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Daily Newsletter, Wednesday, 02/09/2000

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The Option Investor Newsletter         Wednesday  2-9-2000
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)
******************************************************************
       2-09-2000           High     Low     Volume Advance Decline
DOW    10699.20 - 258.40 10948.80 10698.80 1,052,049k 1,023  1,972
Nasdaq  4363.24 -  64.26  4460.76  4362.74 1,775,593k 1,811  2,341
S&P-100  765.47 -  16.74   785.02   765.47    Totals  2,834  4,313
S&P-500 1411.71 -  30.04  1444.55  1411.65            39.7%  60.3%
$RUT     536.00 -   1.49   541.43   534.90
$TRAN   2550.32 -  32.48  2605.87  2550.32
VIX       24.65 +   2.55    24.77    22.60
Put/Call Ratio       .54
******************************************************************

Hack Attacks And Bond Yields Spook The Markets

How about that final hour today?  Just when you thought the 
Dow Industrials were going to hold above 10,800, a rash of 
sellers showed up to crash the markets.  The Dow dropped 
faster than an online web site under a "Hack Attack".  Today's 
close is less than encouraging too as it is underneath the 
closing lows of late January.  This close at 10699, down 258, 
is also a major breakdown in the descending pattern outlined in 
Jim's Market Wrap from yesterday.  Could it be that there are no 
investors interested in bidding up stocks that are breaking to 
new 52-week lows on a daily basis?  What a shocker!  How the 
tables have turned from days when the NASDAQ was the unwanted 
index.


 

Speaking of the shining NASDAQ star, it lost some luster today, 
but not much compared to the nearly 700 point gain in just over 
a week.  The tech-heavy index closed down 64.71 to 4362.79 and 
right at the low for the session.  This index is far from any 
major technical damage though, unlike the Dow.  The NASDAQ 
composite should find support at 4300 and even stronger support 
at 4200.  If we are in for a period of consolidation after the 
big run-up, these will be key support levels.  


 

Blame it on the bond.  The 30-year treasury was the main reason 
for the big rally last week and the late sell-off today.  You 
may recall the move to the upside in the 30-year last week came 
after comments that the government would be limiting supply.  
Well today Treasury Secretary Larry Summers said the reduction 
in supply would be broad across all issuance, such as the 
5 and 10 year notes, and will not be disproportionately bestowed 
upon the 30-year bond.  Enough said.  The 30-year plummeted late 
in the day in response, to close with a yield of 6.30%.  A weak 
showing in today's 10-year note auction already had the bonds 
on the ropes.  Tomorrow may not be much better with $10 billion 
in 30-years (typically the weakest of all) coming to market. 
The Dow may not have what it takes to rule the markets anymore, 
but the bonds still have a major impact.  Look for rising rates 
to keep a lid on market optimism.  

Decreasing optimism is what we saw today with the VIX dropping 
from a very bullish stance just over 22 on Tuesday to a close 
of 24.44, near the day high.  Decliners trounced the gainers 
today on the NYSE and NASDAQ.  The NYSE saw 19 stocks head lower 
versus every 10 that went up.  The NASDAQ lost by a 23-18 margin.  
NASDAQ volume was steady at over 1.7 billion while the NYSE 
turned in just over a billion.  The S&P 500 lost 30.04 to close 
at 1411.71, holding above 1400 support.  The Russell 2000 gave 
back only a small amount, giving back 1.49 to 536.00.  

"We will stun the company with our strike and we will stop 
the company with our strike," Charles Bofferding, Boeing's 
union executive director commented on Tuesday.  In one of 
today's headlining individual stock stories, thousands of 
Boeing engineers and technicians decided to "take off" and 
initiate a strike against Boeing.  The strike comes after 
failed attempts at negotiations between a federal mediator 
and the Society of Professional Engineering Employees in 
Aerospace.  Union members seek to obtain a contract which
guarantees pay raises and bonuses.  Peter Conte, a spokesman 
for Boeing stated that Boeing would continue operations and 
would do so "to the highest degree possible."  There are no 
further talks scheduled at this time.  News of the strike sent 
shares of Boeing flying lower to close at $38.81, down $2.  

This morning, Broadvision (BVSN) announced that its Board 
of Directors had approved a 3:1 stock split, which will be 
payable to shareholders of record as of February 21st.  It is 
expected that the shares will be distributed around the 13th 
of March.  Shares of BVSN gapped up to open at $165 this 
morning and traded as high as $177.50.

Alright, try and feign surprise and stifle the yawns.  It was
announced this morning that the European Commission has 
started an investigation with a focus on Microsoft's Windows 
2000 operating system.  It is believed that the new system 
may be in violation of European antitrust laws.  The European
Commission claims that Microsoft has "bundled" its personal 
computer operating systems in a way that is only fully 
interoperable with it's own server software.  To make a long 
story short (too late), EU Competition Commissioner Mario 
Monti, commented that "Microsoft's competitors, which do 
not have access to the interfaces, would therefore... be put 
at a significant competitive disadvantage,"  John Frank, 
Microsoft's European director of law and corporate affairs, 
responded to the allegations by stating "We are confident 
the Windows 2000 desktop is fully interoperable with other 
server operating systems."  This has an all too familiar air 
about it, does it not?  Hopefully Steve Ballmer knew just what 
he was getting himself into.  Oh well, I bet the pay is good!

Plenty of news for the Biotech's today.  This morning, Imclone 
(IMCL) and SmithKline Beecham (SBH) announced a licensing 
agreement regarding a meningitis vaccine.  Details were scarce 
though the headline alone was enough to send IMCL to a close 
at $72.50, up $4.25.  The Biotech sector has been hot lately.  
Sector winners today included Gold and Transportation.  

Other movers in the Biotechs included Incyte Pharmaceuticals 
and Corixa (CRXA).  The two companies announced an agreement 
to work together to further diagnostics, therapeutic monoclonal
antibody, and vaccine development. 

An article in the Wall Street Journal reported that Merck (MRK) 
will have five of its biggest patents expire within the next two 
years.  Apparently, this news concerned investors and worked 
to bring MRK down over four points for the day.  The Drug group 
is continuing to be weak.  Other sector losers included Semis, 
Health-care, Internet, Retail and Telecom. 

Boston Biomedica (BBII) announced today that the Food and Drug
Administration has approved its Accuron 106 HIV Antigen Positive
Control to be used in the detection of the HIV virus which 
causes AIDS.  Shares of BBII, which had closed Tuesday's session 
at $5.50 a share, traded as high as $16.97 on Wednesday.

All in all, we would expect a weakening bond to weigh on the 
NASDAQ and Dow in the morning tomorrow.  How far it will dip 
will be up to the general sense of fear in the market.  The 
reasons for fear are part old and part new.  The old story of 
interest rates are back in the forefront.  We will get Retail 
Sales on Friday, but that is the only biggie left this week.  
The new story is cyber attacks on popular web sites.  It is 
making investors wonder how this new element might hurt their 
investments.  Just keep in mind that this is a traffic jam, 
not a 12-car pile-up during rush hour.  We are likely to see 
more of this in the future, but new measures will be taken to 
combat these hackers.  If you haven't noticed, security stocks 
have been going haywire lately on a possible increase in demand 
for their products.  Today, VRSN +5.38, CHKP +7.94, ISSX +7.88 
and ENTU +6.81 all gained.  Possibly sit out during the dip, 
but it's hard to say the market is due for a lasting breather.  
That sentiment has kept you out of a lot of entry points.  Not 
that the market can't go down, just that we've seen no real 
evidence that it wants too.

Trade smart and by the rules.


Ryan Nelson
Asst. Editor



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

Not All Technology Involves Silicon
By  S.P. Brown

The NASDAQ Composite Index (COMPX) has been hogging the
headlines of late, and with good reason.  Over the past six
weeks, the index has added another 8 percent to its market
value, with most of the gains coming over the last 10 trading
sessions.  What's more, over the first two trading sessions of
this week, the index has set two new records.  

http://members.OptionInvestor.com/stocknews/020900_1.asp


*********************
PLAY OF THE DAY - PUT
*********************

PVN - Providian Financial Corp. $68.25 -4.31 (-10.06 this week)

Providian is a provider of lending and deposit products to 
customers nationwide and also offers credit cards in the United 
Kingdom.  Providian serves a broad market with loan products 
including credit cards, home equity loans, secured cards and 
membership services.  With a commitment to 100% customer 
satisfaction, Providian's mission is to help its customers build 
or rebuild, protect and responsibly use credit by providing a 
quality borrowing experience that leads to active and lasting 
customer relationships (code for "C" grade consumer credit). 
Providian has $23 billion in assets under management and over 
12 million customers.

Tuesday's Write Up

Sometimes kids need to learn the same lesson twice.  Such is the 
case for PVN.  Spurred by attorneys' general in California and 
Connecticut, there are rumblings that the Federal government may 
be coming after the subprime consumer credit giant.  That 
wouldn't be the first time PVN has had suits leveled at them.  
There were already four lawsuits filed in San Francisco that 
accuse Providian of charging consumers for credit products and 
services they didn't want, transferring balances from other 
credit cards without customer approval and imposing excessive 
late fees, according to a Forbes article published as far back as 
July, 1999.  Anyway, the rumor had an effect on the technical 
outlook for the stock, dropping it below historical support of 
$75-$77 on increased volume over the last two days.  It now 
trades under its 10, 50, and 200-dma.  That's a bad sign given 
that interest rates (bond rates, not discount rates) should be 
benefiting financials.  Not so for PVN.  Its next level of 
support is way down at $60.  It doesn't mean it will get there 
though.  The rumors could be dispelled quickly and PVN is still 
a nicely profitable company with a growing earnings stream (just 
the stuff to cause an upgrade).  A tick up to $75-$77, then a 
bounce back south would provide the best confirmation for entry - 
all the better if the market is headed south too from interest 
rate worries (watch tomorrow's 10-yr bond auction).

***February contracts expire in less than two weeks***

BUY PUT FEB-75 PVN-NO OI=698 at $ 7.88 SL=5.75
BUY PUT MAR-75 PVN-OO OI=443 at $10.00 SL=7.50
BUY PUT MAR-70*PVN-ON OI=852 at $ 6.75 SL=5.00

Average Daily Volume = 1.14 mln
/charts/charts.asp?symbol=PVN



*************************************
BIG COVERED CALLS & NAKED PUT SECTION
*************************************

The DOW drags the NASDAQ down while Internet vandals
persist with their horrid "swarm" attacks.

Although a number of well-known stocks are in the dumps
today, OIN's in-the-money covered call strategy offers a
high probability of achieving a 5% monthly return. The
summary below shows that all of our previous picks are
positioned for a maximum return. Our short-term approach
focuses on a consistent monthly return, regardless of
market conditions. During a time of extreme volatility and
astronomical valuations, we are not interested in stock
ownership, just consistent growth in the value of our
brokerage account.


Summary of Previous Picks:

Covered Calls:

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

MRVC    FEB     60   58.00   75.06  $2.00    6.6%
RNWK    FEB    150  143.44  173.88  $6.56    6.0%
RIMM    FEB     60   57.38  112.00  $2.62    6.0%
NEWP    FEB     55   52.06  114.63  $2.94    5.7%
DITC    FEB     90   85.25  167.00  $4.75    5.6%
JNPR    FEB    125  120.12  185.94  $4.88    5.4%
NSM     FEB     50   48.63   61.94  $1.37    5.4%
ASDV    FEB     60   57.00  118.63  $3.00    5.3%
NEWP    FEB     65   63.25  114.63  $1.75    5.3%
QCOM    FEB    125  119.00  133.31  $6.00    5.1%
CNXT    FEB     65   61.93  104.94  $3.07    5.0%
HLIT    FEB     95   91.56  126.63  $3.44    5.0%
VRIO    FEB     55   52.50   65.13  $2.50    4.8%
CTXS    FEB    125  122.00  175.22  $3.00    4.7%
MERQ    FEB    110  106.31  138.44  $3.69    4.6%
ADAP    FEB     75   71.06  121.88  $3.94    4.6%
CNXT    FEB     75   73.50  104.94  $1.50    3.9%
GMH     FEB    100   95.81  108.00  $4.19    3.6%
NVLS    FEB     38   36.48   53.25  $1.53    3.4% Split 3 for 1

Naked Puts:

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

DITC    FEB     85   81.25  167.00  $3.75   13.7%
NEWP    FEB     60   58.81  114.63  $1.19   13.6%
IMNX    FEB    115  112.50  164.00  $2.50   13.5%
MRVC    FEB     55   53.94   75.06  $1.06   12.6%
NSM     FEB     50   48.88   61.94  $1.13   11.9%
QCOM    FEB    115  111.12  133.31  $3.88   11.8%
RNWK    FEB    130  128.00  173.88  $2.00   10.8%
CTXS    FEB    120  117.94  175.22  $2.06   10.8%
JNPR    FEB    113  110.62  185.94  $2.38   10.1%
CNXT    FEB     60   58.25  104.94  $1.75    9.9%
VRIO    FEB     50   48.56   65.13  $1.44    9.7%
NEWP    FEB     50   48.69  114.63  $1.31    9.5%
SDLI    FEB    230  227.00  313.00  $3.00    9.3%
VIGN    FEB    145  143.00  210.19  $2.00    9.1%
JNPR    FEB    110  108.63  185.94  $1.38    9.0%
HLIT    FEB     85   83.44  126.63  $1.56    8.6%
RNWK    FEB    130  127.75  173.88  $2.25    8.2%
ASDV    FEB     50   48.81  118.63  $1.19    7.7%
RIMM    FEB     50   49.19  112.00  $0.81    7.1%
ADAP    FEB     65   63.25  121.88  $1.75    7.1%
CTXS    FEB    120  117.69  175.22  $2.31    7.0%
CNXT    FEB     70   69.31  104.94  $0.69    6.9%
PGTV    FEB     95   93.69  132.50  $1.31    6.3%
NXTL    FEB    100   98.12  124.69  $1.88    6.3%
VIGN    FEB    160  157.69  210.19  $2.31    6.2%
PMCS    FEB    150  148.12  288.63  $1.88    5.8%
NVLS    FEB     33   32.63   53.25  $0.71    5.8% Split 3 for 1
GMH     FEB     95   92.75  108.00  $2.25    5.6%
MERQ    FEB     95   93.87  138.44  $1.13    5.6%


NEW PICKS 

The positions that we find favorable (and will track every week) 
will be marked by asterisks. Do not enter these trades 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 to keep the issue.

****

DITC - Ditech  $167.00   *** 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 shares have rocketed over 1000% since the initial public
offering last summer and Robertson Stephens analyst Paul Johnson
says the company is poised for more growth in 2000. He recently
raised his earnings-per-share estimates for the telecom equipment
maker and reiterated a "buy" rating, based on DITC's announcement
of orders for its echo-cancellation products from two major
telecom companies. 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 has been on the move since early February when the stock
broke-out of a recent consolidation area near $120. A new deal
with Teleglobe (TGO) and today's announcement of the completed
acquisition of Telinnovation, a leading developer of voice
enhancement and echo cancellation technology, will help support
the rally.

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

Sell Call MAR 125  DUI CE  35       49.13   117.87     5.0% ***
Sell Call MAR 130  DUI CF  22       45.88   121.12     6.0%

Sell Put  FEB 130  DUI NF  106       1.44   128.56    14.0% ***
Sell Put  FEB 135  DUI NG  84        2.19   132.81    20.0%

Chart =
 /charts/charts.asp?symbol=DITC

****

FIBR - Osicom Technologies  $77.00   *** Hot Sector ***

Osicom Technologies is a designer, manufacturer and marketer of
optical networking products for use in intra-city networks. The
company's products are used by telecommunication, Internet and
cable TV service providers, and also installed in interoffice,
corporate and campus network environments to provide both
transport within and access to these networks. Other businesses
include embedded networking, which provides system-on-silicon
solutions to original equipment manufacturers, network access
and wireless access.

The recent feeding frenzy for optical networking stocks has
boosted this bullish issue to record levels in the past week
and the sector trend is extremely favorable. We offer this
position as a method of entry for the current over-extended
stock price. A reasonable cost basis exists near the previous
resistance area at $55-$58.

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

Sell Call MAR 55   QFW CK  123      25.25    51.75     5.2% ***
Sell Call MAR 60   QFW CL  227      21.50    55.50     6.7%

Sell Put  FEB 60   QFW NL  123       1.06    58.94    21.8% ***

Chart =
 /charts/charts.asp?symbol=FIBR

****

HLIT - Harmonic  $125.62  *** More Fiber Optics ***

Harmonic designs, manufactures and markets digital and fiber optic
systems for delivering video, audio and data services over cable,
satellite and wireless networks. Their products include optical
transmitters and node receivers, return-path transmitters and
receivers, network management software, and data delivery systems
that enable high-speed Internet access, video-on-demand, and other
interactive services.

Harmonic reported blow-out earnings in mid-January, besting the
Street estimates with $0.33 per share on sales of $63 million,
up 134% from $27.1 million for the fourth quarter of 1998. The
company experienced strong demand for its fiber optic products
across its worldwide base of cable customers and domestic sales
increased 197% from the fourth quarter of 1998. 
 
During the quarter, Harmonic announced the acquisition of DiviCom
(from C-Cube Microsystems) to help position the company as a
leading supplier of open-system solutions for delivering video,
voice and data over a variety of network architectures. The new
combination will double the size of the company and allow them
to offer more complete solutions for cable operators, as well as
expand their penetration into telecommunications, satellite,
wireless and other emerging broadband markets. They also intend
to develop advanced fiber optic and digital systems, along with
expanding their worldwide sales and marketing effort.

This is simply another bullish issue in a hot sector with little
upside resistance.

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

Sell Put  MAR 95   LQL OS  35        2.50    92.50     7.4% ***
Sell Put  MAR 100  LQL OT  18        3.50    96.50    10.0%

Chart =
 /charts/charts.asp?symbol=HLIT

****

Immunex - IMNX  $164.00   *** Big Down Day! ***

Immunex is a biopharmaceutical company that discovers, develops,
manufactures and markets innovative therapeutic products for the
treatment of human diseases including cancer, infectious diseases
and immunological disorders. The Company's major product lines
are Enbrel, Leukine, Novantrone and Thioplex. Enbrel is a soluble
tumor necrosis factor receptor used to reduce inflammatory
activity in patients with moderate to severe rheumatoid arthritis.
Leukine is a granulocyte-macrophage colony-stimulating factor that
is used to stimulate infection-fighting white blood cells.
Novantrone and Thioplex are chemotherapy drugs that are used to
treat pain in cancer patients. Immunex is also developing products
to address ailments such as inflammatory disease, infection,
multiple sclerosis, asthma and cancer.

The recent big news for Biotech leader IMNX was the approval of
NOVANTRONE (mitoxantrone for injection concentrate). The drug was
unanimously recommended for approval to slow the worsening of
neurologic disability and to reduce the relapse rate in patients
with clinically worsening forms of relapsing-remitting and
secondary progressive multiple sclerosis. This recommendation was
made by the U.S. FDA Peripheral and Central Nervous System Drugs
Advisory Panel.

Unfortunately, when a reasonably conservative stock like IMNX
climbs $50 in four days, there's room some profit-taking. In
this case, we think today's activity offers another potential
entry opportunity and a cost basis near technical support will
suit us just fine.

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

Sell Call MAR 130  IUU CF  241      41.50   122.50     5.0% ***

Sell Put  FEB 130  IUU NF  245       1.44   128.56    14.2% ***

Chart =
 /charts/charts.asp?symbol=IMNX

****

INSP - InfoSpace.com  $182.43   *** E-nabler! ***

InfoSpace.com provides private label solutions for content and
commerce to Websites and Internet appliances. The company's
affiliate network include a number of online giants such as
America Online, Microsoft Network and Lycos. The cornerstone of
InfoSpace.com's content and commerce services is its nationwide
yellow pages and white pages directories. In addition to its
directory services, the company also distributes other valuable
information in order to help web users locate people, places and
things in the real world.

InfoSpace.com provides services for a unique area of cyber-space.
The Internet is best known for providing information and allowing
communication. InfoSpace.com helps improve the quality of these
activities for Web sites and their customers. Their services are
utilized by more than 2,500 consumer Web sites, e-tail merchants
and wireless communications companies. They also have a number of
infrastructure tools to boost their own brand identity.

The potential of this company and the technical outlook for the
issue are both favorable. The opportunity to own the stock at a
discounted price is one of the benefits of this conservative
strategy.

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

Sell Call MAR 140  OHY CH  69       49.88    132.56    4.6%
Sell Call MAR 145  OHY CI  25       46.88    135.56    5.7% ***
Sell Call MAR 150  OHY CJ  328      44.00    138.44    6.9%

Sell Put  FEB 150  OHY NJ  224       1.00    149.00    8.1% ***
Sell Put  MAR 125  OHY OE  68        3.63    121.37    7.4%
Sell Put  MAR 130  OHY OF  17        4.63    125.37    9.3% ***
Sell Put  MAR 135  OHY OG  45        5.88    129.12   11.4%

Chart =
 /charts/charts.asp?symbol=INSP

****

ITVU - Intervu  $128.50   *** Akamai Buy-out! ***

InterVU provides Website owners and content publishers with
feature-rich, cost-effective services for the delivery of
streaming, live and on-demand video and audio content over the
Internet. InterVU's streaming media services allow Internet users
to view news, sports and other events from around the world,
listen to live radio broadcasts, watch and listen to specialized
content not widely available on television or radio, hear live
earnings reports, accompanied by a graphical presentation, view a
movie trailer before purchasing a movie ticket, videotape or DVD
and watch music videos or listen to songs on demand. InterVU has
also developed a suite of services that automate the publishing,
distribution and programming of video and audio content.

On Monday, Akamai Technologies (AKAM) announced plans to merge
with Intervu in a $2.8 billion stock deal. Akamai's business is
building faster web sites with leading-edge technology. With the
addition of Intervu's products, they will become a full service
provider in virtually every type of online content. Together, the
combined entity will have a leading market share with over 1,000
of the Web's most popular sites. Of course Monday's deal remains
subject to approval by shareholders and regulators.

This combination of the Internet's most advanced presentation
specialists should certainly produce a winner. Our basis for the
position is the favorable upside potential for the new company
and ITVU's  recent technical support near $100.

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

Sell Call MAR 105  QYU CA  20       30.25    98.25     5.6% ***
Sell Call MAR 110  QYU CB  227      26.13   102.37     6.1%

Sell Put  FEB 105  QYU NA  13        1.44   103.56    16.6% ***
Sell Put  FEB 110  QYU NB  20        2.25   107.75    21.6%

Chart =
 /charts/charts.asp?symbol=ITVU

****

MUSE - Micromuse  $206.00   *** Net Management ***

Micromuse develops and supports scaleable, configurable, rapidly
deployable, software solutions for the effective monitoring and
management of multiple elements underlying an enterprise's
information technology infrastructure. The company is a leading
provider of service-level management software and their Netcool
suite of applications is used by network service providers,
Internet service providers, telecommunications firms, and
mission-critical enterprises worldwide.

An industry analyst recently commented that service providers
who can deliver billing solutions, value-added services (such as
voice-mail, caller id, wireless Internet, etc.) and trouble-free
products with enhanced customer care will experience a number of
benefits. They will enjoy increased customer interaction by
providing the desired, unique services and will differentiate
themselves from the competition. Micromuse certainly fits that
description and we believe the issue is poised for higher share
value growth in the future. The bullish trend is comfortably
intact and the technical support near the cost basis provides
a favorable, low risk position.

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

Sell Call MAR 175  QVM CO  11       41.00   165.00     5.0% ***

Sell Put  FEB 175  QVM NO  24        1.00   174.00     6.4% ***
Sell Put  FEB 180  QVM NP  24        1.56   178.44     9.1%

Chart =
 /charts/charts.asp?symbol=MUSE

****

PROX - Proxim  $111.19  *** Wireless Telecom ***

Proxim designs, manufactures and markets wireless local area
networking products based on radio frequency technology that
enable mobile computer users to access host-based and local area
networks. 

Proxim makes components for handheld data collection terminals,
notebook computers, and other products used to access wireless 
LANs. Electronics manufacturers such as Intermec (40% of sales) 
incorporate Proxim's RangeLAN radio-frequency transceiver modules
and wireless LAN adapters into their LAN access products. Proxim
also markets branded products to systems integrators and value-
added resellers in the health care, education, financial services,
and retail industries. Its Symphony line provides wireless 
Internet access in homes and small businesses. Proxim is working
with Intel and Motorola to develop products for the hot wireless 
home networking market.

In the most recent quarter, Proxim reported record revenues,
30% higher than the previous period. They also acquired Wavespan,
a developer of wireless broadband access solutions and announced
the acquisition of Micrilor, a leader in developing unlicensed
spread spectrum wireless technology. These additions will broaden
its wireless networking capabilities and help it become one of
the dominant companies in the industry.

The technicals have begun to strengthen as Proxim is showing
signs of moving out of its recent ascending triangle. Although
it might not break near-term resistance, we favor the technical
support near $85 for this conservative position.

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

Sell Put  MAR 80   WQG OP  40        1.50    78.50     5.2% ***
Sell Put  MAR 85   WQG OQ  25        2.63    82.37     8.7%

Chart =
 /charts/charts.asp?symbol=PROX



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