Option Investor
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Daily Newsletter, Wednesday, 01/19/2000

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The Option Investor Newsletter         Wednesday  1-19-2000
Copyright 2000, All rights reserved.
Redistribution in any form strictly prohibited.

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

Also provided as a service to The Online Investor Advantage
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
       1-19-2000           High     Low     Volume Advance Decline
DOW    11489.40 -  71.30 11574.70 11456.00 1,066,200k 1,513  1,505
Nasdaq  4151.29 +  20.48  4164.65  4084.73 1,643,706k 2,281  1,883
S&P-100  790.31 -   5.37   794.54   787.97    Totals  3,794  3,388
S&P-500 1455.90 +   0.76  1461.39  1448.68            52.8%  47.2%
$RUT     520.02 +   6.56   520.02   511.89
$TRAN   2838.04 -  15.57  2861.19  2819.10
VIX       23.27 -   0.04    24.36    22.97
Put/Call Ratio       .47
*************************************************************

The Other Big Three 

Auto makers are no longer the big three.  We are right in the 
heart of earnings season again, but no one is looking to Ford, 
General Motors, and Daimler Chrylser to lead the charge.  
Instead we got the earnings reports of IBM, America Online, 
and Apple Computer after the close today.  AAPL reported strong 
numbers with a $1.00 per share earnings vs. an estimate of $0.90.  
AOL finished the final quarter of last year strong too by earning 
$0.09 cents per share versus a First Call estimate of $0.08.  
IBM earned $1.12 per share, which was $0.06 cents ahead of 
lowered estimates, but revenues were somewhat soft.  Big Blue 
claimed the Y2K issue hurt the 4th quarter.  All three stocks 
traded higher during both the regular session and after-hours.  

The Dow Industrials also had three companies reporting earnings
with Boeing, Honeywell, and United Technologies all coming in 
with numbers that met or beat estimates.  Boeing beat the street 
by $0.05, UTX by $0.03, and Honeywell's earnings were in line 
with estimates.  These positive numbers did little to help the 
struggling Dow though.  UTX ended -2.06, HON -4.75, and BA 
was +2.63.

Today the indices mirrored the sentiment from Tuesday as the 
Dow continued to slide while the Nasdaq powered ahead.  The 
Nasdaq closed at 4151.29, up 20.48.  The Dow closed at 11489.36, 
down 71.36 and the S&P 500 inched up to 1455.90, up 0.76.  Even 
the Russell 2000 kept the momentum flowing by trading up to 
another record close at 520.02, up 6.56 today.  The volume 
was heavy at over 1.6 billion on the Nasdaq and over 1 billion 
on the New York as well.  The advancers beat the decliners by 
11-9 on the Nasdaq, but were dead even at 15-15 on the NYSE.  
The internals on the Nasdaq were incredibly strong with 317 
new highs against 53 new lows.  Here are the charts for a closer 
look at today's action.  Notice the weak opening for the Nasdaq 
before trading higher for most of the session.  The Dow opened 
weak too, but never really maintained a comeback.  It's general 
trend for the past two days has been lower.  Look at the charts 
in Jim's Market Wrap from Tuesday for a better indication of 
what support and resistance lines we are watching.

Chart of the Nasdaq
 


Chart of the Dow
 


The market also had to digest the Housing Starts numbers that 
came out this morning.  Housing construction rose by a much 
stronger than expected 7.0%.  Economic analysts were expecting 
to see an unchanged number.  New home construction grew from 
1.60 million units to 1.71 million.  This is the biggest jump 
in over a year and was aided by unseasonably warm weather.  You 
would expect this kind of surprise to spook the bond market, but 
it had little effect.  In fact, the bond rallied slightly today 
after Tuesday's drubbing.  This is probably due to bond traders 
looking at the current weather situation for January, with the 
record-breaking cold temperatures, and figuring these numbers 
will decline.  The 30-year Treasury yield ended down at 6.72%.

The tech sector saw Internet stocks showing strength today.  
That helped to lift the Nasdaq despite the weak software sector.  
Other strong sectors included Drug, Biotech, Utilities, Gaming, 
Chip Equipment and Fiber Optics.  Software was weak on the heels 
of Microsoft's earnings which were announced after the close on 
Tuesday.  MSFT, like always, beat the estimates, but showed some 
concern for near-term PC demand and corporate sales.  Also weak 
were Gold, Airlines, and Automakers.  

So who was moving among the hot Internets?  YHOO +22.81, MSTR 
+23.63, FMKT +69.69, VERT +19.50, AGIL +14.00, and INSP +12.69.  

Biogen rose sharply today after being added to Merrill Lynch's 
"buy-focus 1" (don't ask, we don't know what that means either).  
Merrill previously had BGEN rated at a Buy.  They cited BGEN as 
having a more compelling valuation among Biotech stocks.  Merrill 
also issued a price target of $100 a share for BGEN.  

The markets are in the thick of the reporting season right now 
and trying to digest all the numbers can sometimes cause an 
upset stomach.  Fortunately, the volatility has remained low 
so far.  The VIX traded in a tight range between 23 and 24 
today, indicating a general calmness amongst traders.  This is 
refreshing compared to the increasing volatility of the past 
couple months.  It turns this into a stock-picker's game instead 
of a market-timer's game.  

On Thursday the government will release the latest trade gap 
numbers which are forecasted at $25.3 billion.  That is one 
giant IOU, but not out of the realm of what we have seen in 
the past.  This will be out before market open, but barring 
any major surprises, shouldn't impact the markets.  

Our real lingering question for the evening is relative to the 
Dow Industrials.  It closed one point above the 10-dma.  Now 
the last time we broke the 10-dma on a closing basis, the Dow 
dropped to the 50-dma.  That would mean another 300 point move 
to the downside.  The Nasdaq continues to look stronger.  It 
closed at another record high today and the volume continues 
to support this market.  Investors are still turning to tech 
stocks despite the rising 30-year bond.  That factor would 
typically kill the tech group.  This shows just how strong the 
fundamentals are for technology.  Why would you want to own a 
bond paying you 6.75% when you have the potential to double 
your money on some of these technological advances?  

The downside to this market is evident to those who have watched 
the market cycle over the past two years or so.  We are entering 
a period after first quarter earnings which is typically weak 
for stocks, last year being a prime example.  It was right about 
this time that the markets went into a lull until mid-March.  
There weren't any massive declines (at least in the Dow), just a 
lot of deteriorating premiums.  Not what we need in the options 
market (but then that may be a matter of strategy)!

January options expire on Friday so most of you will want to 
start switching to February's if you haven't already.  January 
contracts should only be played by high-risk, gun slingers at 
this point.  One piece of advice for all options traders?  Sell 
too soon.


Ryan Nelson
Asst. Editor.



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***********
STOCK NEWS
***********

Is Merck Next?
By  S.P. Brown

Going from number one to number three within a two-month span 
has to have the top brass at Dow Jones Industrial component 
Merck & Co. (MRK) seething.  Long the top player among the 
"big drugs," Merck will soon be relegated to the third rung on 
the pharmaceutical ladder.  On Monday, two British drugmakers, 
Glaxo Wellcome (GLX) and SmithKline Beecham (SBH) agreed to 
merge to claim the top rung, while the likely combination of 
Pfizer (PFE) and Warner-Lambert (WLA) will soon move up to 
claim the second.

http://members.OptionInvestor.com/stocknews/011900_1.asp



**********************
PLAY OF THE DAY - CALL
**********************

MFNX - MetroMedia Fiber Network $64.81 +3.81 (+7.69 this week)

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.

Sunday's Write Up

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.

Tuesday's Write Up

BRRRR!  We got the cold shoulder this morning from MFNX's IR
department.  When asked for a specific earnings date, they 
declined an answer and said to call back in February.  Thanks 
for the help!  While they are not likely to report in January, 
it could happen any darn time they feel like it in the first 
two weeks of February (Zack's has a tentative earnings date of 
February 7).  Making things even tougher, they have reported 
during market hours for the last two quarters.  All frustration 
aside, volume remains exceptionally strong at 45% over the ADV 
today, showing us strong buying interest.  Part of the reason 
may be the emerging possibility of MFNX's transmitting up to 
2000 channels within a single strand of fiber, creating 
ubiquitous, cheap bandwidth for all in its service areas - 
that's up to 8 petabits per second, or the total average 
traffic covering the entire globe as recently as 1997.  Anyway,
technically, this is nosebleed territory, with the nearest 
support at the 10-dma, way back there at $51.39.  While we fully 
expect MFNX to be at a higher price by earnings (whenever it is), 
there will be bumps along the way.  With seven consecutive days 
of gains, now is not the time to buy everything in sight.  Wait 
for the dips, (hopefully a big intraday selloff followed by a 
strong bounce) for an entry.  Also be forewarned that MFNX is 
really temperamental, and subject to violent moves for no 
apparent reason (think Tasmanian Devil) - something we expect 
from a company with little concern for disseminating news.  
Nonetheless, we like the gains and the chart is strong.  While 
nowhere near a guaranty, over $52, they could also announce 
another split. 

BUY CALL FEB-55*QFN-BK OI=1545 at $11.88 SL= 9.25
BUY CALL FEB-60 QFN-BL OI= 339 at $ 8.50 SL= 6.50
BUY CALL FEB-65 QFN-BM OI=   0 at $ 6.00 SL= 4.25 New strike	
BUY CALL MAY-55 QFN-EK OI=5205 at $16.63 SL=13.00
BUY CALL MAY-60 QFN-EL OI= 227 at $13.88 SL=11.00

Picked on Jan 16th at   $57.13     P/E = N/A
Change since picked      +7.69     52-week high=$64.94
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=MFNX&d=3m



********************************
BIG COVERED CALLS AND NAKED PUTS
********************************

This week's list includes a number of well-known telecom issues
and two split plays. Each of the "in-the-money" positions offer
conservative entry points into technically bullish charts, with
reasonable monthly returns. The positions that we find favorable
(and will track every week) are marked with asterisks. We will
also list more aggressive positions for those traders so inclined.
Do not enter these positions unless you fully understand the
strategy and various methods of manipulating the position should
the stock price drop or rise and in the event you decide you want
to keep the issue.


Summary of Previous Picks:

Covered Calls:

Stock  Strike Strike  Cost    Current  Profit  Monthly
Symbol Month  Price   Basis   Price    (Loss)  Return

PUMA    JAN    80     77.16   90.56    $2.84     7.0%
HNCS    JAN    60     58.81  103.13    $1.19     6.8%
CLRS    JAN    60     58.06   71.75    $1.94     6.4%
RFMD    JAN    65     63.88   84.50    $1.12     5.9%
INCY    JAN    60     58.22  139.88    $1.78     5.8%
AFFX    JAN   120    116.75  202.25    $3.25     5.3%
HGSI    JAN   125    121.63  193.13    $3.37     5.3%

ADAP    FEB    75     71.06  115.63    $3.94     4.6%
NVLS**  FEB    38.38  36.48   52.69    $1.91     4.3%
GMH     FEB   100     95.81  121.25    $4.19     3.6%

Naked Puts:

Stock  Strike Strike  Cost    Current  Profit  Monthly
Symbol Month  Price   Basis   Price    (Loss)  Return

ARTG    JAN    75     74.06  102.13    $0.94    15.0%
ASDV    JAN    55     54.37   71.88    $0.63    13.4%
PUMA    JAN    70     69.25   90.56    $0.75    12.4%
CLRS    JAN    55     53.87   71.75    $1.13    11.7%
INCY    JAN    50     49.00  139.88    $1.00    10.5%
IDC     JAN    30     29.37   33.63    $0.63     9.6%
AFFX    JAN   105    103.44  202.25    $1.56     9.5%
PUMA    JAN    65     63.87   90.56    $1.13     9.4%
INCY    JAN    65     64.44  139.88    $0.56     8.9%
HGSI    JAN   115   113.62   193.13    $1.38     8.6%
CRA     JAN   115   113.75   216.00    $1.25     7.2%
JDSU    JAN   125   124.31   211.94    $0.69     6.3%
ICGE    JAN   110   108.87   150.38    $1.13     6.2%

ADAP    FEB    65     63.25  115.63    $1.75     7.1%
NVLS**  FEB    33     32.63  52.69     $0.71     5.8%
GMH     FEB    95     92.75  121.25    $2.25     5.6%

** NVLS - Adjusted for a 3 for 1 split.


NOTE: Our target Return On Investment: for February is 5% for
thirty days which equates to a 5% monthly return. A margin 
account would double the listed covered call returns. 


NEW PICKS 

January Plays

ASDV - Aspect Development  $71.88   *** Technicals Only ***

Aspect Development creates, markets and supports enterprise client
server software and content products that enable manufacturers to
improve product development and business processes through
component and supplier management (CSM). Aspect's CSM solution is
licensed to global enterprises in many industries including
electronics and high technology, aerospace and defense, automotive, 
industrial process and consumer package goods. The CSM solution 
incorporates four interrelated elements, the Explore family of 
enterprise client server software products, the VIP family of
component and supplier content databases, Professional Services
for legacy data conversion and business process consulting and a
Web Catalog Publisher. Aspect's customers include more than 150 of
the 200 largest manufacturing companies in the world.

In short, ASDV makes Internet-based software and reference data
products that help businesses improve product development and
business processes through component and supplier management
solutions. That's one of the hottest sectors in the market right
now and the late-December rally has boosted the stock out of an
old trading range to new all-time highs. We will use the technical
support from the recent consolidation area to provide a favorable
entry position.

Action    Month &  Option  Open     Closing  Cost     Return On
Req'd     Strike   Symbol  Interest Price    Basis    Investment

Sell Call FEB 60   QDV BL  160      14.88    57.00     5.3% ***

Sell Put  FEB 50   QDV NJ  10        1.19    48.81     7.6% ***
Sell Put  FEB 55   QDV NK  40        2.06    52.94    12.5%
Sell Put  FEB 60   QDV NL  40        3.38    56.62    16.7%

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

****

CNXT - Conexant Systems  $80.56   *** Post Earnings Drop? ***

Conexant provides semiconductor products and systems solutions
for communications electronics. Conexant delivers integrated
systems and semiconductor products for a range of communications
applications. These products facilitate communications worldwide
through wireline voice/data communications networks, cordless
and cellular wireless telephony systems, personal imaging devices
and equipment and emerging cable/wireless broadband communications
networks. CNXT operates in five business segments that include
Personal Computing, Network Access, Wireless Communications,
Digital Info-tainment and Personal Imaging.

Today Conexant Systems reported that it had record revenues in
the latest quarter and expects a 40% increase in revenues for its
fiscal 2000. The company experienced record product shipments
across a broad range of its businesses, including networking and
wireless communications and personal computing. The CEO said the
company is well positioned to grow significantly faster than the
overall semiconductor industry and expects to deliver more than
$2 billion in revenues next year.

A bullish outlook for sure but we expect a post-earnings sell-off
and that's when we want to open this position. Today's quotes are
listed but they won't be accurate tomorrow. Use good judgment and
try to achieve a cost basis near the technical support at $60.

Action    Month &  Option  Open     Closing  Cost     Return On
Req'd     Strike   Symbol  Interest Price    Basis    Investment

Sell Call FEB 65   QXN BM  509      18.63    61.93    5.0% ***
Sell Call FEB 70   QXN BN  1476     15.38    65.18    7.4%

Sell Put  FEB 60   QXN NL  1359      1.75    58.25    9.8% ***
Sell Put  FEB 65   QXN NM  263       3.00    62.00   15.3%
Sell Put  FEB 70   QXN NN  78        4.63    65.37   17.6%

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

****

CTXS - Citrix Systems  $155.00   *** Split Run? ***

Citrix supplies thin client/server application server products
and technologies that enable enterprise-wide deployment of
applications designed for Windows operating systems. Their
MetaFrame and WinFrame product lines, developed under license
and strategic alliance agreements with Microsoft Corporation,
permit organizations to deploy Windows applications without
regard to location, network connection or type of client hardware
platforms. MetaFrame software is an enhancement to the Windows NT
Server 4.0, Terminal Server Edition. The MetaFrame product line
enables organizations to deploy, manage and access applications
across the extended enterprise. WinFrame is a Windows application
server software based on Windows NT 3.51 that allows customers to
deploy advanced Windows applications remotely, provide Windows
applications to a broad array of client platforms and publish
enterprise applications on a corporate Intranet.

Today Citrix posted fourth-quarter operating earnings of $37.7
million, 50% higher than the year-earlier quarter and slightly
ahead of Wall Street's consensus expectations. Citrix also said
they would split their stock 2-for-1 in the form of a dividend.
The dividend is payable on or about February 16 to shareholders
on record as of January 31.

The stock has excellent support near $120, offering a number of
favorable entry points, depending on your risk/reward outlook.

Action    Month &  Option  Open     Closing  Cost     Return On
Req'd     Strike   Symbol  Interest Price    Basis    Investment

Sell Put  FEB 120  XSQ ND  118      2.31     117.69    6.9% ***
Sell Put  FEB 125  XSQ NU  21       3.25     121.75    9.2%

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

****

DITC - Ditech  $118.00   *** Another Split Run ***

Ditech designs, develops and markets equipment used in building
and expanding telecommunications and cable communications
networks. Their products are: echo cancellation equipment and
equipment that enables and facilitates communications over fiber
optic networks. Echo cancellation products eliminate echo, which
is a significant problem in existing and emerging networks. Their
optical communications products enable the implementation of
wavelength division multiplexing technology, which is becoming
more widely adopted by service providers to address network
capacity constraints. Ditech's optical communications products
are designed to function either as stand-alone products or as a
complete system known as the Optical Path Solution. To date, the
vast majority of its revenue has been derived from sales of its
echo cancellation products.

Ditech officials also recently authorized a two-for-one split of
its common stock. The split will be paid as a stock dividend on
February 16 to shareholders of record on February 1, 2000. Ditech
shares have rocketed over 1000% since the initial public offering
last summer and Robertson Stephens analyst Paul Johnson says the
company is poised for further growth in 2000. He recently raised
his earnings-per-share estimates for the telecom equipment maker
and reiterated a "buy" rating, based on Ditech's announcement of
orders for its echo-cancellation products from two major telecom
companies.

Action    Month &  Option  Open     Closing  Cost     Return On
Req'd     Strike   Symbol  Interest Price    Basis    Investment

Sell Call FEB 90   DUI BR  30       34.75    85.25     5.6% ***

Sell Put  FEB 85   DUI NQ  7         3.75    81.25    13.5% ***
Sell Put  FEB 90   DUI NR  59        5.25    84.75    17.9%

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

****

NEWP - Newport Corporation  $63.19   *** One The Move! ***

Newport, together with its consolidated subsidiaries, is a global
supplier of high precision components, instruments, positioning
and measurement systems to the fiber optic, computer peripherals,
semiconductor equipment and scientific research markets. Newport
designs, manufactures and markets components and systems that
enhance productivity and capabilities of automated assembly and
test and measurement for precision manufacturing and engineering
applications. The company also provides sophisticated equipment
to commercial, academic and governmental research institutions
worldwide. NEWP operates in three business segments, Components
and Subassemblies, Instruments and Systems and their European
operations.

We favor this position based on the networking sector performance
and the underlying technicals for the issue. We will use the
recent consolidation area near $50 as an entry target for this
aggressive combination play.

Action    Month &  Option  Open     Closing  Cost     Return On
Req'd     Strike   Symbol  Interest Price    Basis    Investment

Sell Call FEB 55   QNW BK  23       11.38    52.06     5.6% ***

Sell Put  FEB 50   QNW NJ  0         1.31    48.69     9.4% ***
Sell Put  FEB 55   QNW NK  0         2.75    52.25    14.0%

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

****

NXTL - Nextel Communications  $119.12   *** A New Range ***

Nextel Communications provides digital and analog wireless 
communications services throughout the United States. Nextel
offers a differentiated, integrated package of digital wireless
communications services under the Nextel brand name, primarily
to business users. Their digital network constitutes one of the
largest integrated wireless communications systems utilizing a
single transmission technology in the United States. Nextel has
significant specialized mobile radio spectrum holdings in and
around every major business and population center in the country,
including all of the top 50 metropolitan statistical areas in the
United States. Through its subsidiaries, the company operates or
has interests in wireless communications systems in and around
various major metropolitan market areas in Latin America, Asia
and Canada.

Another "technicals only" play as the news in NXTL's recent past
is a bit complex. Regardless of the problems with Nextwave and
their license agreements, Nextel has moved to the next level with
a break-out above resistance near $110. Now there is no turning
back!

Action    Month &  Option  Open     Closing  Cost     Return On
Req'd     Strike   Symbol  Interest Price    Basis    Investment

Sell Put  FEB 100  FQC NT  1292     1.88     98.12    6.2% ***

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

****

QCOM - QualComm  $146.63   *** An OIN Favorite ***

QualComm is a leading provider of digital wireless communications
products, technologies and services. QualComm designs, develops,
manufactures and markets wireless communications, infrastructure
and subscriber products and makes Application Specific Integrated
Circuits, based on its Code Division Multiple Access technology. 
QUALCOMM also licenses and receives royalty payments on its CDMA
technology from major domestic and international telecom equipment
suppliers. QCOM also manufactures and distributes and services for
the OmniTRACS system. The company has contracts with Globalstar to
design, develop and manufacture subscriber products and ground
communications systems for their satellite system.

Just a quick breather for this market-leading issue and now it
appears to be bracing for another upside move. We favor the recent
support near $135 and will try to get in on the ground floor with
this conservative combination position.

Action    Month &  Option  Open     Closing  Cost     Return On
Req'd     Strike   Symbol  Interest Price    Basis    Investment

Sell Call FEB 125  AAF BE  2493     27.63    119.00    5.0% ***
Sell Call FEB 130  AUA BF  2578     24.75    121.88    6.7%

Sell Put  FEB 115  AAF NC  1431      3.88    111.12   11.7% ***
Sell Put  FEB 120  AAF ND  1378      5.00    115.00   13.5%
Sell Put  FEB 125  AAF NE  2066      6.38    118.62   14.7%
Sell Put  FEB 130  AUA NF  2476      8.38    121.62   16.6%

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

****

VRIO - Verio  $68.00   *** Master ISP ***
  
Verio provides comprehensive Internet services with an emphasis
on serving the small and medium-sized business market. Services
offered by the company include providing clients with telecom
circuits that permit them to make connections and transmissions
over the Internet, and Web hosting services that provide clients
with Internet presence in the form of a Website. Other services
include an expanding package of enhanced Internet tools such as
electronic commerce, enabling customers to conduct transactions
with their customers and vendors over the Internet, and virtual
private networks, permitting clients to engage in communications
with their employees, vendors, customers and suppliers, with whom
secure Internet communication capabilities are important.

Verio has been providing Internet services since the world wide
web began and today the world's largest operator of Web sites for
businesses announced it is offering a new digital subscriber line
service to provide high-speed Internet access to home offices and
telecommuters nationwide through an expanded agreement with Covad 
Communications. This kind of service demonstrates Verio's ability
to satisfy the increasing demand for powerful, yet cost-effective
Internet access solutions.

A bullish chart break-out and favorable option premiums provide
us with an excellent opportunity for entry into a conservative
position.

Action    Month &  Option  Open     Closing  Cost     Return On
Req'd     Strike   Symbol  Interest Price    Basis    Investment

Sell Call FEB 55   RLQ BK  861      15.25    52.50     4.8% ***
Sell Call FEB 60   RLQ BL  606      11.75    56.00     7.1%

Sell Put  FEB 45   RLQ NI  1689      0.81    44.19     5.6%
Sell Put  FEB 50   RLQ NJ  497       1.44    48.56     9.6% ***
Sell Put  FEB 55   RLQ NK  100       2.56    52.44    15.1%
Sell Put  FEB 60   RLQ NL  154       4.00    56.00    17.1%

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



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