Option Investor

Daily Newsletter, Sunday, 01/16/2000

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The Option Investor Newsletter          Sunday  1-16-2000  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 1-14          WE 1-07         WE 12-31         WE 12-24
DOW     11722.98 +200.42 11522.56 + 25.44 11497.12 + 91.36  +148.33 
Nasdaq   4064.27 +181.65  3882.62 -186.66  4069.28 + 99.84  +216.38 
S&P-100   797.52 + 14.03   783.49 -  9.34   792.83 -  2.73  + 21.63 
S&P-500  1465.15 + 23.68  1441.47 - 27.78  1469.25 +  7.81  + 40.39 
RUT       508.11 + 19.80   488.31 - 16.44   504.75 + 26.81  + 11.73 
TRAN     2891.63 - 73.09  2964.72 - 12.48  2977.20 + 89.50  - 30.72 
VIX        22.13 -  1.07    23.20 -  3.51    26.71 +  3.59  +   .11 
Put/Call     .42              .50              .51              .47

Remember February!

The PPI was benign. The CPI was the lowest since 1965. Greenspan 
did not turn his speech into a market roast. Intel beat the whisper 
numbers and the Internets survived the AOL/TWX merger news. The
Fed meeting is not for two weeks but the rate hike is already 
priced into the markets. Y2K is history and the Retail Sales showed
the consumers spending all that Y2K cash. What is wrong with this 
picture? I hate it when everything is too good to be true!

The markets roared back into record form again on Friday after the
PPI posted the smallest gains since 1965 with only a +1.9% increase.
After four failed attempts to close over 10600 the Dow exploded to
a new record high close at 11722. There was no holding back the 
big caps or the techs even though the bond yields traded as high
as 6.71% before falling back to close at 6.69%. Financials soared
on the news and completely disregarded the coming rate increase.
Citigroup closed at a new high and other Dow components AXP and JPM
posted strong gains. 



The Nasdaq gapped open +65 and quickly ran up to trade near 4100
all day but could not break out completely. I am not complaining but
many Nasdaq stocks did not participate in the rally. Most of the
Nasdaq gains were on the back of Intel's outstanding earnings and
the new Microsoft CEO. Intel added +$12 and MSFT +4.44. The other
Nasdaq leaders were soft with CSCO only adding +1.38 and Dell +.88.

Friday, Intel set the mood.  Their earnings report was inspiration 
for a host of analyst upgrades on the chip sector.  This spilled 
over into tangible and large scale moves in technology stocks across 
the board.  Intel is rolling out a new chip for laptops this week.  
It's a 600 megahertz chip with power management capabilities built 
in.  In other technology stock news, Lucent is in more trouble.  
There are now questions about accounting practices being raised.  
The tech sector appears to have digested most of the bad news in 
this stock, and is disregarding it.

On the Economic front, Greenspan's Speech to the NY Economics Club 
last week was greeted well by Wall Street.  Most encouraging, from 
our standpoint was that he seems to be assigning greater importance 
to the idea that the old models may not apply anymore.  Under the 
old Phillips curve economic model, the Labor rate was the single 
largest component for inflation.  Under the new Internet economy/New 
Paradigm, productivity growth is so rapid that the impact labor has 
on inflation has to be re-thought significantly.  Some of the 
language in his speech showed signs that he may be becoming a little 
more comfortable with the idea that these older models are giving 
way to the New Paradigm.

The Fed began draining some of the liquidity out of the market this 
week that had been pumped in for concerns over Y2K.  Before the end 
of the year, there was a great deal of speculation about how and 
when this would be done, and what it's impact on the financial 
markets would be.  The impact appears to have been negligible.

Coming up soon, Mr. Greenspan will be speaking in front of the 
Senate Budget Committee.  While this appearance will not be a 
rate policy speech, you can count on the Senators to badger him 
to death about interest rate policy and to make futile attempts 
to ascertain and to influence his opinion on interest rate policy 
matters.  Any time Mr. Greenspan speaks, Wall Street pays attention.  
None of us want to be caught flat footed if he says something with 
direct and immediate impact.  Treasury Secretary Summers will be 
giving testimony next week as well.  He'll be addressing the 
Administrative Budget for the 2001 fiscal year.  While we don't 
believe there will be any market moving news, we'll want to keep 
a close watch on this testimony.

Next week is a short week, but there are going to be some key 
earnings announcements we'll want to keep an eye on.  Tuesday, 
Broadcom and DoubleClick will be reporting.  These two leaders 
hold big sway in the internet community.  On Wednesday, AMD, 
Ameritrade (AMTD), AOL (AOL), E*Trade (EGRP), IBM, and Redback 
(RBAK) will report.  On Thursday, Sun Micro (SUNW), Lucent (LU), 
and Gateway (GTW) are reporting.

This week there were several key split events.  Among them were 
DoubleClick (DCLK), CMGI (CMGI), Novellus (NVLS), and Juniper 
Networks (JNPR).  For next week, Vitria (VITR), KLA Tencor (KLAC), 
and Oracle (ORCL) all have splits on the 19th.

The only index not included in the party this week was the 
transports. With oil setting a new high of $28 per bbl the
transports lost ground. This energy component will eventually
make its way through the CPI/PPI numbers and cause trouble.
This along with the FOMC meeting in two weeks is contributing
to the rising bond yields.

Everything appears rosy. Earnings announcements are picking up
speed this week and most of the news has been good so far this
month. So why should you remember last February? After a strong
period and record profits by many traders during the end of
1998 the Nasdaq started a sell off on Feb 1st that took -300
points off the index by the middle of February. Well over -10%
considering the high on Feb 1st was 2533. The market traded
sideways from mid-February through March and did not regain
the 2500 level until early April as the next earnings cycle
kicked into gear. 


In 1998 the Nasdaq had run up from the October crash low of 1360
to a Feb 1st high of 2533 or +1173 points. The February sell off
lasted six weeks as traders shuffled profits from this record gain.
Don't look now but the Oct-1999 low was 2640 and we are now at 4100
for another record gain of +1460 points.  The challenge here is to
be in the market in case it does continue upward but be ready to 
get out of the market quickly should any market weakness begin
to appear. I think I have received well over 1000 emails in the
last year that went something like "I did real well the last four
months (Oct-Jan) but I gave it all back and then some in February,
what am I doing wrong?" Think about it. How did you do last February?
Do you want to do it again? I doubt it. 

Now I want everybody to focus on this point. There may be a good
chance the market will drop starting in the next two weeks. There
is also a good chance the Y2K money coming off the sidelines 
could cushion this drop but once the earnings are basically over
there will be some market weakness. This is hard to rationalize
since market breadth is now more positive than it has been for
sometime. New highs are beating new lows. The Nasdaq, Dow, S&P,
RUT are all at new record highs. Investor sentiment is at an all
time high. Yet, almost all the analysts are expecting some profit
taking soon. Those concepts are not opposites. You can be bullish
and still recognize that some short term profit taking will occur.

Why am I trying to be so forceful in warning you about a possible
bout of profit taking? Because most traders are so accustomed to
buying the dip that they either try to hold their positions
until it is over or they jump back in on the first or second dip
and then get killed when the market continues downward. Everybody
always thinks the correction will only impact everyone else. The
stocks they own are good, strong and bullet proof. Sorry, but
there has never been a stock that was bullet proof. Technicians
differ on the exact amount but most will agree that 60% to 80%
of a stocks movement is caused by market movement. Take any ten
stock charts and overlay the corresponding market chart (Dow or
Nasdaq) and you will see what I mean. We are entering a very
critical period in the markets. I do not want you to give back
your recent gains by ignoring the facts. Trade the current rally
until it fails and then step aside. When it fails, and it
eventually will, step aside. The end of this earnings cycle will
leave investors with a Fed that is raising rates and no short
term reason to be in the market. The Fed meets on February 1-2nd
and that should be the catalyst for profit taking to begin. The
next meeting is on March 21st and that meeting should be the
signal for the April earnings runs to begin. Everything in
between could be rocky. The low points last year during this
period were Feb-18th and March 4th. Be careful the next few
weeks. Ignore the warning signs and it could be expensive.
Trade smart and avoid the mistakes of the past.

The economic calendar this week is a non-event. With the markets
closed on Monday for Martin Luther King Day there are no scheduled
releases until Wednesday. The Housing Starts and Building Permits
on Wednesday and International Trade, Philadelphia Fed Survey
on Thursday are not significant compared with the PPI/CPI last
week. It is earnings, earnings, earnings this week and then we
start over the week before the Fed meeting with Consumer 
Confidence, Durable Goods and the Employment Cost Index. 

I got several hundred emails last week on the Covered Straddle
Options 101 article. I can not answer them all but I plan on
posting the most commonly asked questions with the answers on 
the website this week. My article this week is a much simpler
strategy and almost as profitable. Check it out on the website.

We are announcing our annual Options Expo Seminar in Denver
for March. Last year this seminar sold out in only two days.
This years seminar will be taught by over 15 OIN staff along
with numerous guest speakers. The advanced seminar is a full 
three days with an optional additional day before the advanced 
seminar for those that need a better understanding of all the
basic option strategies before attending the advanced sessions.
Look for the announcement notice on the website or in the 
newsletter. If you think you are interested in attending you
need to register immediately as seating is limited.

The Options Clearing Corp reported that Friday was the fourth
heaviest day ever for U.S. options volume with over 3.6 million
contracts traded. This compares with an average of 2 million
per day in 1999 and 1.6 million in 1998. Average daily volume
in January has been over 3 million contracts. Looks like our
readers are trading hard! 

With options expiring on on Friday the bias is normally up.
Trade smart, sell too soon.

Jim Brown


OptionInvestor is announcing the dates for the annual 
OIN Options Seminar in Denver Colorado.

The four day seminar is scheduled for March 25-28 and
will be taught by 15 OptionInvestor staff and several
well known guest speakers. 

The seminar consists of two parts. The first day is
an optional Options Boot Camp for new option traders
who need a better grasp of all the different strategies
before attending the following three day advanced

Some of the topics covered will be:

Entry Point, Entry Point, Entry Point
Technical & Fundamental Analysis 
Options on Stock Splits
Understanding Market Sentiment
Recognizing Market Changes
Cash Flow with Covered Calls
Covered Calls on Leaps
Using The Power of Index Options
Successful Spread Techniques
Maximizing Returns With Options
Selling Puts, A Win - Win Play
Using Options To Hedge the Market
Buying Stock with Options
Fundamentals of Charting
Picking the Right Play
In the Money, At the Money, Out of the Money
Understanding Risk Profiles
Making Stop Losses Work
Trend Trading
Day Trading Options
Trading Psychology
Money Management
Target Shooting, Waiting on the Market
Capitalizing on Earnings
Stress Free Straddles
Taxes and the Trader
Keeping more Profits by Paying Less Taxes
Selling Time
OEX Skybox
Recognizing Opportunity and Profiting From It.

Last year the seminar sold out the first day. If you are
interested please register immediately because seating
is limited.


Spring Advanced Seminar Series

The spring dates for the OptionInvestor/Optionetics seminar
series have been announced. This is the advanced seminar
taught by George Fontanills and Tom Gentile. If you feel
you need more option strategies in your trading arsenal then
this seminar is for you. Remember, you can bring a friend
for free and retake the seminar as many times as you want for
free. The cost of the two day seminar is about what you would
lose in only one trade. Invest it, don't lose it.

Here are the spring dates: 

Feb 27/28 Los Angeles
Mar 19/20 Chicago 
Mar 26/27 Dallas
Apr 2/3   San Francisco

For complete details http://www.OptionInvestor.com/seminar/

There is a 100% money back guarantee and you can take a friend
for free. What else could you ask for?


Another incredible week in the market, if only you knew which
way to play the day before. Up +100, down -100, repeat. 
Volatility anyone?

I actually did not trade very much. I am buried with work
this time of the year getting ready for our March seminar.
I am also concerned about the coming post earnings season.
With that in mind, I am limiting myself to two or three
positions that are easily monitored.

QQQ - JAN-160 Calls

I bailed on these on Monday with a little better than a $10
per share profit. The QQQ tracking stock does not normally
make such major moves. This shows the extreme volatility in
the market. After the Nasdaq stopped dead on 4100 again and 
the Dow set new record highs three days in a row, I took a
chance on Friday afternoon and bought some Jan-188 puts for
$5.75 just in case the pull back starts Tuesday. This was a
long shot and since the market did not drop at the close I 
really expect to bail on these at the open and re-enter the
position later in the week. 

LU Jan-2002-45 leaps

Still holding and considering buying more after rumors of
accounting problems made the rounds on Friday. Lucent denied
the rumors and I expect a quick rebound.

GTW - Jan-2002 $50 Leaps

Gateway rebounded quickly but the continued press on a 
rumored Dell warning to come has continued to depress Gateway.
Earnings are this week and positive comments from the company
should start the recovery.

VOD - APR- $40 calls

This was very gratifying. I actually was patient and waited for
VOD to come back to me and bought the April-40 calls on the dip
last week. As you can see it was just a dip and to my surprise
it did rebound. Lately the dips I bought just kept dipping.
I am sure this happens to nobody else. Now if only VOD can
mount a breakout over $54!!  Fortunately a great entry point
makes me worry less about selling too quickly. I am going to 
try and let this one run. It is hard but I think I can, I think
I can, I can, I can...

BVSN - Covered Straddle

I was long the stock and short the Jan-$170 puts last Sunday.
I sold the stock at the open on Monday for a $13 gain and then 
went short the stock after it gapped down on Tuesday. I covered
the short at the close Tuesday expecting another gap up off
support on Wednesday but not confident enough to go long.
I got wipsawed several times on Wed/Thr and finally saw the
writing on the wall that it was not going back to $170 this
week. I already had a noce profit and with no clear direction
I closed the play. These require constant supervision if there
is no clear direction. It is better to pass than remain
frustrated over the the possibilities.

China - Jan-75 puts

I bailed on the Jan-75 puts after the gap open on Monday. It
looks like the trend is down but I was taking no chances.
A busted play, period.

OEX - Jan-810 puts

Another long shot on the market tanking Friday at the close.
I bought the 810 puts near the high of the day expecting
some sell off before the long weekend. If the market opens
up on Monday I will bail and wait for another upward spike
later in the week. 


Again, I am not planning to trade much this week as I have
a heavy schedule. I feel my LU and GTW plays are fairly safe
from any market disturbance and I am going to sell calls against
them on any upward spike. I want to wait for the spike to avoid
being called out. If the VOD play looks like it is going to 
roll over again I may try converting to a rolling stock play
and sell on the peaks and buy back on the dips until the 
trend quits.

I am planning to sell some January puts on Tuesday morning
to capture some quick cash flow deep out of the money. Because
I am expecting a drop in the market soon I am not going to
sell Feb puts until the drop starts. This will inflate the
premiums and establish direction. 

Watch for signs of the market rolling over as we get closer
to the Fed meeting. 

Good Luck



Minimum Risk, Maximum Reward.
By Jim Brown

Selling naked puts significantly out of the money offers
minimum risk on positions that require very little maintenance.
If you can not watch your trades and want a low risk strategy
this is it.


Stock News

Time to buy UAL?

Are shares of parent company UAL Corp.'s United Airlines 
cheap? That's a tough question. Shares of the Elk Grove 
Township, IL-based airline fell sharply Thursday to $65 after 
the company warned that 2000 earnings would fall below 
analysts' estimates. Shares had been moving higher, up from 
$68 in December to the high 70s at the end of the year. 



There is no Ask the Analyst article this weekend.

Market Posture

As of Market Close - Friday, January 14, 2000 

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

DOW Industrials   11,000  11,350  11,723    BULLISH   1.13
SPX S&P 500        1,340   1,400   1,465    BULLISH  12.03
OEX S&P 100          700     750     798    BULLISH  12.03
RUT Russell 2000     430     450     508    BULLISH  11.12
NDX NASD 100       3,200   3,800   3,705    Neutral   1.06
MSH High Tech      1,650   1,900   1,852    Neutral   1.06

XCI Hardware       1,300   1,350   1,428    BULLISH   1.14  *
CWX Software       1,210   1,420   1,333    Neutral   1.07
SOX Semiconductor    640     660     810    BULLISH  12.21
NWX Networking       820     900     879    Neutral   1.07
INX Internet         665     800     711    Neutral   1.06

BIX Banking          645     690     561    BEARISH  11.30
XBD Brokerage        410     450     441    Neutral  11.30
IUX Insurance        625     650     615    BEARISH  11.30

RLX Retail           900     935     976    BULLISH  11.23
DRG Drug             380     400     375    BEARISH  12.07
HCX Healthcare       760     790     754    BEARISH  12.07
XAL Airline          180     190     144    BEARISH   5.21
OIX Oil & Gas        280     315     290    Neutral   1.06

Posture Alert    
"Intel Inside" definitely got inside technology buyers Friday as 
the Nasdaq romped to another 100+ point gain. Thanks to the giant 
chip-makers stellar earnings, the Semiconductor Index posted a 
+8.13% gain, which was followed by Hardware (+4.08%), Banking 
(+3.18%), and the Nasdaq 100 (+2.57%). Losers were limited to the 
Internet (-2.37%), Oil & Gas, and Retail sectors. With Friday's 
market action, we have upped the Hardware Sector to Bullish.

Market Sentiment 

Sunday, January 16, 2000

Great Expectations!

Last week felt more like a daytime soap opera than the usual grind 
of the stock market. Rumors, mergers, resignations, and earnings 
all contributed to the "Days of Our stock market Lives." The 
Nasdaq closed out the week by notching on another triple-digit 
gain, its fifth time year-to-date, or 50% of the trading days 
outstanding! The week started off with the news that America 
Online was merging with Time Warner in a $350-billion dollar 
blockbuster deal. We then had rumors of a Microsoft breakup, which 
were compounding hourly, then the world's richest man stepped down 
from the CEO position. We also had the CEO of the worlds largest 
retailer (Walmart/David Glass) step down as well. Intel rocked 
Wall Street with solid earnings and had it biggest day in a 
long-time, and now Lucent Tech is being rumored as cooking the 
books. Finally Michael Jordan is buying the Washington Wizards! 
C'mon Mike, buy some Dot-Com stocks, you'll make more money! 
Anyway, what a week this has been! If the major earnings run 
starting this next week is anywhere near as exciting as this 
last, we will be in for a major ride! Did we mention that the 
Nasdaq has a 50% batting average for 100+ gains in the new 

Anyway, below is a 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*:
Adv. Micro Dev.  AMD       4.80      -.07       -.00      1/19
America Online   AOL       1.34      +.08       +.10      1/19
Ameritrade       AMTD      3.68      -.12       -.11      1/19
Apple Computer   APPL      2.84      +.86       +.90      1/19
Adaptec          ADPT      8.42      +.48       +.52      1/20

Broadcom         BRCM      6.69      +.27       +.30      1/18
Citrix Systems   CTXS     15.50      +.37       +.39      1/18
Corel Corp       CORL      4.86      -.14       -.13      1/19
Conexant Systems CNXT      5.88      +.20       +.23      1/19
C-Cube Micro     CUBE      9.20      +.37       +.38      1/20

Doubleclick      DCLK      7.30      -.08       -.07      1/19
E-Trade Group    EGRP      2.45      -.17       -.15      1/19
Electronic/Imag. EFII      3.45      +.41       +.42      1/19
ExciteAtHome     ATHM      1.29      +.00       +.00      1/20
Gateway Computer GTW       0.99      +.37       +.37      1/20

Go2Net Inc.      GNET      8.31      +.09       +.11      1/18
Harmonic Lightw. HLIT      9.05      +.23       +.28      1/19
HearMe           HEAR      4.20      -.30       -.27      1/18
i2 Technologies  ITWO      4.74      +.17       +.19      1/20
IBM              IBM       1.39     +1.05      +1.07      1/19

Iomega           IOM       7.80      +.04       +.04      1/20
LamResearch      LRCX      5.01      +.70       +.76      1/20
Lattice Semic.   LSCC      2.22      +.36       +.37      1/20
Lucent Tech      LU        1.00      +.36       +.39      1/20
Lexmark          LXK       1.93      +.68       +.69      1/18

Motorola         MOT       3.52      +.81       +.84      1/18
Microsoft        MSFT      4.80      +.42       +.45      1/18
Morgan JP        JPM       1.85     +2.10      +2.15      1/18
Novellus Syst.   NVLS      6.90      +.77       +.84      1/18
Phone.com        PHCM      0.78      -.17       -.14      1/20

PMC-Sierra       PMCS      2.46      +.27       +.28      1/20
Rambus           RMBS      2.36      +.10       +.12      1/18
Redback Networks RBAK      3.37      +.01       +.04      1/19
Spyglass         SPYG      3.33      -.05       -.05      1/19
Silicon Storage  SSTI      3.81      +.19       +.20      1/18

ST Microelectric STM       7.89      +.56       +.59      1/20
Sun Microsystems SUNW      9.15      +.20       +.22      1/20
Sybase           SYBS      4.17      +.22       +.27      1/20
Tyco             TYC       1.43      +.45       +.47      1/18
Unisys           UIS       1.40      +.46       +.49      1/18

With Intel's solid earnings this past week, the expectation bar 
has been lifted for all companies across the board. On Friday, 
call options on individual equities traded over one million 
contracts, a very sizable number. What this tells us is that the 
speculators are looking for the next "big one." We may see this 
current rally continue, and witness many other issues beat 
expectations, only to sell off. The buy the rumor, sell the news 
mentality will definitely come out this week. 

Stocks showing current levels of extreme optimism based on the 
Pinnacle Index include Advanced Micro Devices, Adaptec, Broadcom, 
Citrix Systems, Conexant, C-Cube Microsystems, Doubleclick, Go2Net, 
Harmonic Lightwave, Iomega, LamResearch, Novellus Systems, ST 
Microelectric, Sybase, and Sun Microsystems. Not only do these 
companies have high option expectations, but also have whisper 
numbers are significantly greater, which is only another 
potential letdown if the quarter is not a blowout. Obviously, if 
these companies blow away all expectations, you could see 
significant appreciation, however, gauging this sentiment has 
been very successful during past quarters and with the level of 
optimism being so great, we would look for a little bit of a letdown
after earnings.  

Stocks with low expectations from the option community include: 
America Online, Apple Computer, E-Trade, Excite@Home, Gateway 
Computer, IBM, Lattice Semiconductor, Lucent Tech, Lexmark, 
JP Morgan, Phone.com, PMC Sierra, Rambus, Tyco, and Unisys. 
Granted, some of these companies have a low Pinnacle Index due to 
a major news announcement, but regardless, if they beat earnings 
expectations and have a solid conference call, these companies 
would be poised for a pop in stock price due to the low sentiment 
that is already priced into the equities. Now, f your favorite 
company is due to report earnings, we would recommend that you 
monitor all option trades for that particular issue during the two 
trading days before the report. This is where the last second 
speculator tries to jump on board, and in the past, we have seen 
the Pinnacle Index change dramatically the day of earnings. Last 
quarter, we witnessed Qualcomm's Pinnacle Index change from 
overly optimistic to overly pessimistic in one day! We will, 
however, keep you posted of any changes Tuesday. 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 with the 
latest being technology bellwether Intel.

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: None


Interest Rates (6.688%):
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 
30% chance of a 50 basis point hike.

Volatility Index (21.05):
The VIX proved continues to prove that the low 30's are an 
excellent buying opportunity, and the high teens continue to be a 
great selling opportunity. At Friday's level, we may be getting 
close to an overbought market on the short term.

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.

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                       (1/14)

Overhead Resistance (800-820)     7.82

OEX Close                       797.52

Underlying Support  (770-790)     1.20

What the Pinnacle Index is telling us:
Based on January 14, direct overhead is extremely heavy. We will 
need to see put buyers coming in to help take this index out. 
Underlying support is light. 

Put/Call Ratio                  Friday
Strike/Contracts                (1/14)

CBOE Total P/C Ratio             .42
CBOE Equity P/C Ratio            .31
OEX P/C Ratio                   1.83

Peak Open Interest (OEX)
Strike/Contracts     (1/14)

Puts                700 / 10,484 
Calls               800 / 22,600
Put/Call Ratio        0.46

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

Janurary 7, 2000                      54.5        26.4


For the week of January 17, 2000


None Scheduled


None Scheduled


Housing Starts           Dec    Forecast: 1.60M  Previous: 1.60M
Building Permits         Dec    Forecast: 1.59M  Previous: 1.61M
BTM Schroders            1/15   Forecast: --     Previous: -0.8%


Jobless Claims           1/15   Forecast: --     Previous: 309K 
International Trade      Nov    Forecast:-$25.5B Previous: -$24.94B
Philadelphia Fed Srvy    Jan    Forecast: --     Previous: 8.6  


Federal Budget           Dec    Forecast: $31.5B Previous: -$27.6B

Week of 1/24

1/25 Consumer Confidence - Jan
1/25 Existing Home Sales - Dec
1/27 Durable Goods Orders - Dec
1/27 Employment Cost Index - Q4  
1/27 Help Wanted Index - Dec
1/28 Gross Domestic Product - Q4
1/28 University of Michican Sentiment - Jan


TIBX DOES AN ELVIS - Anatomy of a bad trade

I thought Elvis was re-incarnated after following the action 
of TIBX this week.  Talk about swiveling those hips!  Well, 
it was 1 for the money, 2 for the show, 3 to get ready and 
4 GO LOW?  

On Monday at 10:30, I received the trading alert from the OIN 
site to buy puts on TIBX.  From the site, I learned that Tibco 
is an infrastructure provider whose products and services enable 
computer applications and platforms to communicate efficiently 
across networks plan to offer Internet access in automobiles.   
Sounds good so far.  48 million new shares were to end their 
lock-up period.  That doesn't sound good unless you're a put 
buyer.   TIBX's 52-week high of 195 was on Dec 22. Since then 
it dropped about 75 points to a low of 114 on January 7 and 
then closed at 120.  Its IPO price was $15 back in July!  Even 
at 120 this stock was in nose bleed territory. 

Next step was to do some quick research, after all, I hadn't 
heard of this stock before the alert.   I found out its 
competitors were MSTR, PUMA, MGIC and LEAF all of whom sport 
an EPS between 61 and 82.  Tibco has been around since 1994 
and still is not profitable.  This seems to fit the "Amazon 
model" justifying extremely high multiples.   Management owns 
26 % of the stock, so in my mind, that further validated the 
reasoning to short this stock or buy puts now that the IPO 
lockout was over.   

Studying the charts further using Japanese candlesticks, I saw 
that the previous day's candle was a doji.  Doji's can be a 
signal of a short- term top or bottom.  The trick is knowing 
which direction.   You need to wait for a further signal for 
the confirmation of a doji.   Being the cautious investor that 
I am, I waited till TIBX broke below its 50-dma (117).   By 
11 AM, TIBX was trading down at 114.  The current day's candle 
was now a very bearish candle called appropriately enough, a 
bearish engulfing pattern.  This pattern is a very strong 
reliable signal, which has served me well.  This was the 
confirmation I was looking for.  

Next I checked the puts-they were grossly overpriced so I 
decided I did not want to be a buyer.  I consulted the chart 
again and determined there was good resistance at 138, so I 
decided to write some calls. To play it even more conservatively, 
I decided to write 10 contracts of the Jan 150 calls for 2-1/4 
with 2 weeks to expiration.  These were 36 points out of the 
money, so I figured I could just sit back and collect my moola 
next Friday.

And now, get ready for the show, cause this stock did a "go 
cat go".  By 1:00 the stock went up to 125, above the previous 
day's close, not a good sign.  I didn't sweat it because I had 
36 points of squirming room.  The stock closed at 123 7/8 and 
the day's candle was now a rather large white up candle with 
a long tail.  The following day, TIBX opened and went down to 
126 in the first ten minutes, I felt a little relieved and 
convinced myself the previous day's move was to shake out the 
bulls.  By 11:00, TIBX climbed to 147.  Not to worry I told 
myself, there can't be any bulls left now so this stock can 
do what it was supposed to do-GO DOWN!   The stock did go down 
from there but instead closed at 140-1/2.   On Wednesday, TIBX 
ran up to 153, which is 3 points above my 150 call.  I looked 
at the calls to buy them back but they were so inflated that 
I would have had to pay 8 points.  It didn't make sense to pay 
8 points when I was only down 3 (153-150) so it was now squirming
time again.   TIBX ran down from there and closed at 146-1/4.  
I was temporarily off the hot seat.    Thursday TIBX gapped open 
at 154 15/16 and ran up to 165!  Now I started desperately looking 
for a bullish counteractive strategy.  There was a lot of noise 
between 162 and 164, so I contemplated writing 160 puts for 14-1/8.  
If the stock stayed above 160 I would keep the premium and use it 
to offset my loss at expiration.  If at expiration the stock was 
at 165, my 150 call option would cost 15 to buy back.  I would 
have received 14-1/8 on the puts plus the original 2-1/4 on the 
call, so I actually would be ahead of the game.  But the bigger 
risk was if the stock closed below 160 and above 150-too much 
exposure for me at this point.  The stock closed at 165 and 
opened on Friday at 167.  As you know, Friday was a blockbuster 
day but TIBX had trouble from the get go and started it's 
downward descent to 159, where it closed.  After climbing for 
4 straight days, from a low of 112 to a high of 166, I reckoned 
this puppy needed a little rest.  Friday's candle was a dark 
cloud cover, a very reliable bearish signal.  I am convinced 
over the next week this stock will go back down and fill the 
gap at 146-1/4.  That's all I need to make money of this raging 
bull.   Of course, time will tell.

The moral of this story is to use stops.  Don't let your trades 
get this far out of control.  I hope you don't think all my 
trading is this reckless.  Rather than present you with all 
the glories of my week, I try to pick out a trade where you 
can learn the most.   Sometimes they're great trades, and other 
times they truly are pathetic.  Trading is an art and a science 
and involves a lot of emotion.  Trying to take the emotion out 
of the trade is the most difficult lesson to learn.  I have been 
trading options for ten years and I still haven't done it yet, 
but I'm working on it.    



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This newsletter is a publication dedicated to the education 
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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
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The newsletter staff makes every effort to provide timely 
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The Option Investor Newsletter              1-16-2000  
Sunday                        2 of 5


Is the Fed on track?

Profitable trades can be made in this range bound market although 
it is necessary for traders to be nimble about their stock and 
option picks. As of last week, I owned Nextlink stock and one 
Nextlink Feb 80 put. I had sold another put last week thinking 
the stock would go up. It went up last week, then way down to 65 
on Monday at which time I sold my second put at a profit from the 
purchase price. If I had hung onto both of the puts I could have 
closed out the stock/put position at a profit. Instead, I wrote 
a Jan 75 covered call on the stock for 4.5 points. If the 
position works out as I think it will it will return 25% profit 
in three weeks. The position has worked out well but not the way 
I originally intended it because I acted too hastily in selling 
the first put. 

My Qwest communications leaps are at a profit from where I bought 
them,  however I did not sell them because I  think that Qwest 
may go to 50 in six months, in which case the leap could return 
100%. I have been watching CMGI very closely, and it is showing 
a strong pattern of moving between 125 and 131.This will make it 
a good day trading stock to buy at 125 and sell at 130. I plan to 
purchase a Jan 125 leap next week if the stock drops to 124 or 
below. In addition, I bought back into Nortel at 94.

There have been a number of debates and discussions in the last 
few years about the role of the Federal Reserve. One of the real 
issues which will face the Fed in the twenty first century is 
whether or not they should use monetary tools such as interest 
rate changes in order to attempt to influence the stock market. 

Traditionally the Fed has used interest rate policy in order to 
help control inflation. There have been periods when this was 
necessary. Inflation is dangerous when it gets to the point where 
people on a fixed income or gradually increasing income no longer 
have enough money for their basic needs.

There is currently debate among economists about whether there is 
widespread inflation in our economy, and also whether the rapidly 
growing economy will lead to inflation if preventative steps are 
not taken. Certainly our current Fed Chairman has shown that he 
feels it is best to err on the side of preventative caution where 
inflation is concerned.

Hypothetically, if inflation were benign or under control, then 
should the Fed act in order to target the stock market? In other 
words, if the stock market is deemed to be dangerously overvalued, 
then are they justified in increasing interest rates for the sole 
purpose of knocking down the stock market? I certainly don't have 
the answer to this question, but it is one of the main issues that 
economists  may be faced with in the coming years. Is the stock 
market overvalued, and by what standards? If it is overvalued then 
is this dangerous? And finally, what should be done, if anything 
can be done, to control an overvalued market?

It is difficult to determine if the entire market is overvalued. 
No one really knows the answer to that question.  Ten years ago, 
who could have predicted the extent to which the internet would 
influence our economy? When the Dow was 1000 the thought of a 
12,000 Dow may have seemed astronomical and unbelievable. But if 
you look at some of the companies in the index, the earnings  
growth have increased the book value of the companies, not just 
the multiple at which they trade. . If a company is growing its 
revenue at 100 % or even 500% per year then is it overvalued if 
it is trading at a high premium to the book value? I think that 
some of the companies in the Nasdaq and S & P 500 could easily 
grow from being 10 billion dollar companies to 100 billion dollar 
companies in  a few years. But to place a precise number on where 
the various indexes should be at any point in time is virtually 

If the stock market were overvalued then is this dangerous? There 
are numerous articles which have been written detailing what some 
call an asset bubble - overvalued shares, record borrowing, and a 
current acct deficit. The assumption is that it will crash and when 
it does this will be dangerous. During and after the crash of 1987 
certain things happened which were actually dangerous. For example, 
certain market makers didn't even pick up their phones to execute 
trades because they had no cash reserves or inventory. You could 
have called in to sell a stock and no one would have picked up the 
phone. The Fed had to authorize the banks to lend money directly 
to specialists on the NYSE so they could open their stocks. This 
was dangerous, and intervention was necessary. But the real issue 
is whether  actual market corrections or crashes are dangerous or 
a necessary part of the growth cycle is debatable.

What if any corrective steps should be taken? The primary goal of 
the central bank in the 1970s and 1980s was to keep inflation under 
control. Now that we may be in a "new paradigm" does the Fed need 
to change its goals and methods? Instead of focusing on inflation 
should they focus on the overvalued market? Should interest rates 
be raised because central bankers think that the overvalued market 
is dangerous? It is possible that if interest rates are raised for 
this reason it might actually damage the market. One other method 
which could be implemented is raising the margin requirements for 
stock purposes. One of the factors which contributed to the crash 
of 1929 was the fact that investors were buying stocks on five 
percent margin. Possibly the Fed of the future should examine 
their strategies as well as their goals in the fine tuning of the 


Renee HELP! My Trades Aren't Working Anymore

Volatility trading can be really hard on your nerves, to say 
the least. Remember that commercial showing an egg being fried 
and sizzling, "This is your brain on drugs...". Well, a similar 
point can be made about your brain and nerves trading the swings 
of the last week. It is especially true coming on the heels of 
the wild ride the last 2 months. I received many emails discussing 
this subject this week. Suddenly trades don't seem to be working 
as well and try as many might, the swings are working against 
them. I suspect that more than a few, did not take their profits 
"off the table" as we had been discussing going into the Y2K 
transition period. Unfortunately, vanishing profits is what 
happens when you hold too long and continue to trade in a market 
that is against you.

Except for YHOO, I had exited most positions when the volatility 
started the first week of January. I needed a break and when I 
saw the sell-off occurring earlier than I had expected, I went 
to cash. This is partly due to a previously learned mistake when 
I had held on during temporary set backs because things seemed 
to always come back. Then, I began to notice huge swings in my 
account every day. I had never seen swings like that because 
the previous year, I had exited to cash before every market 
downturn, due to pure accidental timing. So I saw these huge 
swings, which became a precursor to a market top last spring. 
Those huge swings by the way, occurred because I was not good 
at using my stop losses. I thought about them a lot and even 
talked to people about them. I just didn't do anything to 
activate them. Instead, I stared at the option and watched it 
go down. It cost me a lot of money before I hurt enough to 
learn to use my stop losses. A dumb lesson, but I finally learned. 

Another common mistake is over-trading. When people get accustomed 
to winning frequently, they think it is more their skill, than any 
help the market is giving them. Unfortunately, when the inevitable 
downturn comes, many over-trade their account trying to win back 
what they lost yesterday in an effort to get their account back 
to where it was. This is very dangerous, especially if you trade 
multiple contracts. That just makes things go down faster at a 
time your confidence is already low.

So, when the markets started selling off the first week of January, 
after a 2 months ride up, I recognized the pattern again. When I 
saw the swings show back up, I exited to cash because I knew I 
needed a rest. Volatility trading can be very profitable, but it 
requires intense concentration, mostly intra-day and sometimes 
intra-10 minutes. When all the markets are turning around and 
start trailing downward, a stock may blow right through its 
support level and keep going south. This is usually when new 
players start learning their expensive lessons because they 
are inexperienced playing the downside strategies and confuse 
sell-offs for dips.

Having learned from past mistakes, if I don't have the time, 
energy or inclination to baby sit the market intra-day, the 
safest rule is to exit to cash and let the dust settle.  This 
will prevent emotional trading while protecting ones well-earned 
profits from the previous upturn. Remember, there is always 
another day or month. All traders have bad plays and all trades 
are not winners. This is why all experienced option traders 
will always tell new comers, "only trade with money you can 
afford to lose". (Hey look! I actually caught myself and 
spelled it corectly this time!!!) Besides, taking a break 
can be healthy. Trade when it works for you, stop when it 

During the break this week, I have been trying to update my 
trading log in order to send Uncle Sam a check for fourth 
quarter taxes. Measured by percentage gain, my best company 
plays this year were AOL, YHOO and QCOM. The best percentage 
gains ranged from 1,851% on QCOM to a whopping 3,251% on YHOO 
in 16 days! Now, before anyone gets excited about those 
figures, let's look at them a little closer.

Reviewing trades gives one a great opportunity to learn. 
Although those percentage gains look great, the trades were 
not. First of all, keep in mind that the two stocks with the 
highest gains had huge gains during a one time event. Both AOL 
and YHOO, exactly one year apart, entered the S&P 500. I was 
shocked by my AOL gains last year in December & January, so 
when they announced YHOO's inclusion, I loaded up expecting 
similar excitement. This time I was right. It will be hard 
for another stock to match the enthusiasm of YHOO's play. 
Remember, the Y2K melt-up helped also. I hope no one expects 
similar gains to occur with other stocks entering the S&P. 
This was an exception. My QCOM was just great timing due to 
Blow & Go. 

The real problem with gains like this is that one focuses on 
the large return, instead of realizing that if I had rolled 
out multiple times to more contracts closer ATM every time 
the option returned 100% (keeping some of the money in my 
pocket of course), I would have actually made more money. 
Rolling that play over and over and over again, is the right 
way to trade it, not holding on. So seeing those large gains 
tell me that I was distracted with other plays and lost 
opportunities to really milk the play until it ended. Of 
course, some of those trades legitimately occurred when I 
held to pay for shares I was exercising. Sometimes though, 
things just get going so fast, that I get distracted following 
my weaker plays more. Now that's kind of dumb isn't it? Why 
not just exit those plays? 

But all in all, as I review the plays through the year; the 
bad timing, the over trading, the lost profits, hard lessons 
learned from leaving town with open positions (read: 100% 
losses), the Fed effect, etc., I realize the biggest lesson 
learned was how valuable evaluating my mistakes really are. 
Writing about them has helped me remember and catch myself. 
My losses are much less now because of my awareness. There's 
lots of room for improvement this year but I have keyed in on 
several areas that ate into my profits last year. There is a 
lot more to trading than just the play. I encourage you to 
identify at least one consistent mistake you make and set 
that as a goal to conquer and improve on this year. 

That's one way to beat a down market!!

Renee White


The Meatgrinder

There are two possible views of the blood on a boxing canvas 
-- as a boxer hurt and down for the count; or as a spectator, 
evaluating the fighting style of a possible opponent. I prefer 
the latter. When I boxed in college, our coach taught us a good 
style -- solid footwork, good technique, how to slip punches, 
how to counterpunch. Tommy had coached Rocky Marciano and had 
boxed in the pros in the 40s; he was a master technician. The 
kids from South Boston, or Southie, on the other hand only knew 
one style -- straight ahead, hard punching, toe-to-toe fighting. 
We would go up and watch potential opponents at the Golden 
Gloves in Lowell, Massachusetts, so that we could pick up the 
style of our prospective opponents.

That's what I am doing with the market right now. The last two 
weeks reminds me of the last few weeks of September, when the 
market changed direction almost daily. You could trade it if 
you picked the right direction each day, but if you were wrong, 
you would lose money fast. I know, I did. I nicknamed that 
volatile, sideways market the meatgrinder because I was always 
one step behind. One bad decision typically leads to another 
bad decision -- what the Marines called a degenerating decision 
making loop. I have been watching traders take blows on the chin 
and bleed cash -- holding QCOM calls too long; holding YHOO calls 
because it runs right up to earnings every time; buying a YHOO 
straddle right before earnings, only to watch the time premium 
evaporate on each side of the play. Pow, pow, pow. Not the kind 
of fight that I want to pick, thank you very much. But, I am 

I have been paper trading the short covered strangle strategy 
(there's a good line for a cocktail party... So, do you, you 
know, trade online?... Well, as a matter of fact, I used to 
employ directional call plays, but now I have progressed to 
the point that I write covered strangles and hedge whichever 
side is in the money... ah, yeah). And I am glad to report that 
this strategy is absolutely beautiful. In my paper trades, I 
sold the BVSN Jan140C at 17.75 and it is now at 4.75; and I 
sold the Jan120P at 8.625 and it is now at 3. As I noted in my 
last column, on some days, I would have had to hedge and 
un-hedge repeatedly. For example, On 1/13, I would have had to 
buy & sell BVSN repeatedly as it passed one of the action lines. 
But, on the plus side, these are no-brainer trades. Now, BVSN 
seems to be settling down nicely in the box created by the put 
and call sold. If it expires between 120 and 140, it is entirely 
possible that neither the put nor the call would have been 

In my CMRC paper trade, I sold the Jan200C at 13.375 and it is 
now at 13/16, low enough to buy to close. I also sold the Jan180P 
at 10.125, and that contract is now at 13. Since the stock is at 
166, I would have had to hedge by going short the stock when it 
crossed under my action line at 180. Should not be a big deal, 
though I am a bit inexperienced in exactly how being short the 
stock will hedge being short the put. Conceptually, I understand 
that I have sold the right to sell the stock to me at 180. 
Therefore, since I have sold the stock short at 180, when the 
stock is put to me my short position should cancel it. However, 
on this point, I need to talk to my broker to clarify the process. 
Nonetheless, the CMRC play seems to be working out also.

In my YHOO paper trade, first of all, I must respond to Jim's 
comment in my last column. Yes, it might have made more sense 
to wait until after earnings to sell the strangle. But, on the 
other hand, the play worked beautifully because of the high 
premiums before the announcement. The premiums evaporated with 
the mundane (?!) 2:1 split and unspectacular (?!) .19 cent 
blow out. I sold the Jan380C at 33.5 and it is now at 4.125. 
I sold the Jan340P at 20 and it is now at 6.5. YHOO is sitting 
right in the box I created, with its current price of 353. It 
barely penetrated the lower bound of 340, so I would have had 
to take a short position for a hour or less yesterday. On the 
bright side, those premiums really did disintegrate. This 
is a game that I would much rather play than trying to profit 
from a directional strategy in a directionless, range bound market.

This weekend, I am going to paper trade a whole list of Red Hot 
Internet stocks with the short covered strangle strategy, giving 
myself the benefit of the doubt of perfect late December/ early 
January entries into stocks like VRSN, INKT, BRCM and a number 
of other stocks. Next week, I will be looking for a failed rally 
entry point to sell calls on some stocks. Over the next month, 
I will track those short calls closely and I will be prepared to 
hedge the contracts by buying the stock at the strike price if 
they do get in the money. My hope is that the market rolls over 
and the stocks never get near the strike price at which I sold 
the contracts.

I will also be commiting a certain amount of capital from my LT 
stock account to the purchase of some positions in AFFX, HGSI, 
INCY and BRCM. But, instead of buying the stock outright, I plan 
on writing puts when these stocks trend down towards my intended 
purchase price. If the stock price hits the put exercise price, 
and I am exercised, then I pocket the premium and get the stock 
at the price that I want. If, on the other hand, the stock does 
not hit the strike price of the option, then I just pocket the 
premium. If I am put the stock, I will probably write calls 
against the stock when, and if, the stock trends back up. I am 
going to go through this exercise because I want to get used to 
the idea of writing puts & calls.

Our boxing coach used to put the experienced fighters in with 
new boxers. In Tommy's system, the experienced guys could only 
throw a jab to the body, for example, while the new fighters 
could throw jabs to the head and body, rights to the head and 
body, hooks & uppercuts. Fortunately, the new boxers rarely 
could throw competent combinations of the different punches, 
and we could dance around the mat, jabbing here or there to 
keep the new fighters at bay. I am still a rookie trader, with 
one good year under my belt. I feel like I only know how to 
throw one punch -- play straight calls... buy em low, sell em 
high. Now, I want to learn how to dance around the ring. I want 
to learn to sell calls and puts... sell em high, buy em low... 
or better yet, just let them expire. That is the fight that I 
want next time that I step into the ring. Every trader has a 
style -- Marty Schwartz, for example, was only a counter puncher, 
a scalper, probably because he started his trading life as a 
option market maker. I want to be able to use the strategy that 
best fits the market I am given, and to be able to profit whether 
the market moves up, down, or sideways.

Good Luck
Janar Joseph Wasito
Contact Support


Sunday, January 16, 2000


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NEW YORK, Jan 14 (Reuters) - The following Standard &
Poor's 500 companies are expected to report quarterly earnings
the week of Jan 17-21. Reporting dates and analysts' mean
estimates are provided by First Call/Thomson Financial.

1/17 Motorola, Inc. (NYSE:MOT) Q4 0.26 0.81
1/18 Abbott Laboratories (NYSE:ABT) Q4 0.41 0.43
1/18 AmSouth Bancorporation (NYSE:ASO) Q4 0.38 0.41
1/18 Archer-Daniels-Midland (NYSE:ADM) Q2 0.18 0.13
1/18 Associates First Capital (NYSE:AFS) Q4 0.47 0.56
1/18 Automatic Data (NYSE:AUD) Q2 0.27 0.31
1/18 BankAmerica Corp. (NYSE:BAC) Q4 0.91 1.23
1/18 Bank Of New York Co. (NYSE:BK) Q4 0.40 0.43
1/18 Bank One Group (NYSE:ONE) Q4 0.88 0.79
1/18 Capital One Financial (NYSE:COF) Q4 0.35 0.47
1/18 Champion International (NYSE:CHA) Q4 0.13 0.74
1/18 Citigroup (NYSE:C) Q4 0.40 0.70
1/18 Comerica Inc. (NYSE:CMA) Q4 0.97 1.08
1/18 Crown Cork & Seal (NYSE:CCK) Q4 0.27 0.30
1/18 Delta Air Lines, Inc. (NYSE:DAL) Q2 1.29 1.06
1/18 Enron Corp. (NYSE:ENE) Q4 0.24 0.30
1/18 FirstEnergy Corp. (NYSE:FE) Q4 0.41 0.52
1/18 Freeport-McMoRan Copper (NYSE:FCX) Q4 0.26 0.20
1/18 Knight Ridder (NYSE:KRI) Q4 0.86 1.02
1/18 Mellon Financial Corp. (NYSE:MEL) Q4 0.42 0.48
1/18 Meredith Corp. (NYSE:MDP) Q2 0.47 0.49
1/18 Microsoft Corp. (NASDAQ:MSFT) Q2 0.36 0.42
1/18 Morgan (J.P.) & Co. (NYSE:JPM) Q4 0.86 2.00
1/18 Northern Trust Corp. (NASDAQ:NTRS) Q4 0.40 0.45
1/18 Paine Webber Group (NYSE:PWJ) Q4 0.63 0.92
1/18 Parametric Technology (NASDAQ:PMTC) Q1 0.16 0.05
1/18 Parker Hannifin Corp. (NYSE:PH) Q2 0.58 0.69
1/18 Schwab (Charles) Corp. (NYSE:SCH) Q4 0.12 0.19
1/18 Southwest Airlines Co. (NYSE:LUV) Q4 0.19 0.18
1/18 State Street Corp (NYSE:STT) Q4 0.68 0.73
1/18 Summit Bancorp (NYSE:SUB) Q4 0.67 0.71
1/18 Teradyne Inc. (NYSE:TER) Q4 0.07 0.39
1/18 Tyco International Ltd. (NYSE:TYC) Q1 0.31 0.45
1/18 U.S. Bancorp (NYSE:USB) Q4 0.52 0.53
1/18 Unisys Corp. (NYSE:UIS) Q4 0.40 0.45
1/18 Washington Mutual (NYSE:WM) Q4 0.74 0.84
1/18 Wells Fargo Inc. (NYSE:WFC) Q4 0.46 0.59
1/18 Xilinx (NASDAQ:XLNX) Q3 0.11 0.19
1/19 AMR Corp. (NYSE:AMR) Q4 1.00 0.61
1/19 Advanced Micro Devices (NYSE:AMD) Q4 0.15 0.01
1/19 America Online Inc. (NYSE:AOL) Q2 0.04 0.08
1/19 Apple Computer, Inc. (NASDAQ:AAPL) Q1 0.78 0.89
1/19 Atlantic-Richfield Co. (NYSE:ARC) Q4 0.22 1.47
1/19 Bear Stearns & Co. (NYSE:BSC) Q2 0.80 1.20
1/19 Boeing Company (NYSE:BA) Q4 0.48 0.68
1/19 Burlington Resources (NYSE:BR) Q4 0.00 0.37
1/19 Johnson Controls, Inc. (NYSE:JCI) Q1 0.86 1.02
1/19 Keycorp (NYSE:KEY) Q4 0.59 0.58
1/19 Millipore Corp. (NYSE:MIL) Q4 0.18 0.44
1/19 Old Kent Financial Corp (NYSE:OK) Q4 0.51 0.60
1/19 PG & E Corp. (NYSE:PCG) Q4 0.51 0.40
1/19 Pinnacle West Capital (NYSE:PNW) Q4 0.42 0.40
1/19 Public Svc Enterprise (NYSE:PEG) Q4 0.66 0.57
1/19 Central & South West Co (NYSE:CSR) Q4 0.26 0.28
1/19 Chase Manhattan Corp. (NYSE:CMB) Q4 1.31 1.32
1/19 Citrix Systems Inc (NASDAQ:CTXS) Q4 0.26 0.37
1/19 Delphi Auto. Systems Co (NYSE:DPH) Q4 (0.45) 0.46
1/19 Household International (NYSE:HI) Q4 0.71 0.90
1/19 International Business (NYSE:IBM) Q4 1.24 1.06
1/19 Regions Financial Corp (NASDAQ:RGBK) Q4 0.59 0.60
1/19 Reynolds Metals Co. (NYSE:RLM) Q4 0.76 0.97
1/19 Southtrust Corp. (NASDAQ:SOTR) Q4 0.59 0.69
1/19 Sysco Corp (NYSE:SYY) Q2 0.26 0.31
1/19 US Airways Group Inc. (NYSE:U) Q4 1.18 (0.63)
1/19 United Technologies Corp (NYSE:UTX) Q4 0.58 0.67
1/19 Warner-Lambert Co. (NYSE:WLA) Q4 0.40 0.52
1/19 Weyerhaeuser Co. (NYSE:WY) Q4 0.38 0.92
1/19 Willamette Industries (NYSE:WLL) Q4 0.07 0.69
1/20 Adaptec Inc. (NASDAQ:ADPT) Q3 0.24 0.48
1/20 Amerada Hess Corp. (NYSE:AHC) Q4 (1.11) 1.14
1/20 Andrew Corp. (NASDAQ:ANDW) Q1 0.28 0.18
1/20 Unicom Corp. (NYSE:UCM) Q4 0.40 0.26
1/20 Union Pacific Corp (NYSE:UNP) Q4 0.39 0.88
1/20 Union Planters Corp. (NYSE:UPC) Q4 0.55 0.81
1/21 Air Products & Chemical (NYSE:APD) Q1 0.55 0.51
1/21 Ball Corp. (NYSE:BLL) Q4 0.45 0.54
1/21 Caterpillar Inc. (NYSE:CAT) Q4 0.83 0.64
1/20 Becton, Dickinson, & Co (NYSE:BDX) Q1 0.29 0.28
1/20 Boise Cascade Corp. (NYSE:BCC) Q4 0.08 0.66
1/20 Consolidated Edison Co. (NYSE:ED) Q4 0.56 0.58
1/20 Crane Co. (NYSE:CR) Q4 0.51 0.42
1/20 Dover Corp. (NYSE:DOV) Q4 0.36 0.52
1/20 Duke Energy Co. (NYSE:DUK) Q4 0.60 0.75
1/20 Fortune Brands Inc. (NYSE:FO) Q4 0.55 0.67
1/20 Gateway (NYSE:GTW) Q4 0.41 0.42
1/20 General Motors Corp. (NYSE:GM) Q4 2.83 1.81
1/20 Helmerich & Payne, Inc. (NYSE:HP) Q1 0.26 0.21
1/20 Lucent Technologies (NYSE:LU) Q1 0.49 0.37
1/20 Molex Inc. (NASDAQ:MOLX) Q2 0.28 0.32
1/20 Peoples Energy Corp. (NYSE:PGL) Q1 0.66 0.81
1/20 Providian Financial (NYSE:PVN) Q4 0.66 1.08
1/21 Constellation Energy (NYSE:CEG) Q4 0.23 0.23
1/21 Edison International (NYSE:EIX) Q4 0.46 0.49
1/21 FPL Group (NYSE:FPL) Q4 0.54 0.57
1/21 Tribune Co. (NYSE:TRB) Q4 0.36 0.43

Copyright 2000, Reuters News Service


Daily Results

Index      Last   Week
Dow     11722.98 200.42
Nasdaq   4064.27 181.65
$OEX      797.52  14.03
$SPX     1465.15  23.68
$RUT      507.56  19.25
$TRAN    2891.63 -73.09
$VIX       21.05  -2.15

Calls             Week

CHKP      236.00  44.13  Dropped, earnings on Tuesday after bell
AFFX      186.75  33.50  AFFX has become one of the favorites
VIGN      200.94  25.75  VIGN is giving us a very nice run!
ANAD       73.00  25.56  Momentum propels ANAD to new heights!
HGSI      184.63  24.31  A major rally for the Biotechs!
TQNT      130.00  22.00  TQNT looks to be one of the strongest!
EXDS      106.00  18.88  Earnings and a possible split for EXDS
MSTR      227.94  17.56  A cutting edge technology company!
ADI       101.38  14.50  A constant stream of momentum for ADI
NOK       184.06  13.06  Nokia breaks and holds over $180!
JDSU      192.19  12.25  Earnings date is driving this play!
LSI        72.75  11.50  New, strength in the sector
GMST       76.81  11.31  Gemstar remains on its shining path!
LVLT       86.75  10.88  New, plenty of bullish indications!
CMVT      148.31   9.31  It looks like CMVT has found its way!
MFNX       57.13   9.00  New, similar to the Tasmanian Devil
NTAP       93.69   8.69  New, shares of NTAP are on the move!
SEPR      126.13   8.00  Biotechs get another shot in the arm!
INTU       81.38   7.81  Momentum is the name of the game!
EMC       112.38   5.00  EMC looks to have regained its footing
INKT       94.38   5.00  Dropped, knowing when to say when
ORCL      106.81   3.44  Dropped, boy, investors are fickle
CSCO      107.56   1.69  Dropped, Cisco gives too little too slow
AMGN       68.31   0.31  We still like the bullish story on AMGN
QCOM      140.44  -9.56  Dropped, lacks the enthusiasm we need


ICGE      133.50 -40.38  New, doesn't have much going for it
ISLD       77.13 -16.50  Dancing feet wear out; drifts lower
CMGI      121.94 -15.56  New, case of the post-split blues
IIJI       85.50 -11.50  New, investors look to lose Initiative
FD         47.88  -2.94  New, news helps to move FD downward
SBC        42.00  -2.19  Can certainly provide opportunities!
WCOM       46.56  -0.63  Survey said?  Entry points!
CHINA      77.50   1.00  CHINA shows weak relative strength



LVLT - Level 3 Communications Inc.
NTAP - Network Appliance Inc.
MFNX - MetroMedia Fiber Network 
LSI  - LSI Logic


FD   - Federated Department Stores
ICGE - Internet Capital Group
IIJI - Internet Initiative Japan
CMGI - CMG Information Services Inc.


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


QCOM $140.44 (-9.56) What can we say, QCOM is choosing it's 
path and its not the direction we want.  Even with the 
Nasdaq's record breaking highs and good volume for QCOM, it 
closed down on Friday.  QCOM is no longer following the Nasdaq.  
It's that new direction that has caused us to drop QCOM.  It 
is still holding support at $140 and that is a good indicator, 
but we just don't see any life in QCOM.  Their earnings are 
due the 25th (that is about 7 trading days)and if they were 
going to make a run based on those earnings, we would see some 
enthusiasm in traders.  Besides, QCOM has never been a company 
based on the present, they are all about the future so earnings 
based on present numbers may not do much for them.  

ORCL $106.81 (+3.44) Boy investors are fickle these days.  It 
took exactly 8 days for them to rotate into, then out of ORCL.  
Volume has fallen back to the ADV despite a split coming on 
January 18.  You may ask why we are dropping it in light of the 
price going up this week and the split next week.  The answer is 
that the markets are closed on Monday, and Tuesday before our 
next update would be the time to sell the position since we never 
advocate holding through a split.  Nothing wrong with the company 
- it's just that the play will be over on Tuesday at the close.

CSCO $107.56 (+1.69) Too far until earnings on Feb 8th and 
not moving fast enough to stay on the list.  As we've noted in 
recent updates, CSCO will benefit from Lucent's stumble.  CSCO 
still runs a great and profitable business, but that "sector 
rotation" thing has taken the wind from its sails.  It appears 
as though the broadening out of the market in the last 3 days 
may have slurped some of money managers' cash into previously 
unfavored issues, leaving CSCO with only average volume.  While 
we still see the ascending pennant forming on the chart, which 
should ultimately result in a breakout as earnings approach, 
there are too many other plays in which to make money.  Thus we 
are not going to wait for the breakout, but may bring it back 
if it does it's thing.  It's not a suggestion to get out at any 
price, just that there are better plays right now.

CHKP $236.00 (+44.13) A $31.13 one-day gain on a split play and
a drop?  Unfortunately that is the way we have to play it.  After
some conflicting information over the actual earnings date, it
was confirmed with the company as Jan 18th after the close.
Since we never recommend holding over earnings, we have to let
this winner go.  With the markets closed Monday, we will look 
to exit this winning play Tuesday morning and take our profits.
The shareholders meeting Thursday resulted in approval of the
much anticipated 2-for-1 split.  Payable to shareholders of
record on January 23rd, post-split trading will begin on or
about January 31.  We'll keep our eye on CHKP, and if earnings
are positive, it could end up on our play list again very soon.

INKT $94.38 (+5.00) Sometimes discretion really is the better
part of valor.  Knowing when to say, we give up, can be a
difficult part of trading.  We said Thursday it "appeared" as 
though INKT was preparing to make a last minute earnings run.
Friday's strong move down, is the wrong direction for any kind
of profitable earnings run.  INKT fell -10.75 to $91.25, at its
intraday low, closing down -7.63 for the session, at $94.38.
INKT was up +6.0% for the week, but Friday's decline makes us 
uneasy.  Many of the stocks in the Internet sector have struggled
since the beginning of the new year.  INKT is ahead, but keeps 
stubbing its toe.  For now, we will stand aside.  We will keep 
our eye INKT, as we do believe it continue to produce great 
opportunities in the future. 


No dropped puts today.


Current Split Candidates
NOK  - Nokia
AFFX - Affymetrix Inc. 
VIGN - Vignette Corporation 
EMC  - EMC Corporation 
CMVT - Comverse
LVLT - Level Three Communications
EXDS - Exodus Communications
SEPR - Sepracor Inc.
Split candidates that are not current plays
VRTS - Veritas Software
IMNX - Immunex
STM  - STMicroElectronic
BRCM - Broadcom
Recent Announcements We Predicted
YHOO (most recent pick) - Yahoo!
TMPW (most recent pick) - TMP Worldwide


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

Symbol - Stock          Splits/Date  
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
RAZF - Razorfish        2:1 01-27-00 ex-date 01-28
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
GBIX - Globix Corp      2:1 01-31-00 ex-date 02-01
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
FDS  - Factset Systems  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
MERQ - Mercury Interact 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
EXAR - Exar Corp        3:2 02-15-00 ex-date 02-16
ADCT - ADC Telecom      2:1 02-15-00 ex-date 02-16
DITC - Ditech Comm      2:1 02-16-00 ex-date 02-17
TQNT - Triquint         2:1 02-22-00 ex-date 02-23
KANA - Kana Corp        2:1 02-22-00 ex-date 02-23
IVX  - IVAX Corp        3:2 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
TMPW - TMP Worldwide    2:1 02-29-00 ex-date 03-01
SLR  - Solectron        2:1 03-08-00 ex-date 03-09
JDSU - JDS Uniphase     2:1 03-10-00 ex-date 03-13
SNE  - Sony Corp        2:1 05-19-00 ex-date 05-22
AA   - Alcoa            2:1 06-09-00 ex-date 06-12

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:

VIGN - Vignette Corporation $200.94 (+25.75)(+12.19)(+12.50)

See details in sector list

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


ANAD - Anadigics Inc $73.00 (+25.56)

See details in sector list

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

Put play of the day:

CMGI - CMG Information Services Inc $121.94 (-15.56)

See details in put list

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

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

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

Anything else is too slow!



The Option Investor Newsletter          1-16-2000
Sunday                        3 of 5


EMC - EMC Corporation $112.38 (+5.00)(-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.

After dipping with the rest of the techs as the new year began,
EMC looks like it has regained its footing.  Moving up to kiss
$116 early in the week, our earnings play needed to test
support between $105-107 before closing out the week above $110.
This was the level of the 52-week high when we started our play
at the end of December, and we would like to see it hold as
support, now that the PPI/CPI is out of the way.  For you chart
readers, EMC is forming a nice pennant, with the lows moving
higher, and the lower boundary now at $108, right on the 10-dma.
With interest rate fears alive and well, the markets could
remain volatile, giving us one more test of this support level,
but we expect to see a strong breakout through the top of the
pennant, near $115.  Earnings, confirmed for January 26 before
the open, should now start to attract investors' attention in
earnest.  New positions can be initiated with either a bounce
near $108 or a break through $115, but make sure volume is there
to back you up.  As always, if you are going to play, use stops.

Like PacMan, gobbling up those little dots, EMC continues to
gobble up what it needs to maintain and strengthen its market-
leading position.  On Friday, the company announced that they
bought Terascape Software for $50 million in cash, adding to
its already strong storage software business.  This marks the
third acquisition for EMC in the past six months.  In December,
EMC announced it would acquire Softworks Inc., another storage
software maker, for $192 million.  This follows the $1.22
billion deal in October, where EMC bought its rival Data 

BUY CALL FEB-110*EMB-BB OI=1718 at $10.25 SL= 7.75
BUY CALL FEB-115 EMB-BC OI=2076 at $ 8.00 SL= 6.25
BUY CALL FEB-120 EMB-BD OI=1034 at $ 6.00 SL= 4.25
BUY CALL APR-115 EMB-DC OI=1429 at $13.00 SL=10.50
BUY CALL APR-120 EMB-DD OI= 769 at $11.25 SL= 9.00

Picked on Dec 30th at   $110.31     P/E = 107
Change since picked       +2.06     52-week high=$113.13
Analysts Ratings     14-7-3-0-0     52-week low =$46.16
Last earnings 10/20   est= 0.27     actual= 0.29
Next earnings 01-26   est= 0.31     versus= 0.24
Average Daily Volume = 5.67 mln
Chart = http://quote.yahoo.com/q?s=EMC&d=3m


AMGN - Amgen, Inc. $68.31 (+0.31)(+7.94)

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.

Despite a week of stock price churning, we still like the 
bullish story for AMGN, and hopefully it will be reflected 
in another rally next week.  The first story that could get 
investors buying AMGN again is their earnings report due out 
this Thursday.  Amgen has a history of reporting excellent 
results this time of year and it is quite possible a earnings 
related rally may ensue.  Remember, we never stay long options 
through an earnings report, due to inflated premiums right 
before announcement.  Another positive influence for AMGN's 
stock is its impressive pipeline of new drugs.  Kinaret, a drug 
for treating rheumatoid arthritis, is currently under review 
at the FDA and NESP, a potential blockbuster drug for treating 
anemia could have sales of over a billion dollars.  NESP should 
be submitted for approval soon.  While awaiting the approvals of 
new drugs, AMGN has been very successful in finding new uses for 
its core drugs in the past year.  Especially Neupogen,  which 
has been used effectively with the treatment of chemotherapy 
patients.  After making a new high, the shares of AMGN have 
pulled back to support and have mostly traded in a range between 
$62.50 and $70.  The upper end of the range at $70 proved to 
be a solid resistance point on Friday.  If the stock can trade 
above that price early this week, a nice move may happen.  If 
you want to try and trade the range, you may consider going in 
around $64.

On Wednesday, Amgen announced that it intends to spend $850-$900 
million on research and development this year.  Also last week, 
fellow Biotech heavyweight, Biogen, pre-released good results 
which should bode well for Amgen's release.  Over the past two 
weeks, there have been several recent upgrades and price target 
revisions for Amgen.  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 industry.
BUY CALL FEB-60 YAA-BL OI=1197 at $11.25 SL=8.75
BUY CALL*FEB-65 YAA-BM OI=2024 at $ 8.00 SL=6.25
BUY CALL FEB-70 YAA-BN OI=2271 at $ 5.63 SL=3.75
BUY CALL FEB-75 YAA-BO OI= 570 at $ 3.38 SL=1.50

Picked on Jan 6th at     $61.00    P/E = 69
Change since picked       +8.31    52-week high=$72.69
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 = 7.48 mln 
Chart = http://quote.yahoo.com/q?s=AMGN&d=3m 


AFFX - Affymetrix Inc. $186.75 (+33.50)(-16.49)

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.

Affymetrix has become one of the favorites of a very strong 
sector.  At the end of the year stocks associated with The Human 
Genome Project exploded.  What makes AFFX an interesting play 
here is that the company is not dependant on coming up with some 
breakthrough drug.  AFFX sells the tools that researchers need.
As long as there is funding for the project, AFFX will have 
plenty of customers.  AFFX's current run began two months ago 
when some of the strongest names in the tech research field 
began coverage.  CSFB and Robertson Stephens both issued Strong 
Buy recommendations.  Since then Robertson Stephens lowered it's 
recommendation to a Buy, mostly due to the strong sell off at the 
beginning of the year.  The analyst did set a $190 price target. 
Look for that target to be raised if AFFX trades above the 
target price.  AFFX is also the beneficiary of being considered 
a Semiconductor company.  An affiliation with that sector could 
account for some of the gains the stock enjoyed on Friday.  AFFX 
seems to trade true to form at the psychologically important 
price levels.  $100 gets you to $150.  $150 gets you to $200.
Friday's rally broke a four day downtrend that closed a gap all 
they back down at $153.  If AFFX can trade into new high ground 
this week a rally to $200 is likely.  If the stock can climb 
above $200 a rally to $250 is not out of the question.  As 
always be cautious when trading a volatile stock like this.
Once a move starts in either direction there tends to be a lot 
of follow through.  Support can first be found at $163 and then 
at $153.  If the market is weak, you may want to wait and see 
if these support levels hold before going long.

Last week Affymetrix received a broad based agreement with 
Novartis to supply the company with the tools it will need to 
develop its gene research capabilities.  The Genomics sector 
received a big boost on Monday when Celera announced that they 
have nearly completed the mapping of the Human Genome.  The 
race is on!

BUY CALL FEB-180*FUE-BP OI= 20 at $29.13 SL=22.75
BUY CALL FEB-190 FUE-BR OI=  6 at $24.25 SL=18.88 low OI
BUY CALL FEB-195 FUE-BS OI=  3 at $22.00 SL=17.13 low OI
BUY CALL FEB-200 FUE-BT OI=180 at $19.75 SL=15.38 

SELL PUT FEB-135 FIQ-NG OI=  3 at $10.13 SL=12.75 low OI
(See risks of selling puts in play legend)

Picked on Jan 2nd at    $184.75    P/E = N/A
Change since picked       +2.00    52-week high=$195.50
Analysts Ratings      3-5-2-0-0    52-week low =$ 27.50
Last earnings 10/99  est= -0.28    actual= -0.21
Next earnings 02-02  est= -0.20    versus= -0.31
Average Daily Volume =    436 K
Chart = http://quote.yahoo.com/q?s=AFFX&d=3m 


HGSI - Human Genome Sciences $184.63 (+24.31)(+7.68)(+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 is in an arena that has seen tremendous growth in the 
last month.  Genomics companies have helped fuel a major rally 
in the biotech sector.  To understand the magnitude of what's 
happened to HGSI, the company's stock traded between $25 and $50
from January of 1996 until the middle of July 1999.  Not exactly
a stock that would be viewed as volatile.  From July through 
December, HGSI moved up to $172.  The point we are trying to make 
is Genomics has garnered investors attention in a big way.  Our 
primary interest in HGSI at this time, is for a potential split
run.  HGSI splits 2-for-1 January 28th.  Not only has the 
company earned investors attention, it now has become a volatile
stock, with a one day trading range of what we saw over a 3-year 
period.  On Friday HGSI made a new 52-week high at $199, before
profit-taking set in to push the stock back down settling at 
$184.63.  If you have a position in this play, HGSI will find
in intraday support at $178, $170, and $163.  Technically the
5 and 10-dma sit at $170.20 and $160.23 respectively.  Due to
the recent volatility, HGSI has provided us with some incredible
opportunities, but it is not necessarily one you want to sit on.
If you are considering a new play, we believe HGSI will continue
to move up into its split, however it could be a wild ride.
Look for bounces off support for entry points, and be prepared
to take your money off the table when profit your objectives 
are met. 

HGSI CEO William Haseltine said in an interview this week, that
they don't have any products on the market yet, but have several
that are undergoing clinical tests.  He went on to say he is
confident studies will show patients benefit from what are 
thought to be the first genomics-derived drugs.  A drug that 
treats breast and ovarian cancer is in Phase I/II trials.

BUY CALL FEB-180 HHA-BP OI=61 at $26.00 SL=20.50
BUY CALL FEB-185 HHA-BQ OI= 1 at $23.63 SL=18.63 low OI
BUY CALL FEB-190*HHA-BR OI=33 at $21.63 SL=17.00

SELL PUT JAN-170 HHA-MN OI= 0 at $ 4.75 SL= 6.50
(See risks of selling puts in play legend)

Picked on Dec 28th at   $138.88    P/E = N/A
Change since picked      +45.75    52-week high=$199.00
Analysts Ratings      1-4-2-0-0    52-week low =$ 28.75
Last earnings 10/99   est=-0.30    actual=-0.42 
Next earnings 01-25   est=-0.67    versus=-0.55
Average daily volume =    433 K
Chart = http://quote.yahoo.com/q?s=HGSI&d=3m


SEPR - Sepracor Inc. $126.13 (+8.00)

They are a specialty pharmaceutical company that develop 
improved versions of widely prescribed existing pharmaceuticals.
Located in Marlborough, MA, Sepracor products can offer
reduced side effects, improved safety, new uses, and improved 
dosage forms over traditional compounds.  They are currently 
in the process of developing drugs to treat asthma, allergies, 
pain, sleep disorders, and depression.  SEPR has licensed to 
Johnson & Johnson the rights to an improved version of JNJ's
own Propulsid heartburn medication.  SEPR competes in the 
healthcare sector with Bayer AG, Glaxo Wellcome, and
Johnson & Johnson.

Our play in SEPR rebounded nicely on Friday.  SEPR jumped 
+6.25 on volume of 746K.  SEPR moved higher Monday and
spent the next three sessions consolidating.  The Biotech
industry got another shot in the arm Friday when Biogen (BGEN)
posted 4th quarter EPS of $0.44, a penny ahead of analyst's
estimates.  Several brokerage firms came out with Buy and 
Strong Buy reiterations on BGEN.  In the news, the Biotech
sector added just under 2.0 percent, while SEPR and the 
stronger stocks added about 5 percent for the session.  We 
believe the near-term prospects for SEPR are excellent, due 
to SEPR's current strategic relationships with Schering-Plough
(SGP), and Eli Lilly (LLY).  SEPR is scheduled to report earnings
the last week of January, an exact date is yet to be announced.
With the current momentum behind the move in SEPR, we believe
the biotech company can sustain the trend higher.  Technically,
SEPR has support at $124 and $120, with the 5-dma sitting at
$121.08.  If we get a pullback early in the week, a bounce off
support would provide a good entry point for this play.  If we
see SEPR continue higher, we would look to enter this earnings
run play, however set your stops according to your risk profile,
as SEPR has a pattern of moving higher and then consolidating
for a few sessions and then continuing the trend.  With SEPR, we
rarely see 3-4 days of strong moves without a consolidation 
period, as we've seen with other sector issues recently.

Friday, analyst Jerry I. Treppel at Banc of America rated SEPR
as a new Buy.  Treppel's 12-month price target for SEPR was
$150 per share.  SEPR's 52 week high is at $140.88 set back in 
the first week of March.  SEPR could be setting up to test that 
area in the near future. 

BUY CALL FEB-120 ERQ-BD OI=30 at $13.63 SL=10.75
BUY CALL FEB-125*ERQ-BE OI=11 at $11.38 SL= 9.00
BUY CALL FEB-130 ERQ-BF OI= 2 at $ 8.88 SL= 6.75 low OI

Picked on Jan 11th at  $122.38     P/E = N/A
Change since picked      +3.75     52-week high=$140.88
Analysts Ratings     5-4-2-0-0     52-week low =$ 58.75
Last earnings 10/99  est=-1.56     actual=-1.68 surprise=-7.70%
Next earnings 01-24  est=-1.51     versus=-1.10
Average Daily Volume =   428 K
Chart = http://quote.yahoo.com/q?s=SEPR&d=3m


ADI - Analog Devices $101.38 (+14.50)(-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 has been blessed with a constant stream of momentum that 
has taken it to new heights four times this week.  For the most 
part, volume has been only moderate, but Friday was a different 
story.  Following Intel's blowout earnings report on Thursday 
evening, ADI traded heavily at 2.34 mln shares and tacked on 
$7.56 by the finish.  This surge catapulted ADI to an intraday 
high of $101.94 crushing overhead opposition from the word "go".  
Notably the stock closed bullishly just a fraction away from 
this new 52-week high.  With the psychological $100 barrier 
broken there's nothing to hold ADI back now.  Earnings are not 
expected until mid-February so it'll be important to pay 
attention to the sector sentiment especially since this is a 
pure momentum play.  Nearest support is still at $93 and $95 
which is now in line with the 5-dma ($94.74).  If there's a 
strong correction, look to firm support at $90 and/or the 
10-dma ($90.78) for a bottom, but don't jump in there.  Wait 
for another rebound if the stock ever gets that low.

News was scarce this week.  However, ADI did announce on Monday 
it's the leading seller of over 1 mln ADSL chipsets on the open 
market with a 60% dominant market share.  ADI also boasts its 
ADSL chipset have more interoperability with more ADSL systems 
than any of the competition.

BUY CALL FEB- 95 ADI-BS OI=320 at $12.75 SL=10.25
BUY CALL FEB-100*ADI-BT OI=228 at $10.00 SL= 7.50
BUY CALL FEB-105 ADI-BA OI=  0 at $ 7.38 SL= 5.75 New Strike
BUY CALL FEB-110 ADI-BB OI=  0 at $ 5.63 SL= 4.00 New Strike
BUY CALL MAR-105 ADI-CA OI=  0 at $10.13 SL= 7.75 New Strike
BUY CALL MAR-110 ADI-CB OI=  0 at $ 8.38 SL= 6.50 New Strike

Picked on Dec 30th at    $90.44    P/E = 93
Change since picked      +10.94    52-week high=$101.94
Analysts Ratings     10-5-1-0-0    52-week low =$ 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 = 1.44 mln
Chart = http://quote.yahoo.com/q?s=ADI&d=3m


TQNT - TriQuint Semiconductor $130.00 (+22.00)

TriQuint Semiconductor is a leading worldwide supplier of a 
broad range of high performance gallium arsenide (GaAs) 
integrated circuits.  TriQuint's products span the RF and 
millimeter wave frequency ranges and employ analog and mixed 
signal circuit designs.  They are used in wireless 
communications, telecommunications, data communications and 
aerospace systems.  TriQuint offers both standard and customer 
specific products as well as foundry services.  TriQuint's two 
operations, in Oregon and Texas, are both certified to the ISO 
9001 international quality standard.

The markets have been backing and filling all month in an 
attempt to establish a new leadership group.  We may have one 
now.  Roaring ahead on the excellent earnings report from Intel, 
many Semiconductor stocks surged to new highs on Friday.  TQNT 
was one of the strongest.  If the other leading groups turn 
out to be wireless communications and telecommunications then 
TriQuint will have hit the trifecta in a big way.  TriQuint's 
gallium arsenide chips are used extensively in telecom equipment, 
especially wireless components.  All fund managers looking 
for exposure in either the Semis or Telecom sectors, have to 
seriously consider a position in TriQuint.  To keep the party 
going, TQNT announced a 2-for-1 split with a delivery date of 
February 22nd.  An excellent trading day on Friday, leads us to 
believe that more gains are ahead for the shares of TQNT.  By 
establishing a new high, TQNT has formed a very bullish pattern 
that could take it up to $150.  The last breakout took the stock 
up 15%.  There was a little profit taking into the close on 
Friday.  If TQNT can stay above $126 on Tuesday you might be 
able to get a bullish position started at a favorable price.  
Momentum investors could be interested in opening positions 
if the stock can take out Friday's high of $137.25.  Support 
can be initially found at $125.
BUY CALL FEB-115 TQN-BC OI= 297 at $21.88 SL=17.00
BUY CALL FEB-120 TQN-BD OI=  58 at $18.75 SL=14.63 low OI
BUY CALL FEB-125*TQN-BE OI=1609 at $16.50 SL=12.88

Picked on Jan 13th at  $130.00    P/E = 114
Change since picked      +5.75    52-week high=$137.25
Analysts Ratings     5-4-4-0-0    52-week low = $10.31
Last earnings 10/99  est= 0.27    actual= 0.36
Next earnings 02-10  est= 0.37    versus= 0.21
Average Daily Volume =   400 K
Chart = http://quote.yahoo.com/q?s=TQNT&d=3m 


LSI - LSI Logic $72.75 (+11.50)

LSI Logic designs and makes application-specific integrated
chips.  They offer a variety of products, however, their system-
on-a-chip(SOC) product combines the microprocessor, logic, and 
memory functions of an electronic system onto a single chip.
LSI's semiconductor business primarily manufactures and sells 
ASICs, which are semiconductors designed for a unique, customer-
specified application.  They have expanded their investment 
in the wireless and broadband communications market.  LSI's 
customers include computer manufacturers, as well as customers 
in the communications and consumer products industries.  

Thank you Intel.  INTC's earnings came in better than expected
and that set the stage for a rally in the Semiconductor sector.
Well, our new play actually got a little help from the tame CPI
report on Friday.  Even Alan Greenspan, unknowingly aided in the 
start of a  rally in the tech and chip sector.  Most investors
decided the Greenspan speech didn't sound that bad, and returned
the markets Friday with buy orders in hand.  LSI took off out of
the starting blocks and set a new 52-week high before the end 
of the session at $74.25.  The momentum behind Friday's move 
was strong with over 2.4 million shares changing hands.  LSI 
is scheduled to report earnings Jan 25th and we believe the 
momentum will continue.  Semiconductor growth is expected to 
post double digit returns in the fourth quarter, and 2000 could
be brighter for LSI and the semiconductor industry.  The broader 
markets will continue to be volatile, so it will be important to 
be patient and select your entry points carefully.  Technically, 
LSI has support at $72 and $70.  Should we see a pullback next 
week, a bounce off those areas would provide a good entry point 
for our new play.

A report out last Tuesday from AP, said PC prices will 
probably begin to rise, due to a chip shortage.  Not a good 
situation for the box makers, however the demand will probably 
continue to stay strong.  On the bright side, the chip shortage
is expected to not be remedied for about two years.  In other
news, analysts at Warburg Dillon Read, said demand remains 
strong across the Semiconductor industry and picked LSI as 
one of its top four picks for the first quarter of 2000.

BUY CALL FEB-65 LSI-BM OI=288 at $12.25 SL=9.63
BUY CALL FEB-70*LSI-BN OI=510 at $ 9.00 SL=6.75
BUY CALL FEB-75 LSI-BO OI=  1 at $ 6.25 SL=4.50

Picked on Jan 16th at    $72.75    P/E = 69
Change since picked       +0.00    52-week high=$74.25
Analysts Ratings     13-7-3-0-0    52-week low =$20.13
Last earnings 10/99   est= 0.30    actual= 0.35 surprise=+16.7%
Next earnings 01-25   est= 0.43    versus= 0.00
Average daily volume = 2.23 mln
Chart = http://quote.yahoo.com/q?s=LSI&d=3m


NTAP - Network Appliance Inc. $93.69 (+8.69) 

Their customer base is an impressive group of clients.  Names 
like Yahoo, AOL, Motorola, Siemens and the UK's #1 ISP Demon 
Internet depend on them daily.  Network Appliance uses its 
Netcache software and NetApp suite of network storage 
servers, or filers.  These products are designed for and provide
fast reliable cost effective service for Internet service 
providers, and corporate intranets.  NTAP's hi-powered ONTAP 
operating system allows simultaneous access by users from  
Windows, UNIX and Web platforms.  NTAP is located in Sunnyvale, 
Ca and competes against EMC, Sun Microsystems, Cisco Systems 
and Novell. 

Since its 2-for-1 split on Dec 21st, shares of NTAP are on 
the move again.  NTAP and the Networking sector had fallen 
prey to the sector rotation in the broader markets since the
first of the year.  The first week of the new year was rough
for many of the tech stocks at the Nasdaq.  NTAP traded down
to a low of $67.75 before investors decided enough was enough,
and began to bid the price higher.  Last Monday in what seemed
to be a group effort, many of the tech stocks began to see buyers
return to the market.  After a brief mid-week sell-off in what
has been described as a one or two day sector rotation, NTAP
and its brothers in the Networking sector, took off like a 
rocket Friday morning, with the release of the benign CPI report
and Thursday evening's speech by Alan Greenspan.   Investors
seem to be saying it's ok now, to jump back in the leading
technology issues.  INTC was the first major Tech to report 
earnings, and that also seemed to ignite the fire at the Nasdaq,
at least for the time being.  NTAP gained $7.97 Friday, on 
volume of 3.0 million shares.  NTAP made a new 52-week high at 
$95.25, and appears to be headed higher, given the strength and 
volume supporting the move.  There has been no company specific 
news or events supporting the move.  As for entering this new 
play, we would wait to see the mood of traders as they return
from the holiday weekend on Tuesday.  If we see some profit- 
taking early in the week, NTAP should find intraday support
at $92 and $90.  

Wednesday NTAP added another name to its long list of satisfied
clients.  Billserv.com, a leading electronic bill presentment 
and payment service bureau, announced it had supplemented its 
data center operation with NTAP storage and data management 
software solutions.  They also selected NTAP as their standard 
storage infrastructure vendor.  Add to that, a reiteration of a 
Strong Buy recommendation from Soundview, and a projected price 
target of $110 and we believe NTAP has had a great start to 
the new year.

BUY CALL FEB-80 NUL-BP OI=205 at $17.75 SL=14.00
BUY CALL FEB-85 NUL-BQ OI= 82 at $14.38 SL=11.38
BUY CALL FEB-90*NUL-BR OI=113 at $11.50 SL= 9.00
BUY CALL FEB-95 NUL-BS OI=380 at $ 8.75 SL= 6.50

Picked on Jan 16th at    $93.69    P/E = 311
Change since picked       +0.00    52-week high=$95.25
Analysts Ratings      8-5-1-0-0    52-week low =$19.06
Last earnings 11/99   est= 0.17    actual= 0.19 surprise=+10.0%
Next earnings 02-16   est= 0.11    versus= 0.06
Average daily volume = 1.48 mln
Chart = http://quote.yahoo.com/q?s=NTAP&d=3m


VIGN - Vignette Corporation $200.94 (+25.75)(+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.

With earnings season now in full swing, VIGN is giving us a very
nice run.  The company has still not released the actual date,
but says to expect earnings near the end of January.  The move
up, though volatile, paints a nice picture of higher-highs and
higher-lows.  After the strong move up late Thursday afternoon,
the momentum continued on Friday.  Volume this past week has
only been average, and we expect it to pick up as we get closer
to that nebulous earnings date.  VIGN has had large daily swings,
providing plenty of entry points, and opportunities for day
traders.  Support is building in the $193-194 area, and the lows
this week have created strong support at $175.  VIGN has traded
as high as $206 three times this week and this looks to be the
next resistance point to break through.  Either a strong move
through resistance or a convincing bounce off of support can be
considered as a point for opening new positions, but remember
your stops.  With the inherent volatility in this issue, you
don't want to be the last one standing when the music stops.

Tuesday brought more good news with Tara Long at CE Unterberg
Towbin reiterating her Strong Buy recommendation.  This, coming
on the heels of two other upgrades one week earlier is adding
fuel to the fire under VIGN.  Also on Tuesday, VIGN announced
the acquisition of Engine 5, Ltd., a pioneer in enterprise-wide
Java server technology. This further solidifies VIGN's
leadership position in the e-business applications market.

BUY CALL FEB-190 GGV-BR OI=207 at $31.13 SL=24.25
BUY CALL FEB-195*GGV-BS OI=102 at $28.63 SL=22.25
BUY CALL FEB-200 GGV-BT OI= 64 at $25.38 SL=19.75
BUY CALL FEB-210 GGV-BB OI= 89 at $21.50 SL=16.75

Picked on Dec 30th at   $163.75     P/E = N/A
Change since picked      +37.19     52-week high=$200.94
Analysts Ratings      9-4-0-0-0     52-week low =$19.91
Last earnings 10/99   est=-0.20     actual=-0.19
Next earnings N/A     est=-0.09     versus= N/A
Average Daily Volume = 1.33 mln
Chart = http://quote.yahoo.com/q?s=VIGN&d=3m


EXDS - Exodus Communications $106.00 (+18.88)

Though they don't like the term, they are frequently called 
"server farms".  Exodus is a leading provider of Internet systems 
and network management solutions for enterprises with mission-
critical Internet operations.  Exodus manages Internet Web sites 
and its network infrastructure from 16 Internet Data Centers 
located in the United States and Europe.  Exodus currently has 
IDCs located in the Austin, Boston, Chicago, London, Los Angeles 
(2), New York (2), Seattle (2), Silicon Valley (4) and 
Washington, D.C. (2) metropolitan areas.  Exodus added three 
additional IDCs and three international server hosting sites at 
the end of 1999, bringing the total number of Exodus sites to 22 

Nice gain for the week, but Friday wasn't so pretty.  Following 
Monday's blast off into new territory, the trading pattern became 
breakout in the morning, then descent through the close.  Of 
course, if you bought at the close, then sold at the open the 
next day, you did well.  Despite the gap and crap (can we say 
that on the Internet?), support moved up from $100 to $102.50 
to $105 throughout the week, and held well at $105 on Thursday 
and Friday, which should provide further support.  If nothing 
else, the 10-dma ($97.56) has provided support during 
consolidation phases, but has generally meant nothing to EXDS 
when it's on the move.  The mechanism for further increases?  
Earnings are scheduled on January 26, wherein EXDS could also 
announce another split.  The last announcement came when the 
shares traded at $108 on November 19, 1999 (It was effective 
December 15, 1999).  Here we are again.  Target-shoot to fit 
your risk profile or wait for the breakout over $110.

EXDS had a great week of "reiterations".  MSDW said Strong Buy.  
Jeffries and Co. maintained a Buy and increased their price 
target to $140, while BBRS reiterated Buy.  Legg Mason?  Buy.  
Wit Capital started them as a Buy the week before last too.  For 
those that are curious about EXDS's $44 mln purchase of KeyLabs, 
KeyLabs provides software and services to help customers develop 
and test sites to ensure that they work before they're 
introduced.  The Lindon, Utah-based company, founded in 1996, 
also tests and ranks the performance of competing companies' 
hardware and software. (bloomberg)

With high time value, consider using Jim's Covered Straddle 
strategy outlined in Options 101 from last Sunday.

BUY CALL FEB-100*DUB-BT OI=1818 at $17.75 SL=14.00
BUY CALL FEB-105 DUB-BA OI= 439 at $15.50 SL=12.00
BUY CALL FEB-110 DUB-BB OI= 796 at $13.38 SL=10.75
BUY CALL MAR-110 DUB-CB OI= 390 at $17.50 SL=13.75

SELL PUT FEB- 90 DUB-NR OI=  76 at $ 6.75 SL= 8.50
(See risks of selling puts in play legend)

Picked on Jan 11th at  $103.19     P/E = N/A
Change since picked      +2.81     52-week high=$116.50
Analysts Ratings    18-8-0-0-0     52-week low =$  6.88
Last earnings 10/99  est=-0.29     actual=-0.29
Next earnings 01-26  est=-0.19     versus=-0.13
Average Daily Volume = 3.7 mln
Chart = http://quote.yahoo.com/q?s=EXDS&d=3m


INTU - Intuit Inc $81.38 (+7.81)

Intuit develops and markets financial software products and 
related Web services.  Their flagship products are Quicken, 
the #1 personal finance program in the world, and TurboTax 
used for tax preparation.  Founder Scott Cook still has a 12% 
stake in the company.

Momentum is the name of the game for INTU.  Investors and 
analysts alike were impressed with the company's unveiling of a 
new Web service that allows small business to create its own 
Website and link up its accounting date.  For the first time 
small business can compete via the Net and at a relatively low 
cost with Intuit's QuickBooks Site Builder service.  In response 
to the news, INTU traded at almost four times its ADV and 
advanced an astonishing 29%, or $17.56 on January 5th.  Bear 
Stearns immediately began coverage with a Buy rating and issued 
an $80 price target.  ABN AMRO also endorsed Intuit with a 
reiteration of its Buy recommendation.  Founder and company 
executive, Scott Cook, was on the front lines that day too.  He 
was adamant that QuickBooks Site Builder "is the most exciting 
thing we've introduced in over a year" and " this is just part of 
a much-larger strategy, which is to become the largest hoster of 
small businesses".  We added INTU to our call list on Tuesday 
evening after watching INTU shatter resistance at $80 and tag 
the $90 mark on pure momentum the day before.  Falling into a 
typical pattern, old resistance at $80 has emerged as near-term 
support holding firm at the 5-dma (also $80).  The present level 
is a reasonable entry point into this momentum play, however 
target-shooting for an intraday bottom would, of course, be 
optimum.  Stay on your toes if you're playing interest-rate 
sensitive Internets.  Volatility is expected. 

Intuit announced on Monday its Quicken Mortgage online home 
lending service changed its name to Quicken Loans to reflect 
its expanded and direct lending capabilities.  The recent 
acquisition of Rock Financial Corp now allows prospective 
clients the ability to secure and close loans directly from 
the Website.  Also in the news this week, Intuit and Concentrex 
(CCTX) formed an alliance to bring TurboTax to the Web.  
Concentrex will market and provide the portal for its 5000 
financial institution clients to reach the TurboTax site.  
The major online retail and Internet related service sites such 
as Wal-mart.com and America Online (to name a few) will provide 
consumers the access to the electronic tax return filing 

BUY CALL FEB-80*IQU-BP OI=381 at $9.88 SL=7.50
BUY CALL FEB-85 IQU-BQ OI=241 at $7.75 SL=6.00
BUY CALL FEB-90 IQU-BR OI= 72 at $5.88 SL=4.25

Picked on Jan 11th at    $82.38    P/E = 44
Change since picked       -1.00    52-week high=$90.00
Analysts Ratings      5-9-1-0-0    52-week low =$22.50
Last earnings 11/99   est=-0.19    actual=-0.12
Next earnings 02-21   est= 0.46    versus= 0.45
Average Daily Volume = 3.26 mln
Chart = http://quote.yahoo.com/q?s=INTU&d=3m


GMST - Gemstar International $76.81 (+11.31)

Gemstar develops, markets and licenses proprietary 
technologies and systems aimed at making technology user-
friendly for consumers under the VCR Plus+ name.  Gemstar is 
a leading provider of electronic program guide services, which 
allow users to view a television program guide on screen, 
obtain details about a show, sort shows by themes or 
categories and select shows for tuning or recording, all 
through remote control.  Gemstar's primary source of revenues 
has been license fees paid by consumer electronics 
manufacturers and publications for the licensing of the VCR 
Plus+ technology and the right to print the PlusCode Numbers.

Gemstar began its most recent shining path to new heights back 
in December.  It began with every investor's favorite early 
Christmas present, a 2-for-1 split.  Not content in simply 
giving during the holidays, Gemstar was also the recipient of 
a cherished invitation into the NASDAQ 100.  Gemstar is one of 
only three foreign companies to be included in this exclusive 
club.  By being included in the QQQ, GMST shares were under 
immediate accumulation by Index investors.  The longer-term 
enthusiasm for GMST lies in the hopes that it will be the leader 
in developing interactive television and could became a brand 
name found in every home.  At the start of the millennium Gemstar 
developed a few occlusions as profit-takers took control of 
the stock and drove the share price back to $61.  We became 
interested in this stock as a call play last week when the 
downtrend was broken.  Leaders for the year are born this time 
of year and GMST seems poised to plow back into new high ground.  
The break above the down channel indicates that GMST may move up 
into the $90 level.  A bullish position around Friday's close 
could prove to be profitable.  Momentum investors are probably 
waiting for a new high above $79.50 before jumping on board.
New support has been established around $72 which might be a 
good entry point for the more patient investor.  Significant 
support exists in the low $60's.  

The most recent new analyst coverage for GMST occurred at the 
end of November when SG Cowan initiated a Strong Buy.  If GMST 
continues its strength, look for some new coverage.

BUY CALL FEB-70 GST-BN OI=1636 at $12.13 SL=9.50
BUY CALL FEB-75*GST-BO OI=4460 at $ 8.50 SL=6.50
BUY CALL FEB-80 GST-BP OI=1029 at $ 6.00 SL=4.25

SELL PUT JAN-75 GST-MO OI= 195 at $ 2.06 SL=3.75 High Risk!
(See risks of selling puts in play legend)

Picked on Jan 11th at    $70.63    P/E = 95
Change since picked       +6.19    52-week high=$79.50
Analysts Ratings      7-0-0-0-0    52-week low =$13.88
Last earnings 10/99   est= 0.09    actual= 0.09
Next earnings 02-15   est= 0.10    versus= 0.08
Average Daily Volume = 1.50 mln 
Chart = http://quote.yahoo.com/q?s=GMST&d=3m 


MSTR - MicroStrategy Inc. $227.94 (+17.56)(+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 has re-shaped itself into a cutting edge technology 
company.  Having announced in the past week the planned sale 
of its Water-Jel division the transformation is complete.
MSTR is in the very hot B2B field.  This industry could be 
one of the strongest for many years to come as businesses in 
general are spending tons to create efficiencies through the 
Internet and MSTR is ready, willing and able to help them do 
it.  After enjoying a huge run up, officers of MSTR have seen 
fit to split the stock 2-for-1 on the 26th of January.  If 
it was not for the cooling attitude for Internet stocks in 
general last week we figure that MSTR would be well on its way 
to new highs.  The sentiment needs to change soon for the 
stock to have a split run.  In the meantime MSTR is doing all 
it can to strengthen its client list.  Recent new clients 
include Ameritrade, Sybase and Dimension Data.  Technically, 
MSTR started the week in fantastic fashion, up over 41 points 
on Monday, only to slowly back down.  Intraday trading has 
established support around $215 and resistance at $233.  One 
could attempt to trade this range.  Look for a nice rally into 
the $250's if the stock can take out $233.  This stock really 
moves on small volume.  Please keep that in mind when 
evaluating your risk tolerance.  Also be careful trading 
options on this stock.  We have noticed some shockingly wide 
discrepancies in the option bid/ask spreads at the two 
exchanges that trade MSTR.  If you do not get the fill you 
think you deserve try moving the trade to the other exchange. 
It is recommended that you do not use market orders when 
trading options with small volume or open interest.

One of the reasons why MSTR rallied on Monday was because of 
the announcement that it had reached an agreement to develop 
a new wireless information channel with Primark.  MSTR is 
looking to build its corporate client base by advertising at 
the Super Bowl.  MSTR was also named by Fortune as one of the 
"Top 100 Best Places to Work".  Happy employees tend not to 
sell stock.

BUY CALL FEB-210 EUU-BB OI=25 at $41.25 SL=32.25
BUY CALL FEB-220 EUU-BD OI=39 at $36.50 SL=28.50
BUY CALL FEB-230*EUU-BF OI=50 at $31.00 SL=24.25

SELL PUT JAN-220 EUU-MD OI=50 at $12.63 SL=16.00 High Risk!
(See risks of selling puts in play legend)

Picked on Jan 9th at  $210.38    P/E = 811
Change since picked    +17.56    52-week high=$262.00
Analysts Ratings    5-3-1-0-0    52-week low =$ 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 =  346 K
Chart = http://quote.yahoo.com/q?s=MSTR&d=3m 

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The Option Investor Newsletter             1-16-2000  
Sunday                        4 of 5


MFNX - MetroMedia Fiber Network $57.13 (+9.00)

Buckets-O-Bits.  That's not a new dog food.  It's MetroMedia's 
business to send big batches of data down its fiber-optic 
network lines as a competitive local exchange carrier (CLEC).  
It operates its network in Chicago, Philadelphia, New York City 
and Washington, D.C. and interconnects its service areas through 
an agreement with Williams Communications.  It rents its fiber 
to customers, ISP's, other local and long distance carriers 
and wireless providers.  Racal is their partner between 
the U.S. and the U.K.  Metromedia also owns Abovenet, a recent 
acquisition (and competitor of Exodus Communications) in the 
hosting business.  Bell Atlantic owns 10% of the company and 
contracts with MFNX to use their network.

On December 19, MFNX was named for inclusion in the NASDAQ 100.  
Having encountered resistance at $45 until that date, MFNX 
finally broke out of the range on strong volume, but took a 
breather in early January, retesting for new support at $44.  
From there, it's moved over the last 2 weeks to its current 
$57.13.  Near-term support is now at $52 following Friday's 
breakout again to a new trading and closing high of $57.25.  
Volume of 3.8 mln shares traded handily beat the ADV of 2.8 mln 
shares by about 35%.  Volume has been steadily rising throughout 
the week and over the last 3 months.  Technically, MFNX is 
looking very strong, and they are scheduled to announce earnings 
in early February.  Though Zack's reports the unconfirmed date of 
February 7, MFNX has a bad habit of keeping investors in the dark 
as to the release date (except that it will likely be the first 
week in February), then releasing numbers in the middle of the 
trading day.  It's not followed by many analysts either, which 
makes estimates much less valuable.  Even so we will have a more 
firm date in the next update, assuming we get an answer from the 
company.  Speaking about "tough to track" information on this 
company, they have historically announced 2:1 splits in the $52-
$78 range.  Could we get another?  Perhaps, but get this.  The 
company reports only 180 mln shares authorized, yet 192 mln 
already issued - neat trick...we're trying to get a handle on 
that too.  Nonetheless, the company last week reported exceeding 
over $2 bln in contracts for the first time (total value, not 
annual revenue) and continues to lease out more capacity to other 
carriers.  To summarize, the play is technical, but partially 
driven by earnings.  Target shoot at support - no chasing.  
MFNX is an illusive animal.  Similar to a Tasmanian Devil, it 
can bite.

In the news, two individuals claim they are owed 15% of the 
company at a cost of $1000 (yes, thousand) stemming from a 1993 
agreement to find financing for the company prior to its 1997 
IPO.  They claim they introduced Stephen Garofalo, MFNX's CEO to 
an investor who took a stake in the company.  Last year, said 2 
individuals wrote their $1000 check to the company seeking their 
15% stake.  Yeah, right.  Don't get panicked out by the words 
"law suit" folks.  Their attorney couldn't explain the 4-year 
delay in making their demand either.

BUY CALL FEB-50 QFN-BJ OI=2049 at $ 9.63 SL=7.75
BUY CALL FEB-55*QFN-BK OI=1520 at $ 6.75 SL=5.00
BUY CALL FEB-60 QFN-BL OI=  70 at $ 4.25 SL=2.50
BUY CALL MAY-55 QFN-EK OI=5277 at $11.75 SL=9.25
BUY CALL MAY-60 QFN-EL OI=  24 at $ 9.63 SL=7.75

Picked on Jan 16th at   $57.13     P/E = N/A
Change since picked      +0.00     52-week high=$57.25
Analysts Ratings    18-8-0-0-0     52-week low =$17.38
Last earnings 11/99  est=-0.12     actual=-0.16 Surprise=-33%
Next earnings 02-07  est=-0.26     versus= 0.00
Average Daily Volume = 2.8 mln
Chart = http://quote.yahoo.com/q?s=LVLT&d=3m


ANAD - Anadigics Inc $73.00 (+25.56)

Anadigics designs and manufactures radio frequency and microwave 
gallium arsenide integrated circuits (IC).  These circuits 
are sold to communications equipment makers in the broadband, 
direct satellite, fiber-optic and wireless communications 
markets.  Ericsson, Motorola, and Qualcomm account for about 
60% of total sales.

Momentum is propelling ANAD upward at an ever-increasing pace. 
Take a look at a ten-day chart for confirmation.  The visual is 
crystal-clear.  Last Friday a Strong Buy reiteration and $56 
price target from Needham & Co lit a fire under ANAD.  On Monday 
the stock broke through the stubborn resistance at the $50 mark 
on positive company news.  Anadigics announced a $10 mln 
expansion to its state-of-the-art 6-inch production facility in 
response to the growing demand for its wireless and broadband 
products.  According to Dr. Bami Bastani, President & CEO, "this 
manufacturing expansion plan positions ANADIGICS with the 
necessary capacity to serve our customers and is consistent with 
our 2000 year-end projected growth rates in these markets".  
Investors also realized the bottom-line potential and have 
subsequently bid up ANAD $25.56, or 53.9%!  On Friday ANAD not 
only advanced a respectable $7, but also closed smack on its 
intraday high.  Quite a bullish sentiment for any stock.  But 
because of the rapid run-up it's difficult to determine a short-
term support level, however $70 held firm as intraday support 
on Friday.  Next would be $66, then the $60 to $62 range in the 
proximity of the 5-dma ($61.53).  There are just two weeks to 
play this momentum run as the company is confirmed to report 
earnings on January 28th, before the bell.  This event should 
significantly increase the intensity of the play so you may 
have to look intraday for an entry point. 

ANAD is not without the analysts' backing.  Earlier in the week 
Adams, Harkness and Hill upgraded ANAD to a Strong Buy from 
Accumulate.  Then on Thursday Needham & Co repeated its Strong 
Buy recommendation for ANAD.  

***Note: The rapid run-up has resulted in new strikes on the 
option contracts and thus, the absence of Open Interest (OI)***

BUY CALL FEB-60*DQA-BL OI=2 at $16.25 SL=12.75
BUY CALL FEB-65 DQA-BM OI=0 at $12.88 SL=10.50
BUY CALL FEB-70 DQA-BN OI=0 at $10.13 SL= 7.75

Picked on Jan 13th at   $66.00    P/E = -181
Change since picked      +7.00    52-week high=$73.00
Analysts Ratings     3-2-1-0-0    52-week low =$11.19
Last earnings 10/99  est= 0.10    actual= 0.15
Next earnings 01-28  est= 0.16    versus=-0.01
Average Daily Volume =   391 K
Chart = http://quote.yahoo.com/q?s=ANAD&d=3m


CMVT - Comverse Technology $148.31 (+9.31)(-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.

It looks like CMVT may have found its way again.  Throughout
the volatile trading that commenced on January 4th, we saw this
issue subjected to the same wild price swings as the NASDAQ.
Now that the economic reports are out, CMVT investors can get
back to focusing on the strength of CMVT in its market. 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.  Still showing weakness early in the week, CMVT
put in a bottom near $132 early on Wednesday, and has marched up
steadily since then.  Now solidly above its 10-dma (currently
$140), it could be setting up to make a run at its 52-week high
at $155.88.  Volume was light throughout the week, and given
the gains over the past 3 days, we would like to see more buying
interest to confirm the move.  Enter new positions on continuing
strength or on any bounce from support near $140.  CMVT is not
for the risk-averse, and with the volatility likely to continue,
keep your stops in place.

The jury is still out on when CMVT will announce a split.
Recall that it has been a split candidate since October when
the company increased the number of shares and the CEO said a
split would be coming in a matter of weeks or months.

BUY CALL FEB-145 CQV-BI OI=161 at $ 9.00 SL= 6.75
BUY CALL FEB-150*CQV-BJ OI= 90 at $ 6.00 SL= 4.25
BUY CALL FEB-155 CQV-BK OI= 25 at $ 4.38 SL= 2.75
BUY CALL APR-155 CQZ-DK OI= 39 at $13.63 SL=11.00

Picked on Jan 9th at    $139.00     P/E = 70
Change since picked       +9.31     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= 0.56     versus= 0.44
Average Daily Volume = 1.35 mln
Chart = http://quote.yahoo.com/q?s=CMVT&d=3m


NOK - Nokia $184.06 (+13.06)(-20.06)(+6.00)(+5.50)(P5W +52.63)

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.  

That's more like it.  Looks like NOK finally got a break over 
$180 and held.  We'd be a lot more convinced though if volume 
existed to back it up - only 76% of the ADV traded on Friday and 
roughly that same figure earlier in the week too.  If the market 
gets rough again, it may not last long.  Nonetheless, a gain is 
a gain; we'll take it.  Fund managers know the story, and after 
9 weeks on the play list you probably do to.  But for those just 
joining us, NOK announced in late November that they would meet 
their three-year sales objective in two years (secret code for 
50% revenue growth rate), while reporting to the Street that they 
should revise revenue estimates from 25-35% up to 30-40%.  Not 
only that, they reported demand for their Internet capable phone 
was exceeding even their lofty projections.  Anybody see an 
earnings surprise here?  The magic date is February 1 after 
the close, wherein they could also announce a split too.  
Historically, NOK has split its shares at around $150.  Support 
is still strong at $170.  If the "old resistance equals new 
support" rule holds, look for support at $175.  The nearest 
resistance is $189.  We suggest you consider target shooting if 
NOK continues to range trade.  Otherwise take a position at any 
intraday dip if the volume and price accelerate into the earnings 

If you are at all concerned that Motorola's recent success in the 
handset business is happening at NOK's expense (NOK usurped the 
number one spot from MOT in 1998), fear not.  "They are taking 
market share, not at Nokia's expense, but others," said Brian 
Modoff, a Deutsche Banc Alex Brown analyst.  Here's the probable 
source of NOK's $6 gain on Friday: NOK announced they had inked 
a "memorandum of understanding" to jointly develop Internet 
access for mobile phone users in China.

BUY CALL FEB-175 NZY-BO OI= 971 at $19.00 SL=14.75
BUY CALL FEB-180*NZY-BP OI=1249 at $16.50 SL=13.00
BUY CALL FEB-185 NZY-BQ OI= 438 at $14.50 SL=11.00
BUY CALL FEB-190 NZY-BR OI=1848 at $12.00 SL= 9.50

Picked on Nov 14th at  $122.25     P/E = 81
Change since picked     +61.81     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 = 3.5 mln 
Chart = http://quote.yahoo.com/q?s=NOK&d=3m


JDSU - JDS Uniphase $192.81 (+12.25)(+7.75)

Here's another company laying around on paradigm beach ready 
to surf the next wave.  Uniphase Corporation is a fully 
integrated optical electronics company that designs, develops, 
manufactures and markets fiber optic telecommunications 
components and modules and laser subsystems.  The Company's 
telecommunications products include semiconductor lasers, 
high-speed external modulators, transmitters, fiber Bragg 
gratings and optical modules for fiber optic networks in the 
telecommunications and cable television industries.  Based in 
the Silicon Valley, California, they employ approximately 6260 
people worldwide.  

As we've said before, "Dear God, please let there be one more 
company like Intel to invest in, and I promise not to mess it up 
this time".  Effectively they do for light what Intel does for 
electrons and is the largest arms merchant in the optical 
networking wars.  JDSU announced another 2:1 split 3 days 
following its last split, which will become effective on March 
10, assuming the shareholders approve an increase in the number 
of authorized shares from 600 mln to 3 bln on February 25.  But 
this isn't the reason for the play.  The earnings date however, 
is driving the play.  The announcement is scheduled for January 
26.  If ETEK's 18% surprise last Monday was any indication, 
earnings should exceed the street estimate by a significant 
amount.  Sorry, we have no whisper number.  If you need further 
evidence, just note that Lehman Brothers raised its estimate on 
Cymer (a laser/semiconductor manufacturer) due to potential 
upside following conversations with Cymer's customers, 
competitors and suppliers (Cockroach theory play - where there is 
one, there are many).  JDSU's CEO, Kevin Kalkhoven figures that 
they need to double capacity for the next two years just to meet 
demand.  Even so, they can't produce fast enough.  Thus it 
becomes an execution-focused business rather than demand-focused.  
JDSU is the biggest and most integrated in the business, which 
all but assures continued future orders.  Support is firm at 
$180, but getting stronger at $185.  Volume has tapered down a 
bit, but still consistently 35-65% above the ADV of 4.6 mln 
shares.  Target shoot to your level of comfort.  Otherwise buy an 
intraday dip if the market, volume and price start to move north.  
Resistance is at $197 and $210.

George Gilder's Technology Newsletter was posted yesterday, and 
true to history, he had comments on JDSU.  "JDSU consolidates its 
position as the Intel of the Telecoms with a breadth and depth 
even its elite competitors cannot challenge".  That sounds good.  
Furthermore, there is a rumor that JDSU will be added to the S&P 
500.  If ultimately true, index funds would be in the position of 
having to buy it to accurately reflect the index.  That means 
increased volume and rising prices as the action occurs.  Needham 
and Company reiterated its Strong buy rating on Thursday too.  
Anybody ever heard of Griffiths McBurney?  Neither have we, but 
they have reiterated their Reduce rating and issued a price 
target of $68.  Suppose these guys are short the shares, or that 
they don't want to do any future underwriting of JDSU?

Limited resources and oh so many ways to play!  Consider the 
Covered Straddle from last Sunday's "Options 101" 
portion of the newsletter (naked puts too).  

BUY CALL FEB-180 XXZ-BP OI= 783 at $32.38 SL=25.25
BUY CALL FEB-190*UCQ-BR OI=1029 at $27.63 SL=21.55
BUY CALL FEB-200 UCQ-BT OI=1925 at $23.63 SL=18.50
BUY CALL MAR-200 UCQ-CT OI=1977 at $31.25 SL=24.50

SELL PUT FEB-160 XXZ-NL OI=1415 at $10.13 SL=12.75
(See risks of selling puts in play legend)

Picked on Jan 13th at  $187.69    P/E = N/A
Change since picked      +4.50    52-week high=$210.75
Analysts Ratings   13-13-0-0-0    52-week low =$ 14.81
Last earnings 10/99  est= 0.25    actual= 0.29 surprise=16%
Next earnings 01-26  est=  N/A    versus= 0.07
Average Daily Volume = 4.5 mln
Chart = http://quote.yahoo.com/q?s=JDSU&d=3m


Rotation seemed to be the key word for the week.  Monday's 
news of the AOL-Time Warner merger set the tone for the week,
until investors really began to dissect the deal, puzzled 
over how to value the merger.  Investors headed for financial,
cyclical and drug stocks to send the Dow to three record 
highs this week.  The Nasdaq gained 4.7% for the week.  
Friday's surge came on the heels of a tame CPI report and 
the Intel's better than expected earnings.  The Nasdaq 
climbed 107 points Friday, to close the week at 4064, just
5 points from where it started the year.  Overall our LEAP
plays maintained a good performance for the week.  The major
indices performed very well, but we need to point of the
ending number for the VIX.  The VIX fell like a rock Friday
ending the day and the week at 21.05.  The VIX is approaching
a low not seen since early December, which would indicate
the broader markets are nearing a period of retracement or at
least a consolidation.  If we get a pullback and the VIX 
rises, it could a great buying opportunity for more LEAPS, 
but for the VIX to rise or you will be paying a high premium.  

Current Plays


EMC     11/07/99  JAN-2001 $80  ZOH-AP at $44.75   $15.38  190.96%
                  JAN-2002 $90  WUE-AR at $48.00   $19.00  152.63%
GPS     11/07/99  JAN-2001 $40  ZGS-AH at $15.00   $ 5.75  160.87%
                  JAN-2002 $45  WGS-AI at $16.88   $ 7.88  114.21%
IBM     11/07/99  JAN-2001 $100 ZIB-AT at $32.50   $13.63  138.45%
                  JAN-2002 $110 WIB-AB at $35.75   $16.50  116.67%
CSCO    11/14/99  JAN-2001 $80  ZCY-AP at $38.00   $19.13   98.65%
                  JAN-2002 $90  WIV-AR at $40.63   $22.00   84.68%
SLR     11/14/99  JAN-2001 $85  ZSR-AQ at $18.75   $21.75  -13.79%
GE      11/21/99  JAN-2001 $150 ZGR-AU at $25.25   $16.25   55.38%
                  JAN-2002 $150 WGE-AU at $35.75   $25.50   40.20%
NT      11/28/99  JAN-2001 $75  ZOO-AO at $34.13   $22.25   53.39%
                  JAN-2002 $75  WNT-AO at $42.13   $30.25   39.27%
VOD     12/05/99  JAN-2001 $50  ZAT-AJ at $13.13   $10.75   22.14%
                  JAN-2002 $50  WHV-AJ at $17.63   $15.00   17.53%
KM      12/05/99  JAN-2001 $10  ZKM-AB at $ 2.69   $ 2.50    7.60%
                  JAN-2002 $15  WKM-AC at $ 1.94   $ 1.75   10.86%
ADBE    12/12/99  JAN-2001 $65  ZAE-AM at $16.25   $15.00    8.33%
                  JAN-2002 $70  WAE-AN at $21.25   $20.38    3.91%
TXN     12/12/99  JAN-2001 $110 ZTN-AB at $23.50   $22.25    5.56%
                  JAN-2002 $120 WGZ-AD at $29.25   $28.50    2.63%
NXTL    12/19/99  JAN-2001 $90  ZFU-AR at $34.00   $23.50   44.69%
                  JAN-2002 $100 WFU-AT at $39.38   $27.25   44.51%
SUNW    12/19/99  JAN-2001 $80  ZJX-AP at $20.88   $17.63   18.44%
                  JAN-2002 $90  WJX-AR at $25.88   $22.00   17.64%
AOL     12/23/99  JAN-2001 $90  ZKS-AR at $ 8.88   $20.13  -58.37% 
                  JAN-2002 $100 WAN-AT at $13.50   $25.63  -47.33%
LU      11/14/99  JAN-2001 $80  ZEU-AP at $ 4.75   $12.88  -65.06%
                  JAN-2002 $90  WEU-AR at $ 8.38   $16.13  -48.05%
        01/09/00  JAN-2001 $50  ZEU-AJ at $13.88   $13.63    1.83%
GTW     11/21/99  JAN-2001 $90  ZWB-AR at $ 7.13   $17.75  -59.83%
                  JAN-2002 $100 WGB-AT at $11.38   $22.50  -49.42%
        01/09/00  JAN-2001 $60  ZWB-AL at $15.75   $15.88  - 0.78%
MOT     01/09/00  JAN-2001 $125 ZMA-AE at $46.00   $31.13   47.77%
                  JAN-2002 $125 WMA-AE at $57.13   $41.50   37.66%
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

CY - Cypress Semiconductor $37.06

Cypress Semiconductor had a great week.  CY started off
strong and ended the week in the same fashion.  Tuesday
analyst's at Warburg Dillion Read said that they expect
demand in the Semiconductor industry to remain strong, and
they expect most of the companies they follow to meet or
exceed fourth-quarter estimates.  They also indicated 
continued demand and stable pricing would lift 2000 chip
industry growth over 1999.  Their top four picks four the
first quarter of 2000 include, ATML, LSI, MIPS and the 
latest addition to our LEAP portfolio, CY.  On the news CY 
gained +4.69 Tuesday.  By Friday CY had hit a new 52-week 
high at $37.75 and would appear to be ready to continue 
higher.  The analysts like CY, with Gruntal reiterating a 
short-term Outperform rating Tuesday as well.  Merrill Lynch 
reiterated their Buy rating as well, citing the acquisition 
of SRAM Co.  CY is scheduled to report earnings January 25th 
before the open.  Analysts estimates are for CY to report 
$0.29 EPS, compared to $-0.04 for the same period last year.  
CY could be an explosive play and a great addition to our

BUY LEAP JAN-2001 $40.00 ZSY-AH at $ 9.13
BUY LEAP JAN-2002 $40.00 WSY-AH at $12.63



WMT $64.50 Wal-Mart provided us with a good opportunity to
profit from our LEAP position in the last two months.  We 
are going to let the retailing giant go for now.  WMT hit 
a new high in late December and was the subject of profit-
taking going into the first week of the year.  We had a bit 
of a rebound and had been consolidating until Friday.  
Friday morning, the discounter announced David Glass, the 
company's CEO, would step down, immediately.  Glass had been
with the company since 1976 and took over from founder Sam 
Walton in 1988.  Investors took this news as an opportunity 
to sell, and shares of WMT dropped through an intraday level 
of support at $65.13.  WMT finished the session down only 
$-0.63, but does appear to be headed lower.  We will keep 
our eye on WMT for new opportunities to buy LEAPS.


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.


ISLD - Digital Island, Inc. $77.13 (-16.50)

Digital Island is a provider of network services to enable 
locally relevant customer experiences.  Digital Island's 
services include global content delivery and hosting, unique 
application services, and a reliable Intelligent Network, all 
of which deliver the right content to the right customer, in 
the right market, at the right time.  The Company has regional 
Data Centers in New York, Santa Clara, Honolulu, Hong Kong, 
and London, connecting directly into 21 countries, with Local 
Content Managers in 11 markets worldwide. 

ISLD made an attempt at a positive day on Friday, but just 
couldn't manage to pull it off.  ISLD gapped up to open at $82 
and quickly fell to spend the majority of the session dancing 
along $80.  Finally, ISLD's dancing feet wore out and ISLD made 
another move down to close pennies over $77.  This is the perfect 
kind of relative strength that we like to see out of put plays.  
In fact, days like Friday are a gift, as they yield room for 
entry points.  The strong open followed by the continual drifting 
lower is a good sign that the selling is still in tact.  We now 
have two consecutive closes below $80, which is a good indication 
that $80 is going to continue to serve more as resistance than 
support.  Worst case, ISLD looks to have additional resistance 
right around the $85 level.  Any confirmed move over this level 
would signal an end to our play so set your stops accordingly.  
As far as support goes, we still are looking at roughly another 
$7.50 to close the gap back to $69 from the huge move up back 
in December after the alliance with SUNW and INKT.  

BUY PUT FEB-85 SUH-NQ OI=353 at $18.75 SL=14.50
BUY PUT FEB-80 SUH-NP OI=  0 at $15.38 SL=12.00 Wait for OI

Average Daily Volume = 1.86 mln
Chart = http://quote.yahoo.com/q?s=ISLD&d=3m


CHINA - China.com $77.50 (+1.00)(-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 did not really even bother trying to breakthrough $80 
on Friday.  Though CHINA did manage to gain a dollar, we were 
not too impressed being that the NASDAQ was up over 100 points.  
CHINA has been demonstrating some weak relative strength 
lately.  CHINA did not even manage to trade half of the average 
daily volume on Friday.  We are still looking for CHINA to drop 
below $75 and then we could be cleared for a nice fall.  CHINA's 
10-dma is hovering just below $70, which may provide some support 
as well.  We are definitely seeing CHINA tag lower highs on a 
seemingly daily basis.  As the intraday trading ranges have been 
narrowing a bit, we believe that we are merely seeing CHINA do 
a bit of consolidating in preparation for further decline.  Of 
course, confirm direction before entering.  Watch for $80 to 
hold as resistance and look for a drop through $75.  CHINA's 
lack of participation in the recent up days in the market, may 
still be a result of pressure from the end of its lock-up 
period on January 8th.  CHINA may also continue to struggle 
as more and more competition emerges.  Many companies are trying 
to establish a strong Chinese presence. 

BUY PUT FEB-80 UIH-NP OI=80 at $14.38 SL=11.50
BUY PUT FEB-75*UIH-NO OI=86 at $11.75 SL= 9.25

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


WCOM - MCI WorldCom, Inc. $46.56 (-0.63)(-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.

Survey said?  Entry Point!  The question we posed on Thursday,
after seeing WCOM recover from a low of $40.75 was, "Has WCOM
found a bottom or is this a good entry point?".  The answer
was clear by the close on Friday, as WCOM opened up at $49 and
slid downhill all day for a loss of $2.94 from the high of the
day.  Volume was still heavy at more than double the ADV,
indicating the weakness we have been focusing on is alive and
well.  The source of that weakness is the seemingly endless
saga of the merger with Sprint.  Adding further downside
pressure is the announcement by AT&T on Thursday that they
are lowering their key long-distance rate, a move WCOM will
have to counter.  This will continue to pressure the company's
revenues and therefore the stock price.  Look to enter new
positions on continued weakness or a bounce off of the 10-dma,
now at $47.50.  Selling volume has been strong throughout this
drop, so confirm that it continues to support any continuation
of the downward move 

The latest salvo in the battle between the local phone companies
and the large Telecoms was launched on Friday.  In response to
the AOL and Time Warner merger, the Small Business Survival
Committee is urging Congress to reject legislation currently
before the House of Representatives. The bill would grant 
local phone monopolies an exemption from the 1996 Federal
Telecommunications Act, which prevents them from offering
long-distance service to their local phone customers.  Also 
on Friday, WCOM was named as the 'unnamed creditor' that has 
agreed to swap part of a $30 million for a 19 percent stake 
in Able Telecom, a builder of communications networks. 

BUY PUT FEB-50 LDQ-NJ OI=1377 at $5.25 SL=3.50
BUY PUT FEB-45*LDQ-NI OI=4543 at $2.50 SL=1.25
BUY PUT MAR-50 LDQ-OJ OI=1051 at $6.00 SL=4.25
BUY PUT MAR-45 LDQ-OI OI=4219 at $3.38 SL=1.75

Average Daily Volume = 14.24 mln
Chart = http://quote.yahoo.com/q?s=WCOM&d=3m


SBC - SBC Communications $41.94 (-2.19)

Since purchasing Ameritech, SBC Communications became the #1 
local phone company in the U.S.  SBC has more than 10 million
wireless phone subscribers in 22 states.  They operate nearly
60 million access lines throughout the country.  SBC has 
Internet access and paging businesses, and stakes in telecom
operations, in 22 countries outside the U.S.  They have invested
in Williams Communications, a national fiber-optic network 
company, which will allow them to enter the long distance 
arena when the time comes.  

We added our put play on SBC Thursday and we've chosen to keep
it for few more days.  SBC jumped up $1.13 up during Friday's 
session.  That's not that surprising given it had fallen over
10% for the week.  SBC is the kind of stock that will get in 
a trend, up or down, and maintain the direction for a time.  
It's not a big mover, but can certainly provide wonderful 
opportunities.  The move up Friday may be the beginning of
a bounce up to resistance levels near $42 or $44, followed 
by a continuation of the current downtrend.  The other possibility
is the communications company is attempting to put in a bottom
in the $40 area.  Honestly, we won't know for sure until we
see the strength behind any further moves higher.  SBC reports
earnings Jan 25th before the open, and we could see some strength
from folks that believe they will handily beat analysts estimates.
Analysts are looking for earnings to come in at $0.54 compared to 
$0.50 for the same period a year ago.  We are not suggesting 
you ignore this play.  We do however believe you should exercise
caution and confirm any moves down with volume, prior to placing
an order.  A decline from the resistance levels could provide a
great entry point for this play, but we would like to see it
accompanied by better than average volume, when placing an 

In a strange way SBC, could have become a part of the ongoing 
Vodafone - Mannesman battle on Friday.  Mannesmann CEO, Klaus
Esser, said they may float their Internet business to realize a 
growth potential greater than anything VOD could offer.  Esser
indicated they may fight the VOD hostile takeover offer, with
an Internet IPO and mentioned the names of SBC, WCOM or BEL
as firms they would cooperate with in a potential venture.

BUY PUT FEB-45*SBC-NI OI=441 at $4.50 SL=2.75
BUY PUT FEB-40 SBC-NH OI=249 at $1.56 SL=0.50

Average daily volume = 5.51 mln
Chart = http://quote.yahoo.com/q?s=SBC&d=3m


FD - Federated Department Stores $47.88 (-2.94)

Federated Department Stores, Inc. is the nation's largest 
operator of department stores, located in all major regions
of the United States.  Federated operates 403 department 
stores in 33 states as of January 1, 2000.  Additionally, 
in March of 1999 Federated acquired Fingerhut, which together 
with Bloomingdale's By Mail, Macy's By Mail, Macys.Com and 
certain other direct marketing activities comprises its 
direct-to-customer businesses. 

In an effort to reinforce their online units, FD announced 
on Friday that they planned to double their Internet related 
spending.  The estimated amount that FD plans to spend will 
be an approximate $150-$200 million.  Though FD tried to 
reassure investors that the added investment should not affect
earnings, FD shares fell on the news, breaking through a good 
deal of support including its 10-dma of $50.  This decline was 
backed by roughly four times the average daily volume.  
Obviously, investors were not too excited about the announcement 
and decided not to wait around to see if the company was right 
about the news not impacting earnings.  FD did manage a bounce 
off of its 50-dma at $46 and we would like to see a breakthrough 
of this level before entering any new positions.  FD's 100-dma 
could play back up at $45 as well.  FD has additional support 
at $42 and $39.  FD has resistance between $48 and $50.  Look 
for this level to hold.  Being that the news is just starting 
to hit the wires, we think that investor concern will continue 
to plague the shares.  Of course, the news may have been 
overblown and the stock could recover so it is important to 
confirm the "mood" and direction of FD before initiating a new 
play.  FD is scheduled to announce earnings on February 9th 
(we will confirm this date next week) and we think it is quite 
possible that this recent news will play a negative role as 
we approach the announcement.  

BUY PUT FEB-50 FD-NJ OI= 33 at $4.25 SL=2.50 low OI
BUY PUT FEB-45*FD-NI OI=550 at $1.75 SL=0.75

Average Daily Volume = 1.13 mln
Chart = http://quote.yahoo.com/q?s=FD&d=3m


ICGE - Internet Capital Group $133.50 (-40.38 this week)

Internet Capital Group is an Internet holding company actively 
engaged in business-to-business e-commerce through a network
of Partner Companies.  It provides operational assistance, 
capital support, industry expertise, and a strategic network 
of business relationships intended to maximize the long-term 
market potential of more than 45 business-to-business 
e-commerce partner companies. 

ICGE made a big run up mid-late December.  Problem is they were
just following the heels of CMGI and good market conditions.  
Let's look at what happened.  CMGI was initiated by Merrill
Lynch predicting a high target price.  ICGE gets initiated with 
a Market Outperform by Goldman Sachs.  At the same time the 
Fed's announce they are leaving short-term interest rates 
alone.  So the Nasdaq gets a big boost.  ICGE made a big run 
up based on all these factors.  At one point, ICGE went as 
high as $210.  Finally reality is sinking in and traders are 
realizing that ICGE is overvalued.  Even with the Nasdaq closing
high on Friday, ICGE closed down.  Support at $134 has been 
holding since Wednesday, but that doesn't say a lot considering 
the overall markets rise.  Any bounce back into resistance 
should be considered as a good point to jump in and ride the 
downward fall.  The 50-dma is at $120 which could hold ICGE at 
that price for awhile since 50-dma usually gives better support.  
If ICGE breaks through the 50-dma of $120, the next stopping 
point for ICGE may be as low as $100.  That is more ICGE's price 
range, valuation-wise.  ICGE really doesn't have anything going 
for them to hold them at these high prices.  Like we said, 
people are realizing their run was due to market conditions 
and CMGI's own run.  

BUY PUT FEB-135 EUG-NG OI=  46 at $19.88 SL=15.50 low OI
BUY PUT FEB-130*EUG-NF OI=1203 at $16.75 SL=12.50

Average Daily Volume = 4.35 mln
Chart = http://quote.yahoo.com/q?s=ICGE&d=3m


IIJI - Internet Initiative Japan $85.50 (-11.50)

Founded in 1992, IIJI offers a comprehensive range of Internet 
access services and Internet-related services to customers, 
including corporations and other Internet service providers, 
in Japan.  IIJI offers its services via one of the largest 
Internet network backbones in Japan as well as between Japan 
and the United States.

IIJI IPO'd on August 4th at $23.75.  Just over one month later, 
it was trading in the $80-$90 neighborhood.  In October, IIJI 
came back to test a $40 support level, moved up a bit to build 
more of a base around $48 and then took off.  After spending 
some time back in the old neighborhood (the $80-$90 range), 
traders took the Initiative and traded it as high as $132.81.  
Then we saw the volume pick up and it looked as though many of 
the investors that had been along for the ride decided it might 
just be time to hop off.  IIJI then began to roll over which 
brings us to our put play.  Previously, when IIJI traded around 
the $80 level, it had quite a bit of moving average support 
backing it.  Right now, IIJI is trading under all of its dmas 
with the exception of its 100, which is down at $76.50.  At 
this point, we are looking for a fall to $80 and though IIJI 
may flirt around here for a bit, we think it could continue 
to fall beyond that level as well.  IIJI looks to have some 
support right around $66.  Resistance looks to be right around 
$90 and $95 with additional backing at $100, and $110.  Volume 
has been consistently backing IIJI's decline, which is a nice 
bearish indication in support of our put play.  IIJI generally 
offers some pretty wide intra-day trading ranges so try and use 
these to your advantage for points of new entry.  IIJI does have 
a history of closing toward the low end of its session, so you 
may want to target shoot your way in on the earlier part of the 
day.  Be sure to keep your stops tight, particularly around $80 
to protect your profits against a bounce.    

BUY PUT FEB-80*IUJ-NP OI=42 at $10.25 SL=7.75
BUY PUT FEB-75 IUJ-NO OI= 9 at $ 7.75 SL=6.00

Average Daily Volume = 536 K
Chart = http://quote.yahoo.com/q?s=IIJI&d=3m


CMGI - CMG Information Services Inc $121.94 (-15.56)

CMGI invests in, develops, and integrates advanced Internet, 
interactive, and database management technologies.  The 
company's venture capital arm is called @Ventures and boasts a 
portfolio of over 30 Internet companies such as Lycos and Raging 
Bull.  One of the more prominent additions to its portfolio is a 
83% acquisition of the search engine, Alta Vista.  The majority 
of CMGI's revenues (80%) is derived from fulfillment and mailing 
list services.  

Doctor, the diagnosis please?  Post-split blues in its classic 
form.  The broad interest-rate concerns and profit-taking kicked 
off the depression earlier in the week foreshadowing the 
inevitable 2:1 stock split on Wednesday.  The completion of the 
stock-for-stock acquisitions of Adforce, an online ad management 
and delivery service company and of Flycast Communications, an 
online direct marketing company, this week didn't seem to help 
the situation.  Under the terms, CMGI will issue .524 shares of 
common stock for every share of AdForce held on January 11, 2000 
and in respect to Flycast, CMGI will issue .9476 shares of 
common stock for every share of Flycast held on January 13th. 
The volume during the ensuing sell-off was unwavering and 
sometimes reached levels triple the ADV.  Three technical 
indicators: the Momentum, MACD, and Stochastic are red-flagged 
pointing south and CMGI is now precariously perched on its 30-
dma ($121.83), a technical point it hasn't seen in months.  I 
say precariously because this price level has acted as bottom 
support recently and honestly, we'd be more comfortable seeing 
the stock slip under this mark.  Yet considering the 
extraordinary gains CMGI has made since mid-November, it's not 
unthinkable for CMGI to retrace 50% back towards the 50-dma 
($97.52).  Simply be patient for further confirmation before 
beginning a new play.  This play has potential.  

BUY PUT FEB-125 GCD-NE OI=1117 at $17.00 SL=13.25
BUY PUT FEB-120*GCD-ND OI= 728 at $14.25 SL=11.25
BUY PUT FEB-115 GCD-NC OI= 239 at $11.88 SL= 9.50

Average Daily Volume = 5.41 mln
Chart = http://quote.yahoo.com/q?s=CMGI&d=3m

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The Option Investor Newsletter             1-16-2000  
Sunday                        5 of 5


Success Basics: The Value of Position Management...

One of the major attributes of successful option traders is their
emphasis on money management principles. The philosophy behind a
precise and orderly administration of financial issues extends to
many other facets of everyday life. Studies of professional
gambling suggest that methodical execution of proven techniques
can shift the odds up to 90% in the player's favor. Unfortunately,
many of the same difficulties that face the speculator are often
found in the realm of investing.

Successful position management is inherently linked to a number of
common axioms that you will hear in stock market rhetoric. Phrases
like "trade with the trend", "keep losses small", "let the winners
run" and "planning and patience produces profits" are all excellent
counsel, provided you have the ability to implement the techniques.
In simple practice, money management means never risking more than
you can afford to lose in any trade. A small percentage (10%-15%
is common) of your trading capital is the most you should devote 
to any one position. Professionals commonly use lower figures but 
for small accounts and more aggressive traders, a 10% maximum would
be appropriate for all but the most conservative positions. For 
novice investors, there are some instances when even that amount 
is more than the suitable risk level for a specific trade.

After you have selected a potential candidate and the theoretically
correct strategy, you must calculate the amount of potential loss
and determine the initial profit target and shortfall allowance. In
most cases, you'll be able to use technical indicators to establish
the appropriate exits but in other instances you may have to limit
the position risk to a percentage of the initial investment, or to
some other arbitrary (maximum) amount. All of these principles have
one goal in common; the preservation of capital when your forecasts
are less than accurate.

One of the most common failures of novice traders is improper entry
timing and incorrect placement of stop-losses. The majority of poor
trades begin when a position is opened near the peak of a short term
movement. When the inevitable consolidation occurs, the trader has 
no alternative but to exit the trade as the loss limits are exceeded.
In contrast, the overly conservative investor is far too protective
with his entry orders and often ends up on the sidelines when the 
issue makes a substantial move. Another frequent problem is the 
tendency to place stops too tight on a favorably trending issue, 
causing the position to be closed-out long before the optimal return
is achieved. Successful traders will balance their desire to achieve
precise entry points with a commitment to participate (@ higher cost)
in positions that have a greater probability of profitable outcome.

The most enjoyable component of money management occurs when your
predictions are correct and the position become profitable. That's
when your trading objective is most important. The methods by which
you lock-in profits and hedge the initial investment will determine
your ability to participate in future gains. As the trend continues,
the returns can grow larger while the risk never exceeds the amount
originally invested. New opportunities will be met with additional
funds (profits) while the principle remains safely preserved as
collateral for the next trade. Only through the use of disciplined
entry/exit practices and adherence to your trading objective will
the desire for success become a reality.


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

MCRE    7.56  11.25   JAN   7.50  1.31  *$  1.25  20.0%  14.5%
SPLH    8.44  12.25   JAN   7.50  1.81  *$  0.87  13.1%  11.4%
EMIS   19.88  35.50   JAN  17.50  4.50  *$  2.12  13.8%  10.0%
WSTL   10.75  11.44   JAN  10.00  1.88  *$  1.13  12.7%   9.2%
CBIZ   10.31   8.13   JAN   7.50  3.63  *$  0.82  12.3%   8.9%
FSII   10.69  15.81   JAN  10.00  1.94  *$  1.25  14.3%   8.9%
LGND   11.69  16.50   JAN  10.00  2.75  *$  1.06  11.9%   8.6%
NFO    14.38  21.75   JAN  12.50  2.94  *$  1.06   9.3%   8.1%
STRX    8.13   8.25   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  28.00   JAN  22.50  3.63  *$  1.00   4.7%   6.7%
SCOC   17.88  20.75   JAN  15.00  4.13  *$  1.25   9.1%   6.6%
PILT   17.56  26.00   JAN  12.50  5.88  *$  0.82   7.0%   6.1%
ENER   11.81  12.19   JAN  10.00  2.06  *$  0.25   2.6%   5.6%
BAMM    9.81   8.13   JAN   7.50  2.75  *$  0.44   6.2%   5.4%
ONHN   10.25   7.44   JAN   7.50  3.38   $  0.57   8.3%   5.2%
TTWO   16.31  14.31   JAN  12.50  4.63  *$  0.82   7.0%   5.1%
MWHS   15.06  18.56   JAN  12.50  3.25  *$  0.69   5.8%   5.1%
PILT   20.25  26.00   JAN  15.00  6.38  *$  1.13   8.1%   5.1%
RNBO   20.00  23.16   JAN  15.00  6.13  *$  1.13   8.1%   5.1%
NPLS   20.56  20.06   JAN  17.50  3.63  *$  0.57   3.4%   4.9%
TSCM   15.75  19.06   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  16.63   JAN  15.00  2.75  *$  0.87   6.2%   4.5%
EMIS   24.63  35.50   JAN  20.00  5.38  *$  0.75   3.9%   4.2%
CNCX   29.88  41.75   JAN  22.50  8.00  *$  0.62   2.8%   4.1%
ENMD   28.44  33.75   JAN  22.50  6.75  *$  0.81   3.7%   4.1%
SATH   12.69  11.88   JAN  10.00  3.38  *$  0.69   7.4%   4.0%
MESG   16.63  13.56   JAN  12.50  4.88  *$  0.75   6.4%   4.0%
BNYN   15.81  19.56   JAN  12.50  4.13  *$  0.82   7.0%   3.8%
VDAT   13.50   9.75   JAN  10.00  3.88   $  0.13   1.4%   1.5%
BIDS    5.13   4.22   JAN   5.00  1.00   $  0.09   2.2%   1.4%
BIDS    5.25   4.22   JAN   5.00  0.94   $ -0.09  -2.1%   0.0%

TERA    4.41   4.94   FEB   5.00  0.50   $  1.03  26.3%  19.1%
GMGC    6.84   7.44   FEB   5.00  2.38  *$  0.54  12.1%   8.8%
HRC     5.81   6.94   FEB   5.00  1.13  *$  0.32   6.8%   5.0%
PCMS   10.06  12.38   FEB   7.50  3.00  *$  0.44   6.2%   4.5%
HMK     9.88  12.19   FEB   7.50  2.81  *$  0.43   6.1%   4.4%
IFCI   10.13  10.50   FEB   7.50  3.00  *$  0.37   5.2%   3.8%
WDC     5.50   4.50   FEB   5.00  1.13   $  0.13   3.0%   2.2%

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


Bid.Com (BIDS) is still holding at support and offering decent
premiums for the $5.00 call in February ($1.00 in May). The
post earnings (and downgrade) sell-off of Visual Data (VDAT), 
appears to be abating. Century Business (CBIZ) looks like it 
just might make it to expiration. On Health Network (ONHN) 
provides a great example of why we prefer ITM covered writes, 
selling calls near support areas. It has fallen 28%, yet it
remains above the cost basis (4 more days please!). February
should allow for a conservative roll down to the $5.00 call, 
lowering the overall debit to $4.50.

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

ASFT   21.50  FEB 15.00  AGQ BC  7.38  220   14.12   6.2%   6.2%
CCUR   18.38  FEB 15.00  URC BC  4.38  185   14.00   7.1%   7.1%
CYOE    5.50  FEB  5.00  QTO BA  1.44  547    4.06  23.2%  23.2%
EAII   14.25  FEB 10.00  QNE BB  4.75  73     9.50   5.3%   5.3%
ERTH    6.03  FEB  5.00  QER BA  1.38  163    4.65   7.5%   7.5%
GMGC    7.50  FEB  5.00  GGQ BA  2.88  30550  4.62   8.2%   8.2%
MUEI   12.75  FEB 10.00  MQU BB  3.25  475    9.50   5.3%   5.3%
XICO   22.56  FEB 17.50  CIU BW  5.75  100   16.81   4.1%   4.1%

Sequenced by Return Not Called

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

CYOE    5.50  FEB  5.00  QTO BA  1.44  547    4.06  23.2%  23.2%
GMGC    7.50  FEB  5.00  GGQ BA  2.88  30550  4.62   8.2%   8.2%
ERTH    6.03  FEB  5.00  QER BA  1.38  163    4.65   7.5%   7.5%
CCUR   18.38  FEB 15.00  URC BC  4.38  185   14.00   7.1%   7.1%
ASFT   21.50  FEB 15.00  AGQ BC  7.38  220   14.12   6.2%   6.2%
EAII   14.25  FEB 10.00  QNE BB  4.75  73     9.50   5.3%   5.3%
MUEI   12.75  FEB 10.00  MQU BB  3.25  475    9.50   5.3%   5.3%
XICO   22.56  FEB 17.50  CIU BW  5.75  100   16.81   4.1%   4.1%

Company Descriptions

ASFT - Artisoft  $21.50   *** A Buy on Dips ***

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. This week, Artisoft signed a contract with
Dialogic, an Intel® company, setting into motion plans to deliver
a jointly developed software-based phone system. The chart remains
in a very bullish stage II climb, with the consolidation area
around $16.00, offering reasonable support.

FEB 15.00 AGQ BC CB=7.38 OI=220 CB=14.12 RC=6.2% RC=6.2%

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


CCUR - Concurrent Computer  $18.38   *** Digital Video ***

Concurrent Computer is a leading provider of high-performance 
computer systems, software, and servers. Concurrent Computer's 
XSTREME Division is a leading supplier in the emerging digital 
video server marketplace. This market includes broadband/cable,
corporate training, education, hospitality, and in-flight 
entertainment industries. Concurrent is also a leading provider 
of high-performance, real-time computer systems, solutions, and 
software for commercial and government markets. Concurrent was
upgraded at the end of December. With a new president and CEO,
Concurrent will be looking to take advantage of the AOL - Time
Warner merger. Favorable speculation on bullish technicals with
support near the sold strike.  

FEB 15.00 URC BC Bid=4.38 OI=185 CB=14.00 RC=7.1% RNC=7.1%

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


CYOE - Coyote Network Systems  $5.50   *** Stage I Speculation ***

Coyote Network Systems designs, builds and operates communication
networks for entrepreneurial service providers. The company
provides telecom switching equipment, international long distance
and network services. Coyote's subsidiary, Coyote Technologies,
signed a three-year contract and license agreement with Ericsson
(ERICY) to develop North American signaling protocols as well as
new technologies and telephony applications. A short-term
symmetrical triangle is apparent in Coyote's chart suggesting a 
continuation of the stage I base. The high call premiums offer
favorable speculation with a cost basis below the November and
December lows.

FEB 5.00 QTO BA Bid=1.44 OI=547 CB=4.06 RC=23.2% RNC=23.2%

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


EAII - Engineering Animation  $14.25    *** Breakout? ***

Engineering Animation is the leader in Internet-enabled visual 
process management, collaboration, analysis and communication 
solutions for extended manufacturing enterprises. EAI's VisEPM(TM)
solutions, which include e-Vis.com(TM), Open Enterprise 
Visualization(TM) and Open Virtual Factory, help manufacturing 
companies drive down costs while improving business practices, 
efficiency, quality and time-to-market. It appears EAII's year-
long downtrend (and recent four month base) has been broken.
Wednesday's news that Delphi Automotive Systems (DPH) has adopted
EAI's VisProcess, for use in product and production planning in 
its European operations, caused a $7 price spike. We favor the 
support at our cost basis on an issue with improving technical
strength and several positive divergence's. Earnings are due 
near the second week of February.

FEB 10.00 QNE BB Bid=4.75 OI=73 CB=9.50 RC=5.3% RNC=5.3%

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


ERTH - EarthShell  $6.03  *** Can They Produce? ***

EarthShell is engaged in the licensing and commercialization of 
proprietary composite material technology for the manufacturer of
disposable food service packaging, such as cups, plates, bowls, 
and hinged-lid containers. EarthShell Packaging is considered an
environmentally preferable alternative made from a new composite
material, which consists primarily of abundant limestone, potato 
starch, water and protective coatings. The manufacturing process
is clean and energy efficient. It uses less energy and results
in low greenhouse gas emissions when compared to traditional rigid 
packaging. EarthShell Packaging is rigid, strong and provides good 
insulation. It biodegrades in marine and composting environments, 
and is recyclable through composting.  Now that they have their
production line up and running, EarthShell is preparing to resume 
in-store testing. The chart is definitely showing a change in 
character, with heavy accumulation since the middle of November.
A favorable entry point with a reasonable cost basis. Earnings are
due near the middle of March.

FEB 5.00 QER BA Bid=1.38 OI=163 CB=4.65 RC=7.5% RNC=7.5%

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


GMGC - General Magic  $7.50   *** It's Still Talking ***

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 last 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=2.88 OI=30550 CB=4.62 RC=8.2% RNC=8.2%

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


MUEI - Micron Electronics $12.75   *** Boxmaker, Boxmaker... ***

Micron Electronics is a leading direct manufacturer of personal 
computers, business Internet offerings, Web hosting and B2B 
e-commerce applications for the small and medium-business, 
government and education markets. Under the micronpc.com, HostPro,
Lightrealm, Micron Internet Services and SpecTek brands, Micron
offers a wide range of innovative products, services and support.
The company expects to continue its expansion and acquisition 
strategy to increase its E-Services capabilities. We favor Micron
as a solid company with improving technical strength. The post
earnings sell-off is over and Micron appears ready to break above
its ten month long stage I base.

FEB 10.00 MQU BB Bid=3.25 OI=475 CB=9.50 RC=5.3% RNC=5.3%

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


XICO - Xicor  $22.56   *** It's Red Hot! ***

Xicor designs, develops, manufactures and sells nonvolatile in-the-
system programmable products which retain information even when the 
system is turned off or power is inadvertently lost. Xicor's product
line includes digitally controlled potentiometers (XDCPs(TM)), 
system management ICs, and standard and secure memory ICs. Upgraded
in December, a new contract this week with America II Electronics,
and a bullish chart make for favorable speculation. We favor a 
cost basis near support on this red hot issue.
FEB 17.50 CIU BW Bid=5.75 OI=100 CB=16.81 RC=4.1% RNC=4.1%

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


Successful Option Trading: Strategy Selection...
The virtually unlimited number of new and exciting ways of making
money in the options market can be an incredible attraction.
Unfortunately reaping those rewards on a consistent basis can be a
daunting task. Profitable option trading requires a knowledge of
advanced pricing concepts, an understanding of commonly used
techniques and the resources to implement the correct strategies
in a timely manner. The foundation for success begins with a
collection of properly planned strategies and a list of simple,
easy to follow guidelines.

The first step in developing a profitable trading plan is to
identify your risk tolerance and comfort level. It's obvious that
no single strategy can be correct for all traders as each of us
has individual attitudes and differing portfolio requirements. 
While several strategies may appear to be appropriate under the
same market conditions, each technique will have different risks
and incentives. If the theoretically correct strategy doesn't
feel comfortable then don't open the position. There are usually
a number of alternatives and the majority of popular techniques
can be implemented synthetically. For example, a trader who wants
to sell naked puts can also buy the underlying stock and sell a
call to create the equivalent position. Another common strategy
for bullish issues is to buy a call and sell a put; a synthetic
long. The knowledge of equivalent positions allows a trader to
utilize favorable alternatives with similar profit potential and 
substantially different risk characteristics.

A study of losing positions would suggest that novice traders are
often pressured into adverse situations simply because they chose
to make a trade that was inappropriate for their particular skill
level or risk tolerance. The problem of strategy selection is a
common obstacle and it's not unusual to find professionals who
encounter the same difficulties under stressful conditions.
Regardless of your style or ability, it's important to be relaxed
and at ease with the techniques you are using. Anything less will
generally produce irrational decisions and a departure from the
original plan. While there's no simple method for avoiding stress
in a trade, there are a number of techniques employed by the pros
that increase the margin for error in demanding situations.
We consider these to be most important:

* Develop a trading plan, write it down and use it.
* Focus on a limited number of techniques and become an expert
   in at least one of them.
* Know the market, know the issue, and trade with the trend.
* Use the appropriate strategy (or its equivalent) and quantify
   all risks prior to establishing a position. Never enter a trade
   without clearly defining the exits.
* Never open a position without a sound mental attitude and
   complete devotion to the task at hand. If in doubt, skip the
* Always use proven position management techniques and adhere to
   the original plan, making only those adjustments that conform
   to the fundamental goals of the trade. Stay in your comfort
   zone at all times.
* Control your emotions and limit risk with position stops.
* Review each transaction and evaluate it critically for missing
   information, theoretical mistakes, and errors in judgment. Make
   a written report and use it to improve your future trades.

Remember, there is one scenario for which there is no appropriate
strategy. That is the case in which a trader has anything less
than complete conviction with respect to market direction or
character. Under those conditions, a successful trader will always
choose to remain on the sidelines and wait for the next profitable

                      *** 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

CNQR   29.50  27.69   JAN  22.50  0.94  *$  0.94  13.7%  29.9%
ADG    13.13  11.50   JAN  10.00  0.25  *$  0.25   8.7%  18.9%
AWEB   12.88  10.13   JAN  10.00  0.50  *$  0.50  16.2%  17.6%
ITIG   24.81  25.13   JAN  17.50  0.63  *$  0.63  11.3%  16.3%
WAXS   20.00  20.69   JAN  17.50  0.69  *$  0.69  11.1%  16.1%
ASFT   18.13  21.50   JAN  12.50  0.25  *$  0.25   6.4%  14.0%
PILT   17.13  26.00   JAN  12.50  0.50  *$  0.50  12.7%  13.8%
AFCI   37.13  39.75   JAN  27.50  0.50  *$  0.50   6.3%  13.7%
RNBO   21.94  23.16   JAN  17.50  0.81  *$  0.81  15.6%  13.5%
AND     9.25   8.00   JAN   7.50  0.44  *$  0.44  18.4%  13.3%
SATH   12.94  11.88   JAN  10.00  0.56  *$  0.56  17.8%  12.9%
SCOC   29.00  20.75   JAN  17.50  0.56  *$  0.56   8.8%  12.8%
GSTRF  35.56  34.13   JAN  25.00  0.44  *$  0.44   5.8%  12.7%
ORCT   31.00  34.50   JAN  25.00  0.81  *$  0.81  11.2%  12.2%
AMD    33.00  40.38   JAN  25.00  0.38  *$  0.38   5.4%  11.8%
IUSA   12.13  12.13   JAN   7.50  0.31  *$  0.31  11.3%   9.8%
LOR    20.25  23.00   JAN  17.50  0.38  *$  0.38   6.6%   9.6%
EMIS   21.00  35.50   JAN  15.00  0.50  *$  0.50  10.6%   9.2%
DAVX   23.75  23.19   JAN  17.50  0.56  *$  0.56  10.5%   9.2%
CCUR   17.75  18.38   JAN  12.50  0.50  *$  0.50  12.3%   8.9%
SCOC   17.88  20.75   JAN  12.50  0.44  *$  0.44  10.9%   7.9%
MSGI   19.00  17.63   JAN  12.50  0.38  *$  0.38   9.1%   7.9%
ENMD   28.44  33.75   JAN  20.00  0.44  *$  0.44   7.2%   7.8%
CS     28.50  29.00   JAN  20.00  0.56  *$  0.56   8.9%   7.8%
PRRC   23.56  26.31   JAN  17.50  0.56  *$  0.56  10.6%   7.7%
INSO   32.13  32.13   JAN  20.00  0.75  *$  0.75  10.4%   7.6%
WAXS   20.50  20.69   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  28.75   JAN  25.00  0.56  *$  0.56   7.3%   5.3%
MMWW   37.38  27.06   JAN  22.50  0.50  *$  0.50   6.3%   4.5%

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


Entremed (ENMD) and Concentric Network (CNCX) never retreated
after the initial opening gap on Monday; therefore we will list
them as unplayable. Autoweb.Com (AWEB) is still looking a little
weak though holding above support around $9.00. Santa Cruz (SCOC)
has been steadily falling over the last few weeks. Wednesday, the
company warned of the impact of Y2K on this quarter's earnings. 
It may hold with four trading days to expiration, but will
require monitoring (unless you wish to own the stock).

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

DMRK   22.38  FEB 17.50  DQN NW  0.69  0     16.81  13.4%
EMIS   35.63  FEB 25.00  MTQ NE  0.63  0     24.37   8.1%
GSTRF  34.19  FEB 22.50  YVQ NX  0.63  96    21.87   8.4%
NETA   28.00  FEB 20.00  CQM ND  0.38  17    19.62   6.4%
NOVL   33.69  FEB 25.00  NKQ NE  0.63  516   24.37   8.6%
PGEX   22.81  FEB 15.00  QAE NC  0.50  583   14.50   9.9%
PILT   25.94  FEB 17.50  PTU NW  0.56  0     16.94   9.7%
TLCM   20.25  FEB 15.00  TMU NC  0.50  0     14.50  11.0%
WSTL   11.44  FEB  7.50  QLW NU  0.50  116    7.00  17.9%

Sequenced by ROI  

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

WSTL   11.44  FEB  7.50  QLW NU  0.50  116    7.00  17.9%
DMRK   22.38  FEB 17.50  DQN NW  0.69  0     16.81  13.4%
TLCM   20.25  FEB 15.00  TMU NC  0.50  0     14.50  11.0%
PGEX   22.81  FEB 15.00  QAE NC  0.50  583   14.50   9.9%
PILT   25.94  FEB 17.50  PTU NW  0.56  0     16.94   9.7%
NOVL   33.69  FEB 25.00  NKQ NE  0.63  516   24.37   8.6%
GSTRF  34.19  FEB 22.50  YVQ NX  0.63  96    21.87   8.4%
EMIS   35.63  FEB 25.00  MTQ NE  0.63  0     24.37   8.1%
NETA   28.00  FEB 20.00  CQM ND  0.38  17    19.62   6.4%

Company Descriptions

DMRK - Damark  $22.38   *** Earnings Rally ***

Damark utilizes targeted, information-based strategies to bring
a broad range of products, programs, and services to consumers
via direct mail, telesales, and the Internet. They operates in
two segments: Membership Services and Catalog Retail. Membership
Services develops, markets, and manages fee-based programs that
provide purchase price discounts and other benefits related to
consumer needs while the Catalog Retail offers brand name items
through a variety of catalog titles. Shares have climbed higher
since DMRK said it will report better than expected earnings and
the support near $15 provides a favorable risk/reward position.

FEB  17.50  DQN NW  Bid=0.69  OI=0  CB=16.81  ROI=13.4%

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


EMIS - Emisphere  $35.63   *** Drugs Are Hot! ***
Emisphere is a biopharmaceutical company specializing in the oral 
delivery of therapeutic macromolecules and other compounds that 
are not currently deliverable by oral means. The company has two 
drugs in human clinical trials using its unique carrier technology
and has strategic alliances and ongoing feasibility studies with 
several pharmaceutical and biotechnology companies, including 
Novartis and Eli Lilly. EMIS's most clinically advanced product is
oral heparin which is designed to capture and expand the existing
$2 billion coronary anti-thrombosis market. A number of new deals
and a recent upgrade. This position offers another chance to gain
entry into an ever climbing issue that is once again in "blue sky"

FEB  25.00  MTQ NE  CB=0.63  OI=0  CB=24.37  ROI=8.1%

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


GSTRF - Globalstar Telecom  $34.19   *** Picking The Bottom ***
Globalstar Telecom is part of a limited partnership which is
designing, constructing, and will operate a worldwide, low earth
orbit satellite-based digital telecommunications system. GSTRF
intends to offer quality, low-cost telecom services including
voice services, messaging and paging services, remote monitoring,
facsimile and other data services, including position location.
Loral Space (LOR) is the managing general partner of GSTRF, with a
majority ownership. Lots of recent news on this issue including a
public offering of 7 million shares. With the recent consolidation,
put premiums have moved up significantly, offering an excellent
entry opportunity.

FEB  22.50  YVQ NX  Bid=0.63  OI=96  CB=21.87  ROI=8.4%

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


NETA - Network Associates  $28.00   *** The Price Is Right ***
Network Associates is a leading supplier of enterprise network 
security and management software. Network Associates' Net Tools
Secure and Net Tools Manager offer best-of-breed, suite-based
network security and management software. Net Tools Secure and Net
Tools Manager suites combine to create Net Tools that centralizes 
these point solutions within an easy-to-use, integrated systems 
management environment. Recent upgrades and favorable earnings
expectations should help NETA continue its move to the new target
of $35. Technical support exists above the cost basis.

FEB  20.00  CQM ND  Bid=0.38  OI=17  CB=19.62  ROI=6.4%

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


NOVL - Novell  $33.69   *** Portfolio Stock ***

Novell provides network solutions, education and support for
distributed network, Internet and small-business markets. Their
products include directory services, operating platforms and
management tools that allow businesses to control and administer
their networks from one central site. The company's communication
services allow users to share and manage files, e-mail, documents
and publish to the Internet. Novell's connection services help
companies expand their services. Recently acquired JustOn, one of
the premier Internet publishing companies, to excel in the growing 
Application Service Provider industry. A solid stock with
excellent long-term potential.

FEB  25.00  NKQ NE  Bid=0.63  OI=516  CB=24.37  ROI=8.6%

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


PGEX - Pacific Gateway  $22.81   *** Something's Up! ***

Pacific Gateway provides international telecom services to a
customer base of long distance service providers worldwide. The
company also provides point-to-point connections between United
States locations and foreign locations to certain carriers to meet
the needs of end users; multinational corporations or government
agencies that have a high volume of voice and data communications
between international locations. Not much news on this issue but
option trading volume has increased over the past few days and
implied volatility is at historically high levels. A low risk
speculation play.

FEB  15.00  QAE NC  Bid=0.50  OI=583  CB=14.50  ROI=9.9%

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


PILT - Pilot Network Services  $25.94   *** New Entry Point ***

Pilot Network Services, the Security Utility pioneer, is the only 
e-business network service provider of highly secure subscription
based e-business services. For companies of all sizes, in every 
industry, Pilot enables secure e-business by providing a wide 
range of services with built-in security to protect enterprise 
networks. PILT is quickly becoming an old favorite with the OIN
and the recent bullish move has excellent underlying strength. We
favor the support near the cost basis. Earnings are due soon.

FEB  17.50  PTU NW  Bid=0.56  OI=0  CB=16.94  ROI=9.7%

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


TLCM - TelCom Semiconductor  $20.25   *** On The Move! ***

TelCom Semiconductor designs, develops, manufactures and markets
a diversified portfolio of high-performance analog integrated
circuits for a wide variety of applications in the industrial,
wireless communications, computing, networking and medical markets.
The company builds products in a number of critical areas for a
wide range of electronic systems. A new upgrade this week based on
TelCom's accelerating sales growth and expected success in their
new communications and networking applications. We favor the new
bullish trend and support near the cost basis.

FEB  15.00  TMU NC  Bid=0.50  CB=0  CB=14.50  ROI=11.0%

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


WSTL - Westell Technologies  $11.44   *** Technicals Only ***

Westell Technologies includes two companies; Conference Plus and
Westell. Westell supplies DSL Customer Premise Equipment, DSL and
Telephone Access Systems and monitoring and maintenance equipment
for demarcation points in telecommunications networks. Conference
Plus is an Application Service Provider, providing audio, video,
IP conferencing and support services. The company serves ILECs,
CLECs, alternative carriers in North America and around the Globe.
A nice year-long trend with over six months of support near the
cost basis.

FEB  7.50  QLW NU  Bid=0.50  OI=116  CB=7.00  ROI=17.9%

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


The Dream Continues..

Friday, January 14

The Dow posted a new all-time high and the Nasdaq enjoyed another
incredible rally as investors rejoiced over tame inflation data.
The Dow closed up 140 points at 11,722 while the Nasdaq composite
index ended 107 points higher at 4064. The S&P 500 index finished
up 15 points at 1465. Volume on the Big Board reached 1 billion
shares, with winners ousting losers 1,621 to 1,395. The 30-year
Treasury fell 13/32 to yield 6.688%.

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

Helix Tech.    HELX   APR25C/APR45C   $15.75   debit   bull-call
Humana         HUM    MAY10C/FEB10C   $0.75    debit   calendar
Pacific Gty.   PGEX   FEB12C/JAN20C   $7.12    debit   diagonal

Helix was a slow starter but came alive late in the day to finish
up $4 at $55. There were no contracts traded in our deep ITM debit 
spread and without volume it's difficult to determine the opening
price. The best observed debit was slightly higher than our target.
Humana and Pacific Gateway were far less exciting. Humana opened
late, traded sideways and drifted lower in the afternoon, offering 
better prices near the close; we recorded our (less favorable)
morning quote. PGEX moved in a small range but offered a number of
entry opportunities. While we feel that $7.00 was achievable, we
will use the 3 contract trade (near 10:30 am) as our entry price.

Portfolio plays:

A broad range of stocks advanced in today's session after a
favorable inflation report (the CPI) prompted investors to get
back to the business of buying. The weight of favorable economic
indicators diminished the prospect of a significant rate hike at
the Fed's February policy meeting and most analysts believe that
Greenspan will do little to alter the outlook in the short-term.
The Fed chief told a group of economists that he was intent on
defusing a potential speculative bubble but investors chose to
focus on the positive remarks in his speech. The outlook for
low inflation and strong corporate profits boosted the market
leaders and shares of banks, brokerages and technology issues
were the big winners.

The Spreads/Combos portfolio also had some big winners and one
of our most recent large-cap plays (Wednesday's new section) was
in the news. Officials at Hughes Electronics reported the company
will sell its satellite systems unit to Boeing (BA) for almost
$4 billion. General Motors (GM) ended up $6 at $82.25 on the
announcement, driving our LEAPS/CC's play well into profitable
territory. Our recent move to February may have been slightly
premature but today's rally offered another opportunity to boost
the profit potential of the play. The cost to roll-up to the $80
was just under $3 strike during the morning session. Another big
mover was Motorola (MOT). Today the stock gained $12.43 to close
at a new all-time high of $151. The time was right for a move to
February and we decided on the $135 strike for increased downside 
protection. Our new position is LJAN105C/FEB135C at $22.50 debit.
The spread now has no upside risk and we can afford to be more
aggressive in the coming months. There were a number of other
favorable moves in the long-term portfolio but none that required
position adjustments.

The small and mid-cap issues were far more interesting and our
bullish diagonal position on Cohu (COHU) led the group. The stock
climbed $5 to $35 in the wake on INTC's positive earnings report.
Cohu is expected to benefit from the increased capital spending
at Intel and one of their competitors, Teradyne (TER) jumped $7
after receiving an upgrade. Our position is at maximum profit
above $30. Cabletron Systems (CS) rallied $4 to close at a recent
high near $29 on speculation of a possible sale or merger of the
company. There was no news to support the speculation but traders
suggest some rumored insider information refers to a buyout offer.
Our bullish LEAPS/CC's play returns maximum profit above $22.50.

One of our newest long-term issues, Network Associates (NETA) was
also on the move, climbing $3 to $28 on high earnings expectations.
The position is profitable after just one month in play and the
rally will help our transition to February options. Other leading
performers in the small cap group included: Concentric Networks
(CNCX), up $2.75 to $41.75; Silicon Valley Group (SVGI), up $1.38
to $23; Cadence Design (CDN) up $1.25 to $22.75 and Loral Space
and Communications (LOR), which rebounded from a midday deficit
to finish $1.06 higher at $23. The most surprising mid-cap has
undoubtedly been Vodaphone (VOD) and today the issue rose another
$2.38 to $53 on strength in the telecom sector. Our LEAPS/CC's
position is at maximum profit above $50.

Questions & comments on spreads/combos to Contact Support


We had an excellent response to our "reader's request" plays this
week and today there are two more candidates from this group. Both
plays are conservative (bullish) positions on well-known companies
with excellent growth potential. Once again, they are based on the 
current price of the underlying stock and the recent technical
history or trend. Current news and market sentiment will have an
effect on these issues so review each play thoroughly and make
your own decision about the future outcome of the position.


BVF - Biovail  $103.88   *** Hot Sector ***

Biovail International is a global integrated pharmaceutical
product development company specializing in the application of
advanced oral controlled release delivery technologies. Their
proprietary technologies are used in formulations, which either
improve upon conventional dosage forms of existing products by
providing the therapeutic benefits of controlled release drug
delivery or are generically equivalent to existing once-daily
branded products. BVF develops controlled release formulations
for branded and generic market segments, which are manufactured
by it or by others under license.

Biovail has enjoyed an incredible run over the past three months,
due in part to the expectation of a much-awaited stock split and
new drug approvals. In mid-December, BVF reported it had received
final approval from the Food and Drug Administration (FDA) of
its generic version of Cardizem CD, for the treatment of Angina.
Biovail's marketing partner Teva Pharmaceuticals has launched the
product and future sales are expected to bolster BVF's revenues.

Officials of the company recently announced that shareholders of
the corporation approved a 2-for-1 stock split of common shares.
The additional stock will be issued to shareholders of record as
of the close of business on January 12, and will begin trading on
a split basis on January 20, 2000 on the New York Stock Exchange.

This week there were two ratings issued on BVF; A short-term BUY
from Merrill Lynch and a STRONG BUY from CIBC. The chart supports
the ratings.

PLAY (conservative - bullish/debit spread):

BUY  CALL APR-85  BVF-DQ OI=97 A=$23.25
SELL CALL APR-100 BVF-DT OI=75 B=$13.25
INITIAL NET DEBIT TARGET=$9.50-9.75 ROI(max)=53% B/E=94.75

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


EMLX - Emulex  $119.00   *** A New Range? ***

Emulex is a designer, developer, and supplier of a broad line of
fibre channel host adapters, hubs, ASICs and software products
that enhance access to, and storage of, electronic data and
applications. Their products, which are based on internally
developed ASIC technology and are deployable across a variety
of heterogeneous network configurations and operating systems,
support increasing volumes of stored data. The company is also
a supplier of some traditional networking products that include
printer servers and network access products. Emulex sells its
products worldwide to OEMs and end users, as well as through
other distribution channels including value-added resellers,
systems integrators and industrial distributors.

This OIN favorite has been on the move since its recent split and
investor optimism about the maker of fiber-optic channel products
has driven the stock to new highs. Analysts say EMLX is one of
the leading companies in the emerging technology market and the
share value has moved higher on improving profit margins and a
strong increase in past earnings.

We favor the fundamental outlook for the issue but what may be
more impressive is the bullish technical pattern that has formed
over the last two weeks. This position offers a conservative
method to participate in the future movement, for those who don't
mind owning the stock.

PLAY (conservative - bullish/covered-combo):

SELL CALL FEB-100 UMQ-BT OI=271 B=$24.12
SELL PUT  FEB-95  UMQ-NS OI=94  B=$4.00

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


SPLH - Splash Technology  $12.25   *** Technicals Only ***

Splash Technology develops, produces and markets color servers
that provide an integrated link between desktop computers and
digital color laser copiers and large format printers, enabling
such devices to provide high quality, high speed, networked color
printing. These hybrid systems, consisting of color servers and
digital color laser copiers, support multiple uses including
image scanning, image manipulation, printing and photocopying.
Their products feature advanced color correction, calibration and
separations support, variable data printing, wide format, ease of
use, time-saving work flow functionality, simulation of many
color monitors and printing presses, and automatic correction
for certain printing workflow problems. Splash's color servers
are commonly accessed by users across networks of Windows-based
personal computers, Power-PC personal computers and UNIX-based

Lots of activity for this up and coming issue. A recent lawsuit
against Electronics For Imaging (EFII), a ratings revision to
STRONG BUY (target $25) and a spike in options trading volume.
Regardless of the news, the technical trend is extremely bullish
and the volatility will help us open a relatively conservative
position at a small discount.

PLAY (conservative - bullish/debit spread):

BUY  CALL FEB-7.50  QRX-BU OI=111 A=$5.00
SELL CALL FEB-10.00 QRX-BB OI=360 B=$2.88
INITIAL NET DEBIT TARGET=$2.00 ROI(max)=25% B/E=$9.50

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


TKLC - Tekelec  $26.00   *** Towering Telecom ***

Tekelec designs, manufactures, and markets innovative switching
solutions and diagnostic systems for the global communications
marketplace. The company's EAGLE STP switching platform enables 
operators of wireline/wireless networks to deliver Intelligent
Network and Advanced Intelligent Network (AIN) services such as
Caller ID, voice messaging, personal number calling, Service
Provider Local Number Portability and customized routing and
billing, as well as digital wireless services such as PCS and
GSM. Their flagship products enable traditional carriers and new
entrants to pursue cost-reduced and performance-enhanced network
architectures based on Internet Protocol, Asynchronous Transfer
Mode or other "packet" technologies. Their diagnostic product
lines enable carriers and communications equipment suppliers to
ensure conformance to specifications and to evaluate network
performance in controlled environments.

The Tekelec rally began in mid-December when Deutsche Banc Alex
Brown raised the company's shares to a STRONG BUY based on future
product developments. Now the issue is steadily trending higher
and each technical consolidation has been met with new investor
interest. The institutional ownership is excellent and last week,
Jefferies & Company reiterated their BUY rating based on TKLC's
leadership in the network switching industry. We favor the sector
outlook and the current strength in the bullish trend.

PLAY (conservative - bullish/debit spread):

BUY  CALL FEB-17.50 KQ-BW OI=85  A=$9.00
SELL CALL FEB-22.50 KQ-BX OI=123 B=$4.88
INITIAL NET DEBIT TARGET=$3.88 ROI(max)=28% B/E=$21.38

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

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