, consumer, Internet, disk
drive and telecom equipment stocks all participated in the rally.
Most traders decided Lucent's problems were company specific and 
not industry wide as NT, CIEN, MOT and CSCO finished the day with
solid gains.  We will get a better insight on earnings next week, 
as earnings season kicks into high gear.  Economic data will 
continue to bombard the markets with the release of Import-Export
Prices, PPI, Retail Sales, and Initial Jobless claims.  Probably
the most important report of the week, CPI, brings up the rear
on Friday.  The VIX peaked out Wednesday morning at 31.02, and 
declined for the balance of the week, settling at 23.20.  The 
week produced one drop and several other opportunities in our 
LEAP section.  We are adjusting our positions in LU and GTW.  
Both announced earnings warnings this week.  If you haven't been 
stopped out off your positions in these two plays, we are adding 
them again as a buy at the lower levels.  We believe traders 
over-reacted to the earnings warnings and if they were good 
plays at their previous points they are great plays at the 
current levels.  We believe the money on the sidelines from 
year-end tax selling and year-end bonuses will continue to make 
its way into the markets.  The VIX went over 30, did anyone 
buy LEAPS?  

Current Plays


EMC     11/07/99  JAN-2001 $80  ZOH-AP at $39.88   $15.38  159.30%
                  JAN-2002 $90  WUE-AR at $43.25   $19.00  127.63%
GPS     11/07/99  JAN-2001 $40  ZGS-AH at $14.00   $ 5.75  143.48%
                  JAN-2002 $45  WGS-AI at $16.38   $ 7.88  107.87%
IBM     11/07/99  JAN-2001 $100 ZIB-AT at $27.75   $13.63  103.60%
                  JAN-2002 $110 WIB-AB at $31.13   $16.50   88.67%
WMT     11/07/99  JAN-2001 $70  ZWT-AN at $11.88   $ 6.50   82.77%
                  JAN-2002 $75  WWT-AO at $15.50   $ 9.75   58.97%
CSCO    11/14/99  JAN-2001 $80  ZCY-AP at $37.00   $19.13   93.41%
                  JAN-2002 $90  WIV-AR at $39.13   $22.00   77.86%
SLR     11/14/99  JAN-2001 $85  ZSR-AQ at $22.13   $21.75    1.75%
GE      11/21/99  JAN-2001 $150 ZGR-AU at $25.50   $16.25   56.92%
                  JAN-2002 $150 WGE-AU at $36.25   $25.50   42.17%
NT      11/28/99  JAN-2001 $75  ZOO-AO at $38.00   $22.25   70.79%
                  JAN-2002 $75  WNT-AO at $45.13   $30.25   49.19%
VOD     12/05/99  JAN-2001 $50  ZAT-AJ at $ 9.75   $10.75  - 9.30%
                  JAN-2002 $50  WHV-AJ at $14.00   $15.00  - 6.67%
KM      12/05/99  JAN-2001 $10  ZKM-AB at $ 2.75   $ 2.50   10.00%
                  JAN-2002 $15  WKM-AC at $ 1.94   $ 1.75   10.86%
ADBE    12/12/99  JAN-2001 $65  ZAE-AM at $15.25   $15.00    1.67%
                  JAN-2002 $70  WAE-AN at $19.50   $20.38  - 4.32%
TXN     12/12/99  JAN-2001 $110 ZTN-AB at $15.88   $22.25  -40.11%
                  JAN-2002 $120 WGZ-AD at $21.25   $28.50  -25.44%
NXTL    12/19/99  JAN-2001 $90  ZFU-AR at $29.38   $23.50   25.02%
                  JAN-2002 $100 WFU-AT at $33.00   $27.25   21.10%
SUNW    12/19/99  JAN-2001 $80  ZJX-AP at $15.88   $17.63  -11.02%
                  JAN-2002 $90  WJX-AR at $20.88   $22.00  - 5.14%
AOL     12/23/99  JAN-2001 $90  ZKS-AR at $16.13   $20.13  -19.87% 
                  JAN-2002 $100 WAN-AT at $20.75   $25.63  -23.52%

***Both cratered due to short-term earnings warning but we feel 
they will comeback and are listing new LEAPS for the situation***
LU      11/14/99  JAN-2001 $80  ZEU-AP at $ 4.50   $12.88  -65.06%
        01/09/00  JAN-2001 $50  ZEU-AJ at $13.63   $13.63     NEW
                  JAN-2002 $90  WEU-AR at $ 8.38   $16.13  -48.05%
GTW     11/21/99  JAN-2001 $90  ZWB-AR at $ 7.75   $17.75  -56.34%
        01/09/00  JAN-2001 $60  ZWB-AL at $17.13   $15.88     NEW
                  JAN-2002 $100 WGB-AT at $12.00   $22.50  -46.67%
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

MOT - Motorola $128.81

MOT fell out of bed this week after making a new high at $153.63.
Thursday, MOT hit a support level near $119, and rebounded Friday,
as investors realized that Lucent's problems are company specific
and not industry wide.  The volume behind MOT's move on Friday
picked up to 7.9 million indicating traders saw the recent 
decline as a buying opportunity.  Frankly, we couldn't agree 
more.  Wednesday and Thursday analysts at Gruntal & Co. and DB 
Alex Brown reiterated Strong Buy ratings of MOT.  They feel the 
recently completed purchase of General Instruments, will provide 
MOT with great potential in the broadband arena.  Gruntal issued 
a short-term price target for MOT at $150 and a long term target 
of $200.  A catalyst to get MOT in gear, could be their earnings 
announcement Jan 17th.  Analysts are expecting earnings for MOT 
to come in at $0.83, compared to $0.26 for the same period last 
year.  Considering the price of the stock and the recent 
volatility the LEAPS are reasonably priced.

BUY LEAP JAN-2001 $125.00 ZMA-AE at $31.13
BUY LEAP JAN-2002 $125.00 WMA-AE at $41.50


DELL $46.19 Although we are still ahead of the game for our play 
in DELL, we are going to stand aside for the time being.  Dell 
suffered right along with Gateway this past week, losing -4.81.  
Considering some of the other stocks in the tech sector it could 
have been worse.  However the volume behind the drop in price 
was substantial.  Average daily volume for DELL, is about 27.5 
million shares. This week DELL averaged about 39.4 million shares.
Dell fell below 2 important levels of support at $50 and $46.50.
This could be a near term bottom, but with the concern over
earnings and the technical picture, we are going to let this 
one go for now.  If the current downtrend continues, Dell could
find strong support near $40 and could provide us with another
buying opportunity soon. 


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.


SCNT - Scient Corp $66.50 (-19.94)

Scient is leading a new category of professional services firms 
focused solely on building eBusiness systems and capabilities 
that help companies go to market rapidly and build competitive
differentiation.  Scient specializes in developing strategic 
eBusiness solutions for both Fortune 500 companies and 
electronic start-ups that want to dominate their marketplace.  

There still looks to be a whole lot of selling going on.  SCNT 
tried to make a move up on Friday and wound up hitting its head 
squarely on $70 and taking a turn south.  This brief attempt 
did a nice job of providing some room for entry points, as SCNT 
traded all the way down to $64.  We mentioned some weak support 
right around $65, though we are really looking for a fall down 
to at least $60, where there is a more solid level of support.  
We are still seeing evidence of SCNT sellers in the market with 
intra-day tops throughout the sessions backed by good volume.  
Need we even mention SCNT's weak relative strength against 
Friday's record breaking market rally?  Anything e-related 
seemed to fare well Friday, however the exuberance did nothing 
to help SCNT.  We believe SCNT is still headed downhill.  We 
look for $70 to continue providing the strong resistance.  
Should SCNT manage a close below $65, we will look for this 
level to hold SCNT back as well.  For new entries, try to target 
shoot your way in on any brief run-ups backed by holding 
resistance, like we witnessed on Friday.  Again, once SCNT 
trades through $65, we could be cleared for another healthy 

***January contracts expire in two weeks***

BUY PUT JAN-70 SMQ-MN OI=787 at $7.00 SL=5.25
BUY PUT JAN-65*SMQ-MM OI=113 at $4.25 SL=2.50

Average Daily Volume = 340 K
Chart = http://quote.yahoo.com/q?s=SCNT&d=3m


HNZ - H.J. Heinz $39.00 (-0.81)

Who hasn't heard of H.J. Heinz?  With the infamous "57 Varieties" 
which include 9-Lives pet food, StarKist tuna, Weight Watchers, 
Budget Gourmet, and of course, Heinz 57 Ketchup, H.J. Heinz is 
indeed a household name.   Heinz produces and markets its 
products worldwide.  Heinz also ventures into the weight loss 
class arena along with other related programs. 

HNZ did manage another gain for Friday's session, trading up 
nearly a dollar and parking on $39 for the weekend.  We really 
do not believe that the overall negative sentiment that has 
been plaguing the food producers has changed direction.  Friday's 
positive job report seemed to be just what investors needed 
to hear to rejuvenate the bull market, for a while anyway.  It 
is quite possible that we will see a pullback in some of the 
more defensive stocks, such as HNZ, which benefited from last 
week's "correction".  Should HNZ continue to move up, it is 
likely to encounter some rather formidable resistance right 
around $40 and may be held back.  This level has potential to 
provide some room for possible entry points should HNZ reach 
$40, turn around and start heading south again.  HNZ does have 
some support that has recently formed right around $38.  HNZ 
really had no problem trading below this level last week so we 
do not view $38 as very solid support.  Watch for a reclamation 
of HNZ's downward trend with good volume to back the selling.

***January contracts expire in two weeks***

BUY PUT JAN-45 HNZ-MI OI= 337 at $7.13 SL=5.25
BUY PUT JAN-40*HNZ-MH OI=1042 at $1.63 SL=0.75 Low premium

Average Daily Volume = 933 K
Chart = http://quote.yahoo.com/q?s=HNZ&d=3m


CHINA - China.com $76.50 (-2.13)

Chinadotcom is the first pan-Asian integrated Internet company 
listed in the United States.  The company provides a full 
range of Internet services that build e-business strategies 
and solutions (Web Connection), distribute content via its 
portal network (china.com, cww.com, hongkong.com, taiwan.com), 
and sell services through online advertising (24/7 Media Asia).  
They are committed to enabling digital communities to realize 
their full potential, thereby facilitating the development 
of the Internet in China and across Asia.  The company has 
over 900 employees in 21 offices across 10 Asian markets, 
including Australia, Hong Kong, Japan, Korea, Malaysia, 
Singapore, and Taiwan.  In Mainland China, the company has 
five offices and over 200 employees.  

China may have survived Y2K, but can this CHINA survive the 
onslaught of over 30 million shares set to clear lockup on  
Monday?  With only an 8.4 million share float, the odds are 
definitely not in there favor.  The company has over 42 mln 
shares outstanding so the release of 30.4 mln more represents 
72% of the stock.  That is a high number even by current lockup 
standards.  One look at the chart and you see that investors 
know what is coming.  The stock has been trending lower despite 
a quick two-day spike to start the year.  This trend is coming 
in the face of a vast number of positive press releases from 
the company to try and support the stock.  Don't kid yourself, 
they know the possible ramifications of such a large amount of 
new stock to absorb and they will do what they can to support 
their stock.  Unfortunately, stocks typically suffer during 
the short-term after the lockup period and it makes for good 
put playing.  CHINA isn't helped by the by the fact that the 
stock has some air underneath it.  We've seen mild support at 
$75, but that isn't likely to last.  After that we are hard 
pressed to see any support before the $65 range and eve that is 
mild.  Strong support resides at $60.  Pick your entry points 
off any subtle rally met by resistance.  A break below the $75 
support looks tempting as well.  

Following Friday's trading alert, the volume on the Jan-75 
contracts went from 66 to 2007 and the ask went from $7.38 to 
$12.75.  Apparently, you were checking your e-mail Friday.  
CHINA closed the session toward the low end of its day, and 
looks well positioned to trade through $75 this week.  In an 
article released late in the day on Friday, it was announced 
that CHINA has plans to sell 3.88 million Class A shares.  The 
company will sell 2.9 mln of the shares itself and stockholders 
will sell the remaining 970K.  Following this offering, CHINA 
will have approximately 47.5 million shares outstanding.  CHINA 
plans to use the proceeds from the sale of its shares for 
expansion of sales, marketing, and workforce.  Acquisitions 
and capital spending will be a focus for the company as well.  
CNBC also did a report late Friday about IPO Lockup periods 
which are ending and CHINA was at the top of the list.  Who knows, 
maybe they are an OIN subscriber as well!

***January contracts expire in two weeks***

BUY PUT JAN-80 UIH-MP OI=197 at $15.88 SL=12.00 Fri vol= 615
BUY PUT JAN-75*UIH-MO OI=159 at $12.75 SL=10.25 Fri vol=2007 

Average Daily Volume = 1.46 mln
Chart = http://quote.yahoo.com/q?s=CHINA&d=3m 


WCOM - MCI WorldCom, Inc. $47.19 (-5.88)

MCI Worldcom is a telecommunications giant, providing consumers
and businesses with local, long distance, Internet, data, and
international communications services.  Included in the
company's products and services are switched and dedicated 
long distance and local products, dedicated and dial-up 
Internet access, wireless services, 800 services, calling 
cards, and debit cards.

Much Ado About Nothing was the theme for WCOM on Friday.
Normally one of the most heavily traded stocks, WCOM nearly
doubled its ADV in the process of going nowhere.  That's right,
in the face of the largest one-day point gain on the NASDAQ,
over 34 million shares traded hands, leaving prices unchanged.
This is encouraging for our put play as there is not enough
pressure to drive prices up, even in a strong market.  The
pending merger with Sprint continues to add downside pressure,
but the real mover this week was the 3 cent per share reduction
in revenue estimates by Jack Grubman of Salomon Smith Barney.
WCOM is now firmly under all of its moving averages which will
create overhead resistance between $51-52.  Look for a roll
over in this area to provide a better entry as we move forward.
Earnings are on January 28, but don't look for any strength from
that camp as long as sentiment about revenues continues to be
bearish.  One other interesting note is that option volume was
particularly heavy for WCOM on Friday.  Although heavy on the
call side, volume for the Jan 45 put was very heavy, with OI
increasing from 166 to 1514.

***January contracts expire in two weeks***

BUY PUT JAN-50*LDQ-MJ OI=1869 at $4.00 SL=2.50
BUY PUT JAN-45 LDQ-MI OI=1514 at $1.50 SL=0.75
BUY PUT FEB-45 LDQ-NI OI=1173 at $2.75 SL=1.38

Average Daily Volume = 18.33 mln
Chart = http://quote.yahoo.com/q?s=WCOM&d=3m


SANM - Sanmina Corp $91.75 (-8.13)

Sanmina is a leading electronic component manufacturer in the 
US.  They produce printed circuit board assemblies and backplane 
assemblies as well as multi-layer printed circuit boards and 
custom cable and wire harness assemblies.  The company's market 
base is diversified and includes original equipment 
manufacturers (OEMs) in the telecommunications, computer, data 
communications, industrial, and medical instrumentation 
industries.  The telecommunications market makes up about 50% of 
Sanmina's sales with DSC Communications and Cisco Systems 
accounting for nearly one-third of total sales.

For the last two weeks SANM has steadily sunk from highs near 
$110 to its present level just above $90.  That is definitely a 
huge decline however, SANM didn't meet its maker until it 
slipped under $95 on Thursday.  Take a look at a six-month chart 
and you can see that this mark previously served as strong 
support through November and December.  Far below, the 200-dma 
($80.25) is the next level of bottom support - a place where 
this stock spent most of 1999.  On Thursday, the bearish plunge 
was backed by increased volume levels and Friday the scenario 
persevered.  This is a technical play that so far hasn't been 
effected by positive news events.  For example on December 29th, 
the Board of Directors announced it would be asking the 
shareholders to increase its authorized common stock to 500 mln 
from 200 mln at the next meeting (January 28th)to add 
flexibility for future corporate dealings.  No response by 
investors - SANM traded relatively flat.  Then this past 
Wednesday, SANM announced it had signed a letter of intent to 
acquire the Clinton, North Carolina electronic enclosure systems 
facility from Alcatel (ALA), a French telecommunications 
equipment firm.  The proposed deal calls for a three-year 
manufacturing service contract and is expected to close in the 
1Q of 2000.  Herve Francois analyst at CSFB liked the deal and 
reiterated a Strong Buy on Wednesday, but investors were still 
"hands off SANM" in the days following.  Now technically the 
indicators such as the MACD, Stochastic, and RSI are all in the 
red too, but wait for further corroboration before entering a 
new put position.  After hours on Friday, the analyst firm 
Stephens Inc reiterated a Buy rating and issued a $150 12-month 
target price.  Likely this alone shouldn't impact the downward 
trend but it's always better to be safe than sorry.  Remember 
cash is king.

***January contracts expire in two weeks***

BUY PUT JAN-95 SQN-MS OI= 149 at $7.00 SL=5.25
BUY PUT JAN-90*SQN-MR OI= 465 at $3.50 SL=1.75
BUY PUT JAN-85 SQN-MQ OI=1360 at $2.13 SL=1.00

Average Daily Volume = 789 K
Chart = http://quote.yahoo.com/q?s=SANM&d=3m

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The Option Investor Newsletter             1-9-2000  
Sunday                        5 of 5


Option Trading Basics: Rules For The Beginner...

The #1 goal for the majority of OIN subscribers is to use options
to take advantage of favorable trading opportunities. Derivatives
are generally regarded as the most effective trading vehicle as
they offer a means to gain an edge in the market. Before you can
begin to utilize this unique instrument, you must understand the
most common rules for success.

The most important factors in option trading are market movement,
option volatility, and time decay. The knowledge of these concepts
is paramount to profitable trading and without a suitable basis,
you will likely enter the market at a theoretical disadvantage.
The first requirement is familiarity with option pricing. We have
the ability to measure an option's premium through mathematical
evaluation and if you aren't prone to formulas, pricing models
will help you determine the fair market value of an option. Many
of the established tools for pricing options are free and they
should be used before opening any position. In volatile issues,
the emotional optimism of traders can cause prices to vary widely
from their true worth. Without a realistic estimate of the value
of an option, you will often pay an excessive amount for the
rights inherent in the contract.

Another important component of successful option trading is risk
management. There are two fundamental risks in derivatives; price
movement in the underlying instrument and changes in volatility.
The risk of adverse price movement can be managed through the use
of spreads and combination positions. Simple call and put options 
can be protected with trading stops and roll-out strategies. Delta
neutral plays can be maintained through the use of a hedge ratio.

After you have a plan for controlling unexpected price movements,
the subject of volatility can be addressed. The easiest way to
reduce your exposure to this aspect of option trading is to buy
options that are under-priced and sell options that are overpriced.
Successful traders will anticipate changes in market expectations
and volatility characteristics. One of the simplest approaches is
buying premium (calls, puts, straddles and back-spreads) when you
foresee an increase in market volatility and focus on techniques
for selling premium (credit straddles, credit spreads and ratio
positions) when you expect volatility to fall. Similar to patterns
in price movement, most volatility fluctuations generally exhibit
observable levels and transition periods, and their tendency to
revert to previous ranges can be used to profit on a regular basis.

In the majority of investment techniques, the end result is a
product of what you know, and how well you act upon it. In the
case of options, it's more a matter of knowing your risk and
controlling it. Only in that manner, will your portfolio grow
consistently, in all market conditions.


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

MCRE    7.56   8.06   JAN   7.50  1.31  *$  1.25  20.0%  14.5%
SPLH    8.44   9.25   JAN   7.50  1.81  *$  0.87  13.1%  11.4%
EMIS   19.88  30.00   JAN  17.50  4.50  *$  2.12  13.8%  10.0%
CBIZ   10.31   7.81   JAN   7.50  3.63  *$  0.82  12.3%   8.9%
FSII   10.69  13.44   JAN  10.00  1.94  *$  1.25  14.3%   8.9%
LGND   11.69  13.69   JAN  10.00  2.75  *$  1.06  11.9%   8.6%
NFO    14.38  20.94   JAN  12.50  2.94  *$  1.06   9.3%   8.1%
STRX    8.13   7.81   JAN   7.50  1.00  *$  0.37   5.2%   7.5%
AWEB   12.13  10.13   JAN  10.00  3.00  *$  0.87   9.5%   6.9%
NETA   25.13  25.13   JAN  22.50  3.63  *$  1.00   4.7%   6.7%
WSTL   10.75   9.69   JAN  10.00  1.88   $  0.82   9.2%   6.7%
SCOC   17.88  25.31   JAN  15.00  4.13  *$  1.25   9.1%   6.6%
PILT   17.56  27.13   JAN  12.50  5.88  *$  0.82   7.0%   6.1%
ONHN   10.25   7.81   JAN   7.50  3.38  *$  0.63   9.2%   5.7%
BAMM    9.81   8.63   JAN   7.50  2.75  *$  0.44   6.2%   5.4%
TTWO   16.31  13.50   JAN  12.50  4.63  *$  0.82   7.0%   5.1%
MWHS   15.06  18.59   JAN  12.50  3.25  *$  0.69   5.8%   5.1%
PILT   20.25  27.13   JAN  15.00  6.38  *$  1.13   8.1%   5.1%
RNBO   20.00  20.88   JAN  15.00  6.13  *$  1.13   8.1%   5.1%
NPLS   20.56  22.00   JAN  17.50  3.63  *$  0.57   3.4%   4.9%
TSCM   15.75  18.50   JAN  12.50  3.88  *$  0.63   5.3%   4.6%
NETS   28.00  26.00   JAN  22.50  6.63  *$  1.13   5.3%   4.6%
AGY    16.88  16.00   JAN  15.00  2.75  *$  0.87   6.2%   4.5%
VDAT   13.50  10.38   JAN  10.00  3.88  *$  0.38   4.0%   4.3%
EMIS   24.63  30.00   JAN  20.00  5.38  *$  0.75   3.9%   4.2%
CNCX   29.88  30.00   JAN  22.50  8.00  *$  0.62   2.8%   4.1%
ENMD   28.44  29.31   JAN  22.50  6.75  *$  0.81   3.7%   4.1%
SATH   12.69  10.38   JAN  10.00  3.38  *$  0.69   7.4%   4.0%
MESG   16.63  13.38   JAN  12.50  4.88  *$  0.75   6.4%   4.0%
BNYN   15.81  16.81   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%
BIDS    5.25   4.28   JAN   5.00  0.94   $ -0.03  -0.7%   0.0%

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


Bid.Com (BIDS) appears to be holding at support. The technical 
outlook of Century Business (CBIZ) has worsened (they expect to 
take a fourth-quarter pre-tax charge) but the position can be
closed now for a break even exit - just something to consider.

Positions Previously Closed:

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

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

ENER  11.81  JAN 10.00  EQI AB  2.06  254     9.75    2.6%   2.6%

GMGC   6.84  FEB  5.00  GGQ BA  2.38  31,971  4.46   12.1%  12.1%
HMK    9.88  FEB  7.50  HMK BU  2.81  134     7.07    6.1%   6.1%
HRC    5.81  FEB  5.00  HRC BA  1.13  597     4.68    6.8%   6.8%
IFCI  10.13  FEB  7.50  IQD BU  3.00  1,258   7.13    5.2%   5.2%
PCMS  10.06  FEB  7.50  PQP BU  3.00  1,675   7.06    6.2%   6.2%
TERA   4.41  FEB  5.00  QIP BA  0.50  190     3.91   27.9%  12.8%
WDC    5.50  FEB  5.00  WDC BA  1.13  1,480   4.37   14.4%  14.4%

Sequenced by Return Called

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

ENER  11.81  JAN 10.00  EQI AB  2.06  254     9.75    2.6%   2.6%

TERA   4.41  FEB  5.00  QIP BA  0.50  190     3.91   27.9%  12.8%
WDC    5.50  FEB  5.00  WDC BA  1.13  1,480   4.37   14.4%  14.4%
GMGC   6.84  FEB  5.00  GGQ BA  2.38  31,971  4.46   12.1%  12.1%
HRC    5.81  FEB  5.00  HRC BA  1.13  597     4.68    6.8%   6.8%
PCMS  10.06  FEB  7.50  PQP BU  3.00  1,675   7.06    6.2%   6.2%
HMK    9.88  FEB  7.50  HMK BU  2.81  134     7.07    6.1%   6.1%
IFCI  10.13  FEB  7.50  IQD BU  3.00  1,258   7.13    5.2%   5.2%

Sequenced by Return Not Called

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

ENER  11.81  JAN 10.00  EQI AB  2.06  254     9.75    2.6%   2.6%

WDC    5.50  FEB  5.00  WDC BA  1.13  1,480   4.37   14.4%  14.4%
TERA   4.41  FEB  5.00  QIP BA  0.50  190     3.91   27.9%  12.8%
GMGC   6.84  FEB  5.00  GGQ BA  2.38  31,971  4.46   12.1%  12.1%
HRC    5.81  FEB  5.00  HRC BA  1.13  597     4.68    6.8%   6.8%
PCMS  10.06  FEB  7.50  PQP BU  3.00  1,675   7.06    6.2%   6.2%
HMK    9.88  FEB  7.50  HMK BU  2.81  134     7.07    6.1%   6.1%
IFCI  10.13  FEB  7.50  IQD BU  3.00  1,258   7.13    5.2%   5.2%

Company Descriptions

ENER - Energy Conversion Devices  $11.81   *** Two-Week Play ***

Energy Conversion Devices is a leader in the synthesis of new
materials and the development of advanced production technology
and innovative products. They provide new technologies for use in
the fields of alternative energy and are engaged in activities
ranging from product development to manufacturing and selling
products as well as designing and building production machinery
with an emphasis on alternative energy and information technology.
Traders are suggesting the meteoric rise of Plug Power (PLUG) has
something to do with the recent rally. Regardless of the reason,
the technical outlook is favorable and it appears there is little
chance of owning this issue at expiration.

JAN 10.00 EQI AB Bid=2.06 OI=254 CB=9.75 RC=2.6% RNC=2.6%

Chart = http://quote.yahoo.com/q?s=ENER&d=1y


GMGC - General Magic  $6.84  *** Talk to me! ***

General Magic offers voice-enabled services and technology that 
make communication and access to information easy and convenient. 
The company's innovative, patent-pending magicTalk voice interface
lets people interact with information using their own words, as 
if they were talking to another person. General Magic started its
climb in November after OnStar, a division of General Motors,
selected magicTalk as the voice user interface for the OnStar 
Virtual Advisor, which will provide hands-free, voice-activated 
access to web-based information services in vehicles. The deal 
was closed in December and this week, Chet Huber, the general 
manager of OnStar, has joined General Magic's Board of Directors.
Favorable speculation with a breakout above resistance ($4.50
- now support) and signs of heavy accumulation.  

FEB 5.00 GGQ BA Bid=2.38 OI=31,971 CB=4.46 RC=12.1% RNC=12.1%

Chart = http://quote.yahoo.com/q?s=GMGC&d=1y


HMK - HA-LO  $9.88  *** What's Up? ***

HA-LO, a brand marketing organization, is the nation's leading 
provider of promotional and premium products and has established
a continuum of brand marketing services, including marketing and
promotion (UPSHOT), brand strategy and identity (LAGA), presence
marketing (HA-LO Sports and Entertainment, and Events by HA-LO) 
and relationship marketing (Market USA and UPSHOT Direct). HA-LO's
extensive client roster includes such global leaders as Abbott Labs,
Anheuser-Busch, The Coca-Cola Company, Discover Financial Services,
Ford, General Electric, Glaxo Wellcome, Mirage Resorts, and P & G.
In December, HA-LO jumped out of a 5 month base after announcing a 
partnership with Nike Golf; to sell & distribute a line of corporate
promotional products, branded with the Nike logo. After a brief 
consolidation, HA-LO has once again started to fly and has taken
out the December high. There is no news for the recent spike in
price which moves HA-LO into a stage II pattern.

FEB 7.50 HMK BU Bid=2.81 OI=134 CB=7.07 RC=6.1% RNC=6.1%

Chart = http://quote.yahoo.com/q?s=HMK&d=1y


HRC - Healthsouth  $5.81 *** Stage I Base ***

Healthsouth provides outpatient and rehabilitative healthcare 
services through its inpatient and outpatient rehabilitation
facilities, surgery centers, diagnostic centers and medical 
centers. The Company had nearly 2,000 locations in 50 states,
the United Kingdom and Australia. The recent volume suggests the
January effect may be drawing some interested buyers to HRC.
Positive technical divergence's are possible signals of an
upside resolution and a new bullish character.

FEB 5.00 HRC BA Bid=1.13 OI=597 CB=4.68 RC=6.8% RNC=6.8%

Chart = http://quote.yahoo.com/q?s=HRC&d=1y


IFCI - International FiberCom   $10.13 *** New Trading Range? ***

International FiberCom is a leading provider of a wide range of 
engineering, development and maintenance services for fiber optic, 
broadband networks, public telephone networks, local and wide area
networks, and specialized wireless applications. With a number of 
recent strategic acquisitions that complement and enhance existing
services and products, International FiberCom has positioned itself
as a "one-stop shop" for the telecom and cable TV industries. The
spike in price Thursday and Friday came after FiberCom's subsidiary,
All Star Telecom, was awarded an additional design-build contract 
with a value in excess of $20 million by PF.Net. This was an
addition to the $32 million contract with PF.Net, announced last
month. This activity has moved the price above resistance at $9.00
and out of a two-year trading range. Conservative speculation with
a favorable cost basis.

FEB 7.50 IQD BU Bid=3.00 OI=1,258 CB=7.13 RC=5.2% RNC=5.2%

Chart = http://quote.yahoo.com/q?s=IFCI&d=1y


PCMS - P-Com  $10.06   *** Stage II? ***

P-Com develops, manufactures, and markets network access systems 
for the worldwide wireless telecommunications market. The point-
to-point, spread spectrum, and point-to-multipoint radio links 
provided by P-Com are designed to satisfy the network requirements
of cellular, personal and corporate communications services, public
utilities and local governments. In addition, P-Com provides 
comprehensive network services including system planning, program
planning and management, path design, and installation. P-COM 
has moved to a new 52-week high on increasing volume as the 
competitive wireless telecom market continues to draw investors.
We favor the technical support near the cost basis with a
conservative entry point.

FEB 7.50 PQP BU Bid=3.00 OI=1,675 CB=7.06 RC=6.2% RNC=6.2%

Chart = http://quote.yahoo.com/q?s=PCMS&d=1y


TERA - Tera Computer  $4.41    *** Finally, OTM Speculation! ***

Tera Computer designs, builds and sells high performance general
purpose parallel computer systems. Tera believes its Multithreaded
Architecture (MTA) system represents the next wave in supercomputer 
technology because of its unique ability to provide high 
performance, broad applicability and ease of programming in a 
single system. In December, Best Paper of SC99 studied a Tera MTA
system and concluded that, compared with competitors (read CRAY, an 
acquisition that SGI is trying to unload), multithreaded systems 
"offer tremendous potential for quickly and efficiently solving 
some of the most challenging real-life problems on parallel 
computers." The San Diego Supercomputer Center recently purchased
and upgrade to their existing 8-processor MTA supercomputer. Will
Tera be able to penetrate the CRAY market? Will the government
continue to fund supercomputers? The tape suggests that Tera
Computer's two-year downtrend has ended and a stage I base has
begun. Reasonable speculation for those with a 'high' risk verse
reward trading plan. 

FEB 5.00 QIP BA Bid=0.50 OI=190 CB=3.91 RC=27.9% RNC=12.8%

Chart = http://quote.yahoo.com/q?s=TERA&d=1y


WDC - Western Digital $5.50  *** Break-Out! ***

Western Digital is a leading manufacturer of hard drives used for 
information storage in desktop computers, servers, workstations 
and home entertainment electronic products. Through its Connex 
subsidiary, the company serves users of network-attached storage
systems and enterprise-wide storage area networks. Western Digital
was founded in 1970 and has long been noted for its storage and 
end-market systems-level design knowledge. The company's products
are marketed to leading systems manufacturers and selected resellers
under the Western Digital brand name. In December, Western Digital
began shipping the WD Caviar EIDE 10.2G perplatter, 7200 RPM hard 
drive, and according to WD's FIT lab, offers a 10% increase in 
performance over all EIDE hard drives on the market. Western
Digital has closed above its 150 dma on heavy volume and improving
technicals. With the data storage sector showing signs of strength,
this play offers favorable speculation with a reasonable cost basis.

FEB 5.00 WDC BA Bid=1.13 OI=1,480 CB=4.37 RC=14.4% RNC=14.4%

Chart = http://quote.yahoo.com/q?s=WDC&d=1y


Success Basics: Trading Plan Revisited...  

Successful investors have a number of traits in common; market
knowledge, an understanding of technical analysis and discipline.
Option traders search for the best opportunities the markets can
provide and exploit them through the use of leverage and hedged
positions to profit on a regular basis. Unfortunately, without
a sound trading plan and rigid money management principles, even
the most skilled trader will fail to produce consistent returns.

If you asked a group of successful investors to describe their
trading mentality, you would discover a number of different
approaches. The systems, methods and markets would all be unique
but they would have one similar characteristic; a trading plan.
A trading plan is the most important feature of your investing
philosophy. Without a specific approach and well-defined objective,
you are subject to a trader's worst enemies; hope, greed and fear.
Hope convinces you that the situation will improve no matter how
bad the fundamental or technical outlook, while fear makes certain
that you're taken out of a good trade prematurely, and greed keeps
you in a winning play long after the optimum exit opportunity has
passed. Unbelievably, four out of every five traders do not have
comprehensive trading plans and only one in ten have their methods
or ideas in writing. As you might suspect, professional traders
and floor brokers use a system of specific, pre-defined techniques
throughout the course of their daily business and that's why they
are consistently successful.

The first step in developing a trading plan is to determine your
risk profile and time frame for any portfolio strategies. Most
investors have a predetermined amount of capital to commit in
their initial venture and the primary objective is to learn a
profitable system before that money is gone. Novice investors can
begin by creating a proposal for long-term success in any market
environment. It sounds like a tall order, but in reality there are
a number of proven strategies that profit under all but the most
unfavorable conditions. After you have a basic outline of future
goals, an arsenal of short range tactics can be constructed from
proven techniques. Before you can decide which approach is best,
you must be aware of the current trend of the underlying market;
whether it is bullish, bearish or neutral. Then you can select a
suitable time frame and the appropriate trading strategy. For most
investors, technical analysis; trend-lines, moving averages and
historical patterns are the primary method of forecasting the
direction or character of the underlying position.

The next phase in a consistent trading system is money management.
This includes provisions for taking profits and limiting losses
including specific guidelines for initiating, adjusting, and
closing positions. Developing these rules is quite wearisome but
the process is paramount to achieving success. Next week, we will
discuss the basic principles of profitable position management.

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


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

AWEB   12.88  10.13   JAN  10.00  0.50  *$  0.50  16.2%  17.6%
ITIG   24.81  23.69   JAN  17.50  0.63  *$  0.63  11.3%  16.3%
WAXS   20.00  18.44   JAN  17.50  0.69  *$  0.69  11.1%  16.1%
PILT   17.13  27.13   JAN  12.50  0.50  *$  0.50  12.7%  13.8%
RNBO   21.94  20.88   JAN  17.50  0.81  *$  0.81  15.6%  13.5%
SATH   12.94  10.38   JAN  10.00  0.56  *$  0.56  17.8%  12.9%
SCOC   29.00  25.31   JAN  17.50  0.56  *$  0.56   8.8%  12.8%
ORCT   31.00  36.00   JAN  25.00  0.81  *$  0.81  11.2%  12.2%
IUSA   12.13  13.25   JAN   7.50  0.31  *$  0.31  11.3%   9.8%
AND     9.25   7.38   JAN   7.50  0.44   $  0.32  13.4%   9.7%
LOR    20.25  20.06   JAN  17.50  0.38  *$  0.38   6.6%   9.6%
EMIS   21.00  30.00   JAN  15.00  0.50  *$  0.50  10.6%   9.2%
DAVX   23.75  21.50   JAN  17.50  0.56  *$  0.56  10.5%   9.2%
CCUR   17.75  16.56   JAN  12.50  0.50  *$  0.50  12.3%   8.9%
SCOC   17.88  25.31   JAN  12.50  0.44  *$  0.44  10.9%   7.9%
MSGI   19.00  19.88   JAN  12.50  0.38  *$  0.38   9.1%   7.9%
ENMD   28.44  29.31   JAN  20.00  0.44  *$  0.44   7.2%   7.8%
CS     28.50  23.44   JAN  20.00  0.56  *$  0.56   8.9%   7.8%
PRRC   23.56  21.81   JAN  17.50  0.56  *$  0.56  10.6%   7.7%
INSO   32.13  32.75   JAN  20.00  0.75  *$  0.75  10.4%   7.6%
WAXS   20.50  18.44   JAN  15.00  0.38  *$  0.38   8.5%   7.4%
NETS   28.00  26.00   JAN  20.00  0.50  *$  0.50   8.2%   7.1%
EGRP   35.56  26.69   JAN  25.00  0.56  *$  0.56   7.3%   5.3%
MMWW   37.38  27.69   JAN  22.50  0.50  *$  0.50   6.3%   4.5%

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


Andrea Electronics (AND), Shop At Home (SATH), Autoweb.Com (AWEB)
and E*Trade (EGRP) are consolidating near the sold strikes. 

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

ADG    13.13  JAN 10.00  ADG MB  0.25  10     9.75   8.7%
AFCI   37.13  JAN 27.50  AQF MY  0.50  260   27.00   6.3%
AMD    33.00  JAN 25.00  AMD ME  0.38  6,932 24.63   5.4%
ASFT   18.13  JAN 12.50  AGQ MV  0.25  60    12.25   6.4%
CNCX   30.00  JAN 22.50  QXF MX  0.38  333   22.13   5.9%
CNQR   29.50  JAN 22.50  COQ MX  0.94  244   21.56  13.7%
ENMD   29.75  JAN 22.50  QMA MX  0.31  366   22.19   5.0%
GSTRF  35.56  JAN 25.00  YVQ ME  0.44  1,608 24.56   5.8%

Sequenced by ROI  

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

CNQR   29.50  JAN 22.50  COQ MX  0.94  244   21.56  13.7%
ADG    13.13  JAN 10.00  ADG MB  0.25  10     9.75   8.7%
ASFT   18.13  JAN 12.50  AGQ MV  0.25  60    12.25   6.4%
AFCI   37.13  JAN 27.50  AQF MY  0.50  260   27.00   6.3%
CNCX   30.00  JAN 22.50  QXF MX  0.38  333   22.13   5.9%
GSTRF  35.56  JAN 25.00  YVQ ME  0.44  1,608 24.56   5.8%
AMD    33.00  JAN 25.00  AMD ME  0.38  6,932 24.63   5.4%
ENMD   29.75  JAN 22.50  QMA MX  0.31  366   22.19   5.0%

Company Descriptions

ADG - Advanced Communications Group  $13.13

Advanced Communications Group is a regionally competitive local
exchange carrier that provides integrated communications to
business and residential customers located in the Midwestern
region of the United States. ADG's products include local, long
distance, Internet access, cellular and enhanced voice and data
services. Advanced also publishes yellow pages directories in
popular markets. Recent speculation on the message boards with
the possibility of an SEC approval concerning the name change
to "WorldPages.com" and new stock symbol. We simply favor the
bullish technical pattern.

JAN  10.00  ADG MB  Bid=0.25  OI=10  CB=9.75  ROI=8.7%

Chart = http://quote.yahoo.com/q?s=ADG&d=1y


AFCI - Advanced Fibre Communications  $37.13 *** Own This One! ***

Advanced Fibre is a manufacturer of telecommunications systems
for the "local loop" between telephone service users and public
telephone networks worldwide. AFC's flagship product is the UMC
1000 Third Generation Digital Loop Carrier (3GDLC). The UMC 1000
can be installed in a variety of network configurations to support
the varying geographic distribution of subscriber bases. There are
thousands of these systems installed in countries around the world.
Recent bullish analyst comments on TSC and CNBC. Quarterly earnings
are expected to be favorable and the long-term outlook is excellent.

JAN  27.50  AQF MY  Bid=0.50  OI=260  CB=27.00  ROI=6.3%

Chart = http://quote.yahoo.com/q?s=AFCI&d=1y


AMD - Advanced Micro Devices  $33.00  *** Keeping Intel Honest ***

Advanced Micro Devices offers a wide variety of industry-standard
integrated circuits (ICs) that are used in many diverse product
applications such as telecom, data and network communications
equipment, consumer electronics, personal computers (PCs) and 
workstations. The company is engaged in the three principal areas
within the digital IC market; memory circuits, logic circuits and 
microprocessors, through two operating segments, AMD and Vantis.
AMD's high-performance Athlon chip is giving Intel a run for its
money in the high-end market and strong sales and margins point
toward a better-than-expected quarter. Gateway has just announced
they will again use AMD chips in their computers.

JAN  25.00  AMD ME  Bid=0.38  OI=6,932  CB=24.63  ROI=5.4%

Chart = http://quote.yahoo.com/q?s=AMD&d=1y


ASFT - Artisoft $18.13   *** (Almost) Free Money ***

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. Their products have received more than 100 industry
awards including "Product of the Year", "Best of Show" and
"Editors' Choice" by a number of publications. Their flagship
TeleVantage is a powerful software-based PBX and an impressive
IP Telephony system that uses off-the-shelf computer, wiring and
telephone hardware. The long-term technical outlook is favorable
(although there is little chance we will own this stock).

JAN  12.50  AGQ MV  Bid=0.25  OI=60  CB=12.25  ROI=6.4%

Chart = http://quote.yahoo.com/q?s=ASFT&d=1y


CNCX - Concentric Network  $30.00    *** New 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. New upgrades and a stake in a future IPO (Register.com)
provides for favorable speculation with a cost basis at support.

JAN  22.50  QXF MX  Bid=0.38  OI=333  CB=22.13  ROI=5.9%

Chart = http://quote.yahoo.com/q?s=CNCX&d=1y


CNQR - Concur Technologies  $29.50   *** Own This One! ***

Concur Technologies provides Intranet-based employee-facing
software applications that extend automation to employees
throughout the enterprise and to partners, vendors and service
providers in the extended enterprise. Their Xpense Management
Solution and CompanyStore products automate the preparation,
approval, processing/data analysis of travel and entertainment
expense reports and front-office procurement requisitions. The
company's EmployeeDesktop product provides a business portal
through which corporate customers and third parties can deliver
other information and services to employees. B2B is hot and one
way to enter a position at a great price is with a naked-put.

JAN  22.50  COQ MX  Bid=0.94  OI=244  CB=21.56  ROI=13.7%

Chart = http://quote.yahoo.com/q?s=CNQR&d=1y


ENMD - Entremed  $29.75   *** An Old Favorite ***   

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

JAN  22.50  QMA MX  Bid=0.31  OI=366  CB=22.19  ROI=5.0%

Chart = http://quote.yahoo.com/q?s=ENMD&d=1y


GSTRF   - Globalstar Telecommunications  $35.56

Globalstar Telecommunications is a general partner of Globalstar
L.P. (Globalstar), a development stage limited partnership which
is designing, constructing, and will operate a worldwide, low
earth orbit satellite-based digital telecommunications system.
Globalstar has launched almost one half of the 52 satellites that
will complete its full constellation. Globalstar intends to offer
low-cost, high quality telecommunications services, including
voice services, messaging and paging services, remote monitoring,
facsimile and other data services, including position location.
Loral Space & Communications (LOR) is the managing general partner
of Globalstar, with a majority ownership. Lots of recent news and 
announcements on this issue and in the satellite industry and we
have had a number of successful plays in this group. The recent
consolidation provides us with an excellent entry opportunity.

JAN  25.00  YVQ ME  Bid=0.44  OI=1,608  CB=24.56  ROI=5.8%

Chart = http://quote.yahoo.com/q?s=GSTRF&d=1y


A Technical Rally Or Speculative Bubble?

Friday, January 7

Investors ignored stronger-than-expected employment data and
corporate profit warnings as they drove the blue-chip index
to record levels. The Dow set a new closing high at 11,522 while
the Nasdaq composite index climbed 155 points to 3882. The S&P
500 index was up 38 points at 1441. Overall breadth was positive
with advances beating declines 2,267 to 854 and volume on the Big
Board was extremely heavy with 1.2 billion shares traded. The long
bond was up 1/32, bid at 94 12/32, where it yielded 6.54%.

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

Globalstar   GSTRF    MAR35C/FEB40C   $3.25   debit   diagonal 
M-S Group    MSGI     MAY12C/FEB22C   $7.00   debit   diagonal

Our new "reader's request" plays were less than outstanding
performers in today's session. Globalstar opened $4 lower and
we quickly reduced the target debit. The stock traded in a
relatively small range considering the recent activity and
eventually closed down $2.12 at $35.50. Marketing Services Group
also moved lower during the session, ending just below the $20
mark on light volume. Favorable entries were available on both 

Portfolio plays:

The market rebounded with authority today as investors vied for
a number of recently under-performing issues in a classic
cyclical rotation. The fear of inflation and higher interest
rates has pressured equities in the past week and today's bearish
employment data was expected to weaken stocks further. Non-farm
payrolls surged in December, finishing well above expectations
on strength in retail and government employment. Unemployment
was unchanged but average hourly earnings rose 0.4%, also above
the consensus estimate. In the end, the jobs report had little
effect on investors and analysts now say the bond market has
factored in a 25-50 basis point hike in the federal funds rate. 
Regardless of the incredibly optimistic buying spree, traders
remain skeptical about today's upside move and many believe that
another correction will occur near the Fed meeting.

Technology stocks regained lost ground as bargain hunters moved
back into the recently battered sector but a significant amount
of money flowed into health-related issues. Investors favored
managed care, biotechnology, medical devices and pharmaceutical
issues. The rally was based in part on expectations that drug
companies will report solid fourth-quarter results later this
month. Investors are also anticipating a well-known healthcare
conference next week in California, traditionally a forum for
important biotech product news. Our top position in this group
was Medtronics (MDT), up $4.25 to a recent high near $42. The
move pushed our LEAPS/CC's play well above the sold strike and 
comfortably into profitable territory. One of our new straddle
positions, Jones Pharmaceuticals (JMED) also rallied with the
group. The stock climbed $3.68 to close at a new all-time high
near $48. The straddle credit is $11.75 on $8.12 invested after
just three weeks in play.

Big-cap companies dominated the headlines in today's session and
our long-term plays were the best performers in the portfolio.
Motorola (MOT) and Proctor and Gamble (PG) were the top movers,
both up almost $10 in heavy trading. Other well known stocks;
Adobe Systems (ADBE), Johnson & Johnson (JNJ), General Motors (GM),
Solectron (SLR) and Sun Microsystems (SUNW) also participated in
the rally. The Murphy's Law "Play Of The Day" was our recent loser 
American International Group (AIG). The stock came rambling back
from the depths with a surprising $8 move, closing just short of
our original target price at $110. The question now is whether the
issue can maintain the today's bullish trend.

In the small-cap portfolio, Peoplesoft (PSFT) again led the way
with a $3 rally to close near $25. The company's share value is
moving higher on speculation of favorable earnings. The three C's;
Cohu (COHU), Concentric (CNCX) and Cadence Design (CDN) also had
solid rebounds in today's session as technology issues recovered
from recent losses. Cyclical stocks in this group performed well
with both Navistar (NAV) and Delta And Pine Land (DLP) continuing
their recent rallies. Regardless of the overall market outlook,
we expect the small-cap issues to continue higher in the coming

Questions & comments on spreads/combos to Click here to email Ray Cummins


PCMS - P-Com  $10.06     *** On The Move! *** 

P-Com develops, manufactures, and markets network access systems 
for the worldwide wireless telecommunications market. The point-
to-point, spread spectrum, and point-to-multipoint radio links 
provided by P-Com are designed to satisfy the requirements of
cellular, personal and corporate communications services, public
utilities and local governments. The company also provides a
comprehensive group of network services including planning,
program management, path design, and installation.

The wireless broadband industry is truly in its infancy and is
expected to grow exponentially in the next two years. In addition
to the incredible demand in the United States, the overseas market
will enjoy an incredible expansion. In Europe, telecommunications
companies will use the technology to fill in networks where they
don't have fiber optic lines. The deficiency in infrastructure
will create a large demand for wireless data and P-Com will be
one of the leading-edge companies that benefits from that growth.

Technically, P-COM has moved to a new 52-week high on increasing
volume as this speculative market continues to interest investors.
The small disparity in option pricing will allow us to participate
in a conservative, low-cost position with excellent risk/reward

PLAY (conservative - bullish/diagonal spread):

BUY  CALL MAY-7.50  PQP-EU OI=936  A=$4.00
SELL CALL FEB-10.00 PQP-BB OI=2323 B=$1.81

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


HRC - Healthsouth  $5.81     *** LEAPS/CC"S ***

Healthsouth provides outpatient and rehabilitative healthcare 
services through its inpatient and outpatient rehabilitation
facilities, surgery centers, diagnostic centers and medical 
centers. The company had nearly 2,000 locations in 50 states,
the United Kingdom and Australia, and is the nation's largest
provider of rehabilitative health care and outpatient surgery
services. Patients receive treatment at its outpatient centers,
imaging services at its diagnostic centers, and treatments for
work-related illnesses and injuries at its occupational medicine
centers. The company also contracts with major insurers, HMOs,
and large corporate employers. The company is partnering with 
Healtheon/WebMD Corporation to form a sports medicine website.

We found this issue while searching for this week's conservative 
covered-calls and although there hasn't been much positive news
in this group, a number of issues appear to be consolidating in
long-term basing patterns. The industry is beginning to rebound
from a long-term slump and the recent volume surge in HealthSouth
suggests the January effect may be drawing some interested buyers
to the issue. A number of positive technical divergences may be
signaling a future upside resolution and a new bullish character.

In any event, the ample time frame and favorable option premiums
offer us an excellent opportunity to profit with little risk of
loss in this bullish calendar position.

PLAY (conservative - bullish/calendar spread):

BUY  CALL JAN01-7.50 ZHC-AU OI=2191 A=$1.43
SELL CALL FEB00-7.50 HRC-BU OI=86   B=$0.25

- And A Unique Short-term Play -

PLAY (speculative - bullish/calendar spread):

BUY  CALL MAR-7.50 HRC-CU OI=2484 A=$0.43
SELL CALL FEB-7.50 HRC-BU OI=86   B=$0.25

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

More Reader's Request

I had a number of Emails for bearish positions after Friday's
market-wide rally. Here are some favorable credit-spread plays
on stocks that have failed miserably during the previous run-up. 
These plays are based on the current price or trading range of
the underlying issue and the recent technical history or trend.
The probability of profit from these positions is also higher
than other plays in the same strategy. Current news and market
sentiment will have an effect on these positions so review each
play individually and make your own decision about the future
outcome of the stock price.


LGTO - Legato Systems  $61.36   *** The BMCS Effect ***

Legato Systems develops, markets and supports advanced enterprise
strength storage management software for the network computing
market. The core elements of the company's storage solutions
include scalability, heterogeneity, performance, ease of use and
central administration. Legato's storage management solutions
have been designed for both network administrators and end users,
and can be accessed through a number of graphical user interfaces,
including Windows, Windows NT and Motif. Their flagship product,
Legato NetWorker, offers a family of easy-to-administer storage
management applications that protect network-wide data across
enterprises consisting of multiple operating systems such as
NetWare, Windows NT, Solaris, HP-UX, AIX, Macintosh, OS/2 and
DOS/Windows. The Company maintains offices around the world.

The recent demise of BMC Software has hurled the sector into a
downward spiral. Last week the company reported that earnings
for the quarter would fall well short of expectations, causing a
sharp sell-off in its stock. BMC said the earnings shortfall was
mainly due to disappointing revenues from software license sales
in North America where a customary surge in large orders during
the final weeks of the quarter failed to materialize. The stock
dropped $30 in one day and the group hasn't been the same since.
Based on the outlook for the industry, the trend should continue
for at least another two weeks.

PLAY (very conservative - bearish/credit spread):

BUY  CALL JAN-80 EQN-AP OI=789  A=$0.81
SELL CALL JAN-75 EQN-AO OI=1263 B=$1.12
INITIAL NET DEBIT TARGET=$0.38 ROI=8% (two weeks)

- or -

PLAY (conservative - bearish/credit spread):

BUY  CALL JAN-80 EQN-AP OI=789 A=$0.81
SELL CALL JAN-70 EQN-AN OI=469 B=$2.00
INITIAL NET CREDIT TARGET=$1.31 ROI=15% (two weeks)

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


ALLR - Allaire Corporation  $130.25   *** Time For A Break ***

Allaire develops, markets and supports software for a wide range
of Web development, from building static Web pages to developing
high-volume, interactive Web applications. Allaire's products
interoperate with emerging Web application technologies as well
as key enterprise information systems technologies. Their unique
services enable organizations to link their information systems
to the Web, as well as develop business applications in areas
such as electronic commerce, content management and web-site 
personalization. Allaire software also enable Web developers to
build high-volume, interactive Web sites and Web applications,
including applications for E-commerce and content management.
They have two primary product brands, HomeSite, an HTML design
tool, and ColdFusion, an integrated Web development environment
and Web application server product line.

Allaire enjoyed an incredible run in the fall technology rally,
climbing from the $50 range to a recent high near $180 on the
heals of surging Internet giants. Now the issue appears to be
consolidating to a short-term support area near $120. Analysts
have not lost interest in the software company but for now they
are less than enthusiastic about the issue. Based on the current
technical indications, they may be justified in their pessimism.

PLAY (aggressive - bearish/credit spread):

BUY  CALL JAN-175 AUR-AO OI=20 A=$1.68
SELL CALL JAN-165 AUR-AA OI=65 B=$2.43

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


VYTL - Viatel  $45.25     *** Rolling Over? ***

Viatel is a communications company providing high quality,
competitively priced, long distance communication and data
services to end users, carriers and resellers. Their products
include switched and dedicated long distance services, 1-800
services, calling cards, domestic and international private
line, debit cards, conference calling, advanced billing systems,
enhanced fax and data connections and facilities management.
The operate in a number of venues around and their principal
services include ViaDirect, ViaDirect Plus, ViaCall Express,
ViaCall, ViaISDNFax, ViaWorldFax, ViaConnect, ViaGlobe, ViaCard, 
ViaLink, and Via0800.

There has been relatively little news on this issue since the
merger with Destia Communications. Other than the recent sale of
$63 million of senior notes, the company headlines have been
rather quiet for a major long-distance carrier. From a technical
point of view, the stock is weakening in its current trend. VYTL
is below its 10-day moving average by a substantial margin and
the MACD indicator, RSI and moving average ratios all exhibit
bearish signs. The stock has fallen steadily over the last week
and the majority of indicators suggests that VYTL will continue
to pull back in the coming days.

PLAY (very aggressive - bearish/credit spread):

BUY  CALL JAN-55 VQL-AK OI=195 A=$0.88
SELL CALL JAN-50 VQL-AJ OI=668 B=$1.68

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

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