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Daily Newsletter, Sunday, 06/11/2000

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The Option Investor Newsletter                    Sunday 6-11-2000
Copyright 2000, All rights reserved.                        1 of 5
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******************************************************************
MARKET STATS FOR LAST WEEK AND PRIOR WEEKS
******************************************************************
         WE 6-9           WE 6-2          WE 5-26         WE 5-19
DOW    10614.06 -180.70 10794.76 +495.52 10299.24 -327.61 + 17.41
Nasdaq  3874.84 + 61.46  3813.38 +608.27  3205.11 -185.29 -138.65
S&P-100  779.70 - 12.99   792.69 + 56.61   736.08 - 16.87 -  8.72
S&P-500 1456.95 - 20.31  1477.26 + 99.24  1378.02 - 28.93 - 14.01
RUT      523.06 + 10.03   513.03 + 55.66   457.37 - 22.33 - 11.24
TRAN    2790.17 - 39.19  2829.36 +141.81  2687.55 - 54.45 -132.02
VIX       25.19 +  1.08    24.11 -  3.38    27.49 -  1.28 -  1.23
Put/Call    .45              .41              .65             .89
******************************************************************

The economy may be slowing but so are profits.

These good news, bad news stories are killing us. The good news,
the PPI was announced Friday morning and was unchanged from last
month, which was lower than expected. Food and energy actually
went down which surprised analysts. The market celebrated with
the Dow soaring +95 points to 10763 with traders convinced that
the Fed would not raise interest rates again. Party time, right?
The bad news quickly deflated the rally balloon and sent traders
to the sidelines again. The bad news was a flurry of earnings
warnings from high profile companies. Warnings that prove the
economy is slowing but call into question the most important
aspect of stock prices, earnings.







Without increasing earnings the entire market will grind to a
halt and we have entered earnings warning season with a bang.
Leading the parade today was McDonalds, which reported slowing
sales of between -4% and -9% depending on the geographic area.
MCD dropped almost -$5 to $31.63 on the news and knocked over
-25 points off the Dow. If sales are slowing in this very low
level consumer product then other areas are suspect. Analysts
were divided on whether it was a sector problem or just a MCD
problem.  Still the results were the same, a drag on the Dow.
Of course MCD is a food stock not a tech stock so who cares?
It is strictly a sentiment reaction. The name is the key. A
big name will elicit a big response regardless of the sector.

Tech stocks were not immune either. EDS warned that revenue
would fall into the low single digits but gains would continue
to be made in cost savings and productivity improvements. OOPS!
Not what investors want to hear. Making money by spending less
is not music to investor's ears. EDS was punished severely with
a -$14 drop.

Retailers got hammered again with worries about sales at
Walmart and Target after a warning from Lands End today.
Dillards started the run with a huge earnings miss in May
followed by news last week that sales were down again. Boise
Cascade warned today after the close that slowing home sales
and higher interest rates would cause it to miss estimates.
This will further depress the wood and paper stocks on Monday.

Financial stocks headed for the cellar again as analysts traded
downgrades and concerns about profits going forward. JPM led
the drop again with -4.19 followed by CMB at -3.19. Not to be
out done, H&R Block, HRB, warned that earnings would not make
estimates and dropped -$4 at the open. Almost every sector
was represented today with even the hot biotech's having their
own warning poster child. Mylan (MYL) warned they would miss
estimates by about -50% and lost about -$7 at the open.

We are just getting started in the earnings-warning season
and the applications for ugliest contestant are piling up.
Only one week into the season we have had PG, CC, MCD, EDS,
HRB, LE, GPSI, MYL and several others I have already forgotten.
As if the warnings were not enough, the follow on downgrades
on the appropriate sectors are starting to take their toll.
The economy is clearly slowing but that is a catch 22.

The PPI report was flat from last month and the CPI is now
expected to come in below estimates also. If it does it
would be two months in a row that prices fell. Also, it is
almost a given now that Retail Sales next Tuesday will come
in less than expected and will mark the third month in a row
that they fell. Isn't this what we want?

Fed expert Lyle Gramley is now predicting no rise in June
along with many others. If the Fed is on hold then why is
the market falling? The earnings for the S&P-500 are still
estimated to grow at +18% for the second quarter. This number
has not changed recently but many think it is eminent. Ouch!
It appears the Fed rate hikes are finally working too well.
The old adage of don't fight the Fed is finally proving
correct. Fed governor Poole said today that the Fed was in
no hurry to change it's policy and would wait for a clear
trend to emerge. While most think the Fed is on hold there
is still noise from the Fed that maybe they still have a
+.25% hike on their mind. They are probably thinking about
this as an election year and don't want to be politically
incorrect in raising rates the closer we get to November.
By taking a last shot in June they risk over kill but also
cement a no hike posture until after the election. Remember
it takes 9-12 months to filter a rate hike through the system
so we still have four working their way through. The challenge
appears to be the profit squeeze. Companies are not able to
raise prices due to the competition of the Internet even
though their costs are going up. The great productivity of
the Internet era meets the high price competition of the
Internet era. The losers - corporate America and stock prices.

The picture beginning to emerge is building overhead resistance.
If profit estimates are going to start shrinking then prices
are quick to follow. The tech stocks appeared to be immune
to these problems this week with many adding decent gains even
after a +20% tech gain last week. While the Nasdaq only managed
a +61 points gain for the week it was still a gain while
undergoing a consolidation. Unfortunately most of the gain
was in the biotech sector but we will take it where we can
get it. If it were not for tech stocks the Dow would have
really been in the tank. HWP added +14 for the week and IBM
added almost +11. This is +125 Dow points. Take those points
out of the Dow and it would have been down over -300 points
for the week to close under 10500. That is right I said 10500!

Bear market rallies are short, sharp and die on low volume.
The Nasdaq gained +800 points last week on only moderate
volume. Friday the Nasdaq only managed 1.2 bln shares and
the NYSE only 785 mln shares. While the volume was terrible
the advance decline line was actually strongly positive.
We have short, sharp and low volume but there is still an
underlying positive sentiment. On Friday there was some
institutional selling and no buying which drove down the
prices. Retail buyers were still active.

So what should we expect for next week? The right answer and
$5,000 would pay for a Lexus by the weekend. We have two
distinct possibilities. On the positive side you could point
to the bullish wedge building on the Nasdaq, the strong advance-
declines from today and the expected market friendly economic
reports scheduled for next week and back up the truck. That
would be quite a gamble but if you were right you could be
amply rewarded. The key reports are the Retail Sales on Tuesday
and the PPI on Wednesday and both are expected to be in our
favor. Friday is also triple witching options expiration
and expiration week normally has a bullish bias.

On the negative side you could point to the same facts and
say "so why did the market die on Friday?" All these things
were already known and the market always moves in advance
of the facts. So where was the move?

The key here is of course the Fed and the profit warnings.
The Fed will be less and less a factor as the reports are
made public unless of course there is an upside surprise.
So that leaves the earnings warnings. These are only trouble
on the surface. The day they are announced they contain
sentiment value which acts like a shot of poison to investors.
While the news of the warning is bad for that stock price
the overall benefit is more subtle. Each warning is a sign
that the Fed hikes are working and everything is under
control. The smart money knows from experience that when
the Fed moves aggressively to raise rates for an extended
period of time that there is a limit to what they can do
without crashing the economy. That limit is here. In 1994/95
when the Fed raised rates in rapid succession the market
actually firmed around the sixth increase because investors
knew the hikes had to stop or slow for 9-12 months until
the real impact to the economy could be evaluated.

We are there. The meeting on June-27th is a non-event because
they will either hold on further hikes or take one last +.25%
shot. Either way they are done. The Fed is out of the long
term picture. This will setup a longer-term outlook for
investors but it does not mean that we may not move lower
before we move higher. The earnings warnings for the next
several weeks will cause sporadic sector events but in
the long term be beneficial. While a strong dose of poison
will kill you, a routine exposure to a smaller amount will
actually make you immune to the poison. Warnings and Fed
news may make us sick but hopefully these "vaccinations"
will also make us well.

Cash is still piling up on the sidelines. Trimtabs.com
reported that over $3 bln in cash came into equity funds
in the week ended on Wednesday. Only half of the $7 bln
from the week before but the second week in a row that the
number was positive. Investors waiting for a pull back
from the monster gains from last week are growing tired
of waiting and starting to nibble at the leaders. The
market is still seeing strong gains in individual stocks
even though the major indexes are flat.

I want to be bullish but the weakness on the Dow is holding
me back. Remember, without IBM and HWP the Dow would be
below 10500 today. We experienced this divergence earlier
this year and the end result was disaster. The only thing
that could turn this around is the financial stocks. If
they turn based on favorable reports next week then the
Dow could firm. This would give support to the Nasdaq
rally and we could see several weeks of decent gains. The
wild cards of course continue to be the warnings. A steady
stream of warnings will dull investor interest keep us
range bound into the July earnings.

I was encouraged by the Nasdaq failing to sell off this
week. I think this is the most positive point in the
entire picture. The Nasdaq, the QQQ and the IIX are all
building a bullish wedge and showing no signs of retreat.
Historically, IN MY OPINION, this is a bullish sign. There
is no guarantee or we would all be driving a Lexus.




The key to trading in this environment is to either be
market neutral or out of the market. The Nasdaq is creeping
up on 3900. I think that is the key this week. If the
Nasdaq can breakout over 3900 on decent volume I would
go long. If it falls back under 3900 I would stay flat.
By setting an arbitrary entry point above resistance you
avoid all those "should I or shouldn't I" questions. The
decision is simple and precise. Of course I would also
want the stock and sector positive also. By making your
decision on Nasdaq 3900 you ignore the Dow problem until
it impacts the Nasdaq. Once into the position be faithful
about setting those stop losses in case the stock you
bought is the next on the warnings list!

My play of the day is on the QQQ. See the Editor's Plays
section for the description.

Because we have so many new readers we are updating and
reprinting my ten part educational series from last fall.
I started this week with Entry Point, Entry Point, Entry
Point. Look for it in the Options 101 section of the website.

Trade smart, sell too soon.

Jim Brown
Editor

On a personal note, Jodi Mayo, a long time customer service
employee here which thousands of readers have communicated with
in the past, delivered her first child, an 8lb, 7oz baby girl
named Abby on Friday. The baby was still born with the cord
wrapped around it's neck. Please remember Jodi and her family
in your prayers. Notes may be sent to jmayo@OptionInvestor.com.


***Attention OI Readers***

Starting today, we are proud to introduce a new section to further
help guide you in the markets.  This section is devoted to playing
the HOLDRS, such as the QQQs.  I have been very excited about the
development of this new feature and have tapped the mind of our
most tenured researcher, Buzz Lynn, to guide us through it.  The
section is called Sector Trader and will be updated on Tuesdays,
Thursdays and Sundays.  Look for it in section one of your email
or in the Strategies section of the website.

Enjoy,
Ryan



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to analyze stocks and trade options like the pros.
Don't wait, do it now.

June 22-24 Los Angeles    3 day
June 27-28 Washington DC  2 day
July 13-15 New York       3 day
July 21-23 Seattle        3 day
July 27-29 Atlanta        3 day
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Aug  17-19 Orlando        3 day
Aug  28-29 Detroit        2 day

Australia coming soon!

Has the market been beating you up? Did you give back
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***************************
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**************
EDITOR'S PLAYS
**************

This is going to be exciting readng? I did not make a single
trade last week. Unbelieveable! I had business meetings with
out of towners all week. When I wanted to trade the market was
down and when it was up I was in meetings. Sometimes things just
don't work out but in light of last weeks activity I probably
saved money staying out of the market. The only event worth
mentioning was MSTR. I always have my Qcharts open just to
keep track on the current market status. Since I was not in
the market I was surprised on Tuesday morning with a "Your
stop has been hit" alert voice when I was not even trading. I
was not even in the room but heard it and went to check. The
stop was on MSTR. I had set it back in April when I was waiting
on MSTR to rebound from the big drop. I had set $30 as an
alarm in my Qcharts to remind me when it broke out. I forgot
it even existed since MSTR has been trading under $20 for
ages. Well, the alarm went off on Tuesday morning and I looked
at the chart and there was no real news and I thought "I
will wait until it breaks $30, (it had just touched and fell
back) then I will buy some. I looked at it several more times
that morning but it had stopped just under $30. Oh well, on
to other things, business was calling. When Ryan and Matt,
the OIN editors, came in my office after the close on Friday
to go over the picks for the weekend, the first thing they
said was "did you see MSTR?" That ruined my entire day. MSTR
closed at $62.56 on news of additional funding. +$32, +110%
from where my faithful Qcharts alerted me on Tuesday. That
would have paid for the Prowler my wife wants!






PLAY OF THE DAY

I had a reader email a suggestion for using the Internet Straddle-
Strangle strategy on the QQQ instead of on an expensive and
volatile Internet stock. Based on the bullish wedge on the
QQQ right now I agreed. The concept for this play is to sell
both a call and a put on the same stock and then cover either
side of the play depending on the direction the play takes.

I am going to write this up as a strangle. That means you sell
an out-of-the-money call and an out-of-the-money put. For the
example I am going to use a Jul-$95 call and the Jul-$90 put.




The premium on the $90 put is $4.63  QVQ-SL
The premium on the $95 call is $6.13 QVQ-GQ
The QQQ stock is $93.56.

To open the position you sell both naked. The margin required
is 50% ($46.50) or less depending on your broker. The premium
received is $10.75 or 23% of the margin requirement. Because
you are short both a call and a put with a $5 difference in
the strike price only one will be executed at expiration. The
key here is to cover which ever side is likely to be in the
money. To do this you will buy the QQQ stock if it moves up
over $95 and you will short the QQQ stock if it goes below
$90. Because of the $5 spread between the strike prices you
can be uncovered for quite some time. If the stock moves back
and forth between $90 and $95 without breaking either strike
then you stay uncovered.




THE KEY IS TO AVOID TRADING THE STOCK. You don't want to keep
going long, short, long, short, etc. This is the reason for
the $5 spread. It gives you breathing room between trigger
points. The ideal execution is to launch the trade as it
crosses the midpoint and hope it never comes back again. The
best stocks are stocks going in one direction where you never
have to trade the stock after you cover the first time.

This strategy is not for everyone but is you have the capital
to execute it and pick the right entry point then you may never
have to cover but one side and never worry about it. The maximum
return on the play is 23% and it is fairly low risk. Your return
depends on how many times you have to cover the position but
with $10 of premium you have quite a bit of wiggle room.

**********

I am still holding my VIGN, YHOO calls and my leaps on NOK, VOD,
MSFT.  I did not sell calls against my leaps as planned since
NOK and VOD were basically flat. I have plenty of time and haste
makes errors.

Good Luck

Jim



****************
MARKET SENTIMENT
****************

Sunday, June 11, 2000

A Trend that Will Continue!

The market ended on a boring note Friday, as the Producer Price
Index turned out to be a non-event, and the markets just yawned
in anticipation of the number. Traders and investors must have
gotten a good head start on the weekend, as volume on the NYSE
was a paltry 787 million, while the NASDAQ traded 1.28 billion.

Most of the major indexes were trading range bound this past
week, but after such a phenomenal week before, this market action
is actually positive. The NASDAQ, which had that spectacular +608
point advance the week before, gained only +61 this last week.
Now after such a big run-up, many technicians thought we might
have a moderate retracement, but so far, this has not been the
case. Now during the huge run-up, we saw the "Generals" leading
the way (i.e. Cisco Systems, Intel's, Oracle's, Sun Micro's,
etc.). This last week, we witnessed many of the second and third
tier performers leading the way, while the "Generals" stayed
trading range bound. This is a trend that we believe will
continue in the short term, as the short sellers get nervous
while the bulls take aim and fire. Margin calls have been greatly
diminished as well, so extra selling pressure has all but dried
up, which benefits the bulls on every front.

Cash continues to increase on the sidelines, but what is going to
propel investors to use it? It obviously wasn't Friday's Producer
Price Index, so are investors waiting for Retail Sales number
next week, or the Consumer Price Index? The Fed Meeting, or
Oracle earnings in two weeks? Whatever issue it is, when this
market moves again, it will go in a hurry. With money managers
and mutual funds managers' bonus's looking a little weak, the
fear of missing an opportunity is significant. What we will
continue to see this next week is the 2nd and 3rd tier technology
companies coming back to life. Whether this is due to short
covering, buying a golden opportunity or just random speculation
remains to be seen. But this last week we saw dozens of depressed
equities that came back to life and had huge percentage returns
in a matter of days. We think this trend will continue in the
short term.

Lastly, (we will continue to hammer this issue home) we are
getting to the heart of negative prerelease season, and it is
already stacking up to be a big one. Negative earning
announcements have just occurred this past week, as Circuit City,
Electronics for Imaging, Proctor & Gamble, Lands End, H&R Block,
McDonalds, Electronic Data Systems, and Mylan Labs have all
warned of poorer times ahead. Citrix Systems (CTXS) got pounded
for about $20 in two days as investors worried about their
upcoming quarter as well. It is still to early to tell, but it

looks like there might be a rocky road ahead for the July
earnings run, so stay cautious, and stick with the sectors that
look to perform well even in a slowing economy. Have a good
trading week!


BULLISH Signs:

Interest Rates (5.890):
With the long bond breaking below the crucial 6% benchmark, fears
of higher rates may finally be subsiding.

NASDAQ Short Interest:
As of May 15, the level of short sales not yet closed out, known as
short interest, climbed 4.80% to 2,780,161,105 shares. With the
tame inflation numbers posted this past week, it was quite
evident that a major short squeeze was occurring.


Volatility Index (25.19):
The VIX has proved that the low 30's are an excellent buying
opportunity, and the low 20's continue to be a great selling
opportunity.


Mixed Signs: None


BEARISH Signs:

Slowing Economy:
If the economy is truly slowing down, we will start feeling the
effects once corporate earnings report over the next couple of
quarters. This has just occurred as Circuit City, Electronics for
Imaging, Proctor & Gamble, Lands End, H&R Block, McDonalds,
Electronic Data Systems, Mylan Labs have all warned of poorer
times ahead.

Liquidity Crunch:
With the fear of inflation, and the most likely scenario of
several more rate hikes, liquidity in the marketplace will become
a more significant issue and put more pressure on equities.

IPO Dilution:
$58.6 billion of stock was freed up for trading in March, $67.3
billion April, and $118.3 billion in May. This is too much
stock for the system to handle.

Energy Prices:
With the rapid rise in crude oil, everything from manufacturing
to transportation will be affected by higher costs. These higher
costs will be felt 1-2 quarters out, and could put pressure on
profit margins.


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

The Power of Sentiment Analysis

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


Pinnacle Index
*****************************************************************
OEX                              Friday       Tues        Thurs
Benchmark                        (6/9)       (6/13)       (6/15)
*****************************************************************
Overhead Resistance (805-825)    16.42
Overhead Resistance (775-800)     2.53

OEX Close                       779.76

Underlying Support  (745-770)     1.89
Underlying Support  (715-740)     5.71


What the Pinnacle Index is telling us:
Both overhead resistance and support are light, indicating that
the OEX can move 15 points in either direction with relative
ease. However, both OTM support and resistance are strong,
indicating that these levels should hold.


Put/Call Ratio
*****************************************************************
                                Friday      Tues       Thurs
Strike/Contracts                (6/9)      (6/13)      (6/15)
*****************************************************************


CBOE Total P/C Ratio            .45
CBOE Equity P/C Ratio           .42
OEX P/C Ratio                   .77


Peak Open Interest (OEX)
*****************************************************************
                     Friday          Tues            Thurs
Strike/Contracts     (6/9)          (6/13)           (6/15)
*****************************************************************

Puts                740 / 8,917
Calls               795 / 9,394
Put/Call Ratio        0.95



Market Volatility Index (VIX)
*****************************************************************
                    Major
Date                Turning Point       VIX
*****************************************************************
October 97          Bottom              54.60
July 20, 1998       Top                 16.88
October 8, 1998     Bottom              60.63
January 11, 1998    Top                 26.38
March 4, 1999       Bottom              28.15
May 14, 1999        Top                 25.01
July 16, 1999       Top                 18.13
August  5, 1999     Bottom              32.12
October 15, 1999    Bottom              32.06
January 28, 2000    Bottom              29.09
April 14, 2000      Bottom?             39.33

June 9, 2000                            25.19



**************
MARKET POSTURE
**************

As of Market Close - Friday, June 9, 2000

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

DOW Industrials   10,200  11,400  10,615    Neutral   5.05
SPX S&P 500        1,350   1,500   1,457    Neutral   5.30
OEX S&P 100          725     800     780    Neutral   5.30
RUT Russell 2000     450     550     523    Neutral   5.05
NDX NASD 100       3,000   4,000   3,761    Neutral   5.30
MSH High Tech        800   1,050   1,007    Neutral   6.06

XCI Hardware       1,250   1,600   1,503    Neutral   5.30
CWX Software       1,050   1,300   1,286    Neutral   6.06
SOX Semiconductor    850   1,200   1,169    Neutral   5.30
NWX Networking       900   1,100   1,139    BULLISH   6.02
INX Internet         500     800     618    Neutral   5.30

BIX Banking          530     640     584    Neutral   6.09  **
XBD Brokerage        400     500     478    Neutral   5.05
IUX Insurance        540     620     636    BULLISH   5.16

RLX Retail           900   1,000     836    BEARISH   6.09  **
DRG Drug             355     400     379    Neutral   4.28
HCX Healthcare       710     800     778    Neutral   4.28
XAL Airline          140     155     171    BULLISH   5.25
OIX Oil & Gas        265     300     308    BULLISH   5.11

Posture Alert
Friday's PPI ended up being a non-event, and traders must have
headed home early for the weekend, as volume on the major indexes
dried up substantially. For the week, most sectors made very
little movement in either direction, while many stayed within a
very narrow trading range. However, the Retail sector ended off
the week on a sour note, by closing down -3.11% to end with an -
8.5% loss. As such, we have lowered Retail to Bearish from
Neutral, and have lowered Banking to Neutral from Bullish.



*************
SECTOR TRADER
*************

By Buzz Lynn

************
Introduction
************

You say you don't want the responsibility of picking the winning
stock, but you know the sector is on fire?  (Is that what's
eating you, Bunky?)  If so, you've come to the right place!
Tonight we kick off the new Sector Trader section containing the
diversification benefits of a sector mutual fund, and all the
liquidity of the fast-paced equity market.  Have you ever tried
to pick the sure-fire winning stock in an emerging sector only to
have it go belly up?  Sadly, we all have.  Murphy is alive and
well.  But there is a solution.  Our objective in building this
section is to give you a source for trading hot sectors while
minimizing the effects of picking the losing issue - in short,
your one-stop shop in the fight against Murphy.

While there are many sector instruments, including indices to
trade, we will stay mostly focused on equity-backed issues in
the most active and tradable sectors.  We may from time to
time list other active indices like SPDRs or DIAs, but not yet.
Unfortunately for us option traders, options aren't always
available on some issues.  But until they are, we invite you
consider long or short positions for your long or short-term
portfolios. (Note: make sure you understand and can accept the
unlimited risk of shorting a stock.  It is not a strategy for
those new to trading, and we do not endorse it in all instances.
However, it is an effective tool for market neutral and
experienced traders.)  Anyway, the most prevalent of these
equity-backed sector trackers are called "holders", which is
where we begin tonight.

Never heard of "holders"?  It's a hot new way to play a sector
without the stress of having to pick individual winners!  The
work is already done for you!  You can thank Merrill Lynch for
the work and the moniker, which comes from the condensed version
of "HOLding company Depository ReceiptS (HOLDRS).

HOLDRS got their start in 1998 when Merrill issued a single stock
to track the various components of the Telebras (Brazilian phone
company) breakup.  Those shares offered the buyer undivided
ownership rights in each of what would become individual phone
companies after the breakup, all in one convenient little package
trading under the symbol TBH.  TBH and all HOLDRS created since
can literally be traded for a basket of their component stocks.
Ownership of a HOLDRS is similar to owning a sector index except
that with HOLDRS, you actually own the underlying shares.  The
difference is that the index settles in cash where the HOLDRS
settle for actual shares - a NON-taxable conversion we might add,
according to Merrill Lynch (we aren't in the tax advice business,
so you better see your own tax accounting professional on that
one).

Convertible and non-taxable are two of the big benefits of
ownership.  Say you own HOLDRS and five of the twenty underlying
issues are starting to suck down yesterday's canal water.  All
you need to do is call your broker and ask him/her to convert
your HOLDRS into underlying shares - tax free.  Then sell the
five losers in the open market and ride the remaining 16 winners.
It also works in reverse.  If you happen to own all 20 underlying
issues of a particular HOLDR in the right ratio, you can convert
them to actual HOLDRS shares in order to gain the ease of trading
just one instrument.  (Click on the link in results below to see
the underlying issues and their relative weights.)

Realizing the success Merrill was having, why not create tracking
stocks similar to an index backed by and convertible to the top
20 stocks of the hottest sectors?  No longer would investors be
forced to do the paperwork of index mutual funds, or the homework
of picking individual winning stocks.  Management fees would be
virtually eliminated, and HOLDRS could be bought and sold at will
on the AMEX, creating a more liquid market for a basket of goods.

The light bulb went off.  In September 1999, Merrill issued
Internet HOLDRS called HHH, which comprised shares of the top 20
Internet companies (mostly B2C, online brokers, ISPs, and
portals) like AOL, YHOO, AMZN, and EBAY, plus 16 others.  Success
begets success, and the rest, as they say, is history.  Since
then HOLDRS have been issued for the following sectors.

Symbol  Sector

BBH     Biotech (issued November, 1999)
PPH     Pharmaceuticals (issued February, 2000)
TTH     Telecom (issued February, 2000)
IAH     Internet Architecture (issued March, 2000)
IIH     Internet Infrastructure (issued March, 2000)
BBH     B2B (issued March, 2000)
BDH     Broadband (issued April, 2000)
SMH     Semiconductors (issued May, 2000)

Excepting TBH, which trades on the NYSE (we won't be tracking
that one), all HOLDRS trade on the American Exchange (AMEX) just
like regular shares of stock.  The only exception is that you
have to buy round lots of 100 shares - no odd lots allowed.

There you have it - hot sectors with minimal individual stock
risk!  Be sure to click on the links in the results section
to see which stocks and how many shares of them make up each
HOLDR.  We're building this section for you, the sector trader!
So, let us know what you think at sectortrader@OptionInvestor.com.


------

Index             Last     Mon     Tue     Wed     Thu    Week
QQQ nasdaq-100   93.56   +0.31   -2.50   +2.38   +0.38   +0.25
HHH Internet    124.56   +0.63   -3.75   +6.06   -1.56   -0.31
BBH Biotech     160.00   +8.25   +5.13   +0.75   -5.06  +15.19
PPH Pharm.       94.25   -0.44   +1.44   -0.38   +0.25   +1.75
TTH Telecom      76.75   +0.38   +0.56   +0.75   -0.19   +2.25
IAH I-net Arch   90.13   -0.19   -1.63   +3.31   +0.69   +2.56
IIH I-net Infr   58.38   +0.81   -2.31   +3.19   +0.44   +2.25
BHH B2B          41.75   +2.75   -2.44   +1.44   +0.81   -2.94
BDH Broadband    85.56   -0.44   -1.56   +0.56   +0.63   -1.94
SMH Semicon.     98.63   -0.63   -4.06   +1.56   +0.44   -0.69


**************
Recent Updates
**************

QQQ - NASDAQ 100 $93.56 (+0.25) optionable.  Would someone please
wake us up when the NASDAQ breaks out of stagnation?  Seriously,
with range-bound trading from roughly $92 to $95 all week, it's
been tough to get a profitable trade off in either direction.
MSFT anti-trust woes and interest rate/inflation fears are
helping to keep a lid on this index.  The PPI news showing no
inflation at the wholesale producer level did not give traders
the strong rally they had hoped for.  Not to sound like a
growling bear, but with the economy slowing, an FOMC meeting in
about two weeks, the CPI due out this week, and technical
resistance now firmly at $95 with the stochastic in overbought
territory, QQQ looks heavily favored to roll over and retest
support at $91.  If that doesn't hold, look for $88 or even $86.
(Now that we've said that, contrarians will be looking for a
rally.)  Though unlikely to rally, should the market for whatever
reason move back up, look for mild resistance at $94, strong
resistance at $95 and again at $98.  If QQQ can get through $98
and hold, that would be a super strong indicator for the future
as that was a former support level prior to April 11th.  But
don't bet on it.  We tend to think the better immediate play is
to the downside.

At Support:
BUY CALL JUL-86 YQQ-GH OI=  526 at $11.88 SL=9.00
BUY CALL JUL-88 QVQ-GJ OI=  720 at $10.63 SL=7.75
BUY CALL JUL-91 QVQ-GM OI=  421 at $ 8.63 SL=6.00

SELL PUT JUL-86 YQQ-SH OI=20413 at $ 3.25 SL=5.25, Huge OI

At Resistance:
BUY PUT  JUL-98 QVQ-ST OI=  341 at $ 9.00 SL=6.25
BUY PUT  JUL-95 QVQ-SQ OI=  501 at $ 7.38 SL=5.25
BUY PUT  JUL-94 QVQ-SP OI=  672 at $ 6.88 SL=4.75

Average Daily Volume = 26.6 mln
/charts/charts.asp?symbol=QQQ

------

BBH - Biotech $160.00 (+15.19) Not optionable.  Despite some
profit taking on Thursday in front of what turned out to be a
benign PPI, biotechs have made a strong recovery since late May,
tacking on 25% from its' $120 low.  With AMGN, DNA, and IMNX
making up a huge part of this index, it's no wonder it was up on
Friday - lack of bad news equals good news for this group.  DNA
shares gained $8.69 but were surprisingly unhurt by the filing of
a Herceptin patent infringement suit by Chiron.  While much
smaller players in the BBH composition, MLNM (+$13.69), AFFX
(+$26.50), HGSI (+$22.00), and CRA (+$14.25), also threw their
collective move behind Friday's gain.  Notice that these issues
all fall in the subsector of genomics.  Technically, holding at
$160 is good sign since it happened at the March support level of
about $160.  This level may be resistance for a short period of
consolidation, but the support level will now likely be closer to
April and May's resistance of $148 to $150.  Watch that level for
new support and consider a long position if it bounces up from
there.  If we get a break over $160 as the rest of the NASDAQ
breaks out with renewed volume, that could also be a good entry.
Keep your eyes balls on the stochastic though, it is flashing an
overbought signal telling us that the sector may be subject to a
larger consolidation or pullback if the market heads south from
here.

Average Daily Volume = 711 K
/charts/charts.asp?symbol=BBH

------

IAH - Internet Architecture 90.13 (+2.56) Not optionable.  Making
its debut in late February, IAH has had nowhere to go but down
overall since reaching its March peak of $107.  However that
didn't stop components HWP (+$2.12), SUNW (+$2.44), and FDRY
(+$11.63) from adding to Friday's slight gain.  JNPR was the big
loser at -$13.94.  The bigger technical picture is that IAH had
been finding intraday support over the last week at $85 following
it's gap up from $82 the previous Friday.  However, buyer beware
- it may need to fall back to $82 in order to backfill the gap.
Thursday's doji star following Wednesday's big move up, not to
mention an overbought stochastic are telling us that IAH may be
in for a reversal.  Solid resistance is at $90, a level of
previous support that could be tough to break unless we see the
overall market react positively this coming week.  With the CPI
next week and the FOMC meeting on the 28th, don't bet on it just
yet.  Volume has fallen off this week too.  It looks like a short
candidate (not yet elected) to us at this level.

Average Daily Volume = 78 K
/charts/charts.asp?symbol=IAH

------

IIH - Internet Infrastructure $58.38 (+2.25) Not Optionable.
Like its brother, IAH, introduced to trading at the same time
(late February), IIH is looking like an overbought short
candidate on the stochastic, and running into firm resistance at
$60.  However, we like the prospects for this sector going
forward as its components, including three of its larger holdings
and biggest gainers Friday (AKAM +7.44, VRSN +3.00, and INKT
+2.12), are the plumbing necessary for the Internet's growth.
IIH has been strong on a short-term basis.  Even so, it still has
the capability to backfill the gap down to $50 from the previous
Friday.  Technically, IIH found support mid-week at $53.50 and
held well at $57 on Thursday and Friday.  That's a good sign of
strength.  But with the CPI out this week (which probably means
nothing given traders underwhelming reaction to the PPI), and the
FOMC looming at the end of June, not to mention the sequentially
decreasing volume, it looks ready to roll over.  Unless the
overall market goes into rally mode (unlikely), a breakout over
$60 looks unlikely.  Keep this one on your short candidate list.

Average Daily Volume = 312 K
/charts/charts.asp?symbol=IIH

------

BDH - Broadband $85.56 (-1.94)) Not optionable.  With LU and
NT making up the greatest percentage of this index, and those two
trading flat for the last six weeks, it should be no surprise
that BDH looks just like these two on the chart and probably will
for a while.  The good news is that there are whole bunches of
likable companies in the makeup that took deep hits in the tech
selloff - names like QCOM JDSU, SCMR, MOT, SDLI, TERN, GLW and
others.  We like this index a lot and think this could be a good
bottom fishing opportunity to play the sector.  Some of the
components, though they are small in the BDH composition, are
already on a tear (GLW, SDLI).  Technically, BDH held up well
this week finding support at an old resistance level of $84.  We
think it can hold again and move up from there depending on the
fortunes of LU and NT, which look pretty good long-term.  $88 to
$89 is looking like resistance right now.  So consider dips to
$84-$85 as a buying opportunity - likewise too if it breaks over
$90 on increased volume.  This could be one for your long-term
portfolio.

Average Daily Volume = 203 K
/charts/charts.asp?symbol=BDH

------

SMH - Semiconductor $98.63 (-0.69) Not optionable.  Even when the
overall tech sector is ice cold, the semiconductors manage to
outpace the rest of the market.  INTC, AMT, and TXN, all leaders
in their fields are the biggest components of SMH and really make
this HOLDR look good.  Even smaller names like AMD and NSM pull
their weight.  Only trading since early May, it doesn't have much
of a track record yet, but it should develop as its components
continue to be purchased by fund managers.  Technically, SMH
looks great, especially since finding support at $94, its trading
high set on its second day of trading - a perfect case of old
resistance becoming new support.  While it does have a $2 gap to
fill down to $93 from the previous Friday, we think any bounce
from $93 and up is buyable.  Resistance is at $100.  With any
market strength on good economic news, that figure could easily
be broken.  Careful.  The stochastic has been flashing an
overbought condition for the last two weeks (though we'll
subjectively put less faith in that indicator in this particular
case since everybody wants the issues that make up SMH.)  We
don't expect investor interest to diminish since higher lows back
up the hypothesis.    Watch for volume to confirm the move and
feel free to take a position at the breakout, or at a bounce off
support.

Average Daily Volume = 208 K
/charts/charts.asp?symbol=SMH



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

For the week of June 12, 2000

Monday

None Scheduled

Tuesday

Retail Sales             May    Forecast:   0.0%   Previous:  -0.2%
Retail Sales ex-auto     May    Forecast:   0.4%   Previous:   0.0%

Wednesday

CPI                      May    Forecast:   0.2%   Previous:   0.1%
Core CPI                 May    Forecast:   0.2%   Previous:   0.2%
Business Inventories     Apr    Forecast:   0.4%   Previous:   0.3%
Fed Beige Book           ---    Forecast:   ----   Previous:   ----

Thursday

Initial Claims           06/10  Forecast:  285 K   Previous:  309 K
Industrial Production    May    Forecast:  -0.3%   Previous:   0.9%
Capacity Utilization     May    Forecast:  81.6%   Previous:  82.1%
Philadelphia Fed         Jun    Forecast:  13.0%   Previous:  20.2%

Friday

Housing Starts           May    Forecast: 1.615M   Previous: 1.663M
Building Permits         May    Forecast: 1.590M   Previous: 1.574M
Michigan Sentiment       Jun    Forecast:  110.0   Previous:  110.7


Week of June 19th

06/20 Trade Balance
06/20 Current Account
06/20 Treasury Budget
06/22 Initial Claims



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DISCLAIMER
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This newsletter is a publication dedicated to the education
of options traders. The newsletter is an information service
only. The information provided herein is not to be construed
as an offer to buy or sell securities of any kind. The
newsletter picks are not to be considered a recommendation
of any stock or option but an information resource to aid the
investor in making an informed decision regarding trading in
options. It is possible at this or some subsequent date, the
editor and staff of The Option Investor Newsletter may own,
buy or sell securities presented. All investors should consult
a qualified professional before trading in any security. The
information provided has been obtained from sources deemed
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The newsletter staff makes every effort to provide timely
information to its subscribers but cannot guarantee specific
delivery times due to factors beyond our control.
The Option Investor Newsletter                    Sunday 6-11-2000
Sunday                                                      2 of 5

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

Liquidity Is Improving But People Are Still Hoarding Cash
By Mary Redmond

Liquidity was one of the key factors which contributed to
the precipitous decline in the market in March and April.
Liquidity generally refers to cash flows to the overall market
and to individual stocks and sectors.  The main cash flows
which liquidity analysts use include cash flows to equity
mutual funds, cash takeovers, share buyback programs, and
initial and secondary public offerings.  It is possible that
initial and secondary offerings issued during 1999 and the
first part of 2000 caused the most damage to the market.

During the period from May 1999 to April 2000 approximately
$320 billion dollars was raised in initial and secondary
offerings.  During this period, domestic equity mutual funds
took in approximately $237 billion in new cash, and money
market funds took in approximately $165 billion in new cash.
If every dollar which went into an equity mutual fund during
these twelve months went into a new issue there would be a big
deficit of cash.  However, we must consider that the total
amount of stock in US equity funds during this period was
in the range of $4 trillion dollars, or $4000 billion.  The
funds could have raised cash to buy ipos by selling current
holdings.  In addition, there are many large private investors
and private institutions which buy ipos and secondaries.
Nonetheless, the level of dollars raised in ipos nearly doubled
from 1998 to 1999, and a heavy ipo schedule can drain cash
from the market.

The liquidity issue might not have been enough to crash the
market alone.  However, if you throw a concern about the Fed
raising rates aggressively into the equation, it was obviously
too much for the market to handle.  The ipo schedule has
lightened up considerably, and this could free up extra cash
to go into equities.  You can find ipos scheduled to come out
every week in most major newspapers.  In March, weekly ipo
pricings were in the range of $15 billion, and are currently
in the range of $2 billion.  In addition, cash corporate
takeovers have are accelerating to the range of $7 billion
weekly.  Both of these factors could help the market.  We
want to see cash in to the market from equity inflows, cash
takeovers and share buybacks higher than cash outflow from
ipos and fund redemptions.

The NASD has reported that block trades comprised between 20
and 22.4% of the overall trading activity on the Nasdaq in 1999
and the first few months of 2000.  This means that institutional
buying comprised about 20 to 22.4% of the cash buying on the
Nasdaq.  During this period, the cash flows to funds averaged
around $8 billion weekly, with $2 billion going into the tech
funds.  If fund flows in the range of $2 billion dollars weekly
were responsible for about 20% of the Nasdaq volume, this can
mean that retail and professional traders can be comprising the
other 75%.  It is not always possible to account for all this
money from other sources.  However, the investment company
institute tracks flows in and out of money market funds weekly,
and this can give an indication.

AMG Data Services reported that the week ending June 7th showed
a net inflow to equity funds of approximately $500 million.
This is slow, but it included net redemptions of over $1.1
billion from international funds.  The investment company
institute's web site reported that retail money market mutual
funds took in $5.53 billion in cash last week, to total $983.5
billion.  Taxable money market retail funds took in $3.03
billion in cash, and institutional money market funds took in
$8.70 billion in cash to total $709 billion.  The total money
market fund assets totalled $1.693 trillion as of June 8th.
Between the retail, taxable retail, and institutional money
market funds the flows totalled $17.26 billion in cash.
A lot of people are keeping their money in cash.

Many option traders wonder if they should sell their leaps if
they have a profit.  Generally, it is best to sell any option
which is at a profit.  A leap will usually have to rise by a
few more points than a short term option in order to be sold
at a profit.  This is because leaps usually have a larger
spread, or difference between buy and ask than shorter term
options.  For example, a two year leap may be quoted at a
price of bid 20-ask 22, versus a short term option which may
be quoted at bid 20 ask 20.5.  I have found that it is more
difficult to sell a leap over the bid price than with a
short term option or stock.  If you want immediate execution
you usually have to sell at the market.  Because of this,
you could buy an option at the ask, in this case 22, and if
the stock went up 2 points tomorrow, you could end up selling
it at the bid, and the quote might be 22 to 24.  In this
particular example you might not profit by selling the leap.

However, if an option goes up 5 or 10 points I think it is
always a good idea to take a profit.  If you are trading
leaps, you could always sell at a profit and buy a leap on
the same stock with a higher strike price.  For example, if
you bought a QCOM Jan 80 leap and it went up 10 points, but
you thought the stock had further to go, you could sell the
80 leap and buy a 90 leap for probably about 5 to 10 points
less.  This way you have a certain amount of protection
against loss if the stock drops, but you can also profit
from further upside potential.

Contact Support


******

Bullish Indexes - A Look Inside
By Molly Evans

Indexes are labeled with the actual numbers for which breachment
constitutes bullish or bearish implications.  Whether you're
playing the call or put side of a stock or an index, you should
at least know what stage and the magnitude of which it is at.
Last week, I talked about the banking sector, which had just
turned bullish.  Say, for example, you saw that American Express
(AXP) was about at it's all time high, but you've noticed
that there was another time it was also at that same level
back in December (weekly chart).  In fact, there's a number
of times in the past few months that it's touched that
illustrious number but can't get through.  It's right back
there again, knocking on the door but not getting through
with conviction yet. "Aha!"  You say.  "That's another failed
attempt to take out the highs because there's no volume to
carry it through.  I'm going to buy puts on that baby."  Well,
you go right ahead.  I'll sell them to you.  Well, ok, maybe
I wouldn't but let's light this candle and have a closer look,
shall we?




Now you tell me which way you may want to play.  I think that
a put or a call player here would be very frustrated.  Yeah,
it's been rising, and yes, it has down days, but in this
past week there's not been enough movement in either
direction to even cover a spread.  Yet, we know that the
financials are in bullish mode.  But wait, AXP is in the
Dow 30.  It's neutral.  What to do, what to do?  The thing
to do on this one is either nothing OR set an alert for AXP
at or around $56.50 to begin watching to see if it will move
on volume beyond $57, it's all time high.  At that point you
could go long to play the breakout if in fact the Dow is
rolling along nicely.  On the flip side, support for AXP could
be the ten-day moving average, which is where it sits right
now or at about $52.50 where it broke through a two month
consolidation to get to this present level.  Barring a market
meltdown, I just don't see big dollar signs in a put play on
AXP.  But this at least gives you the idea of how you marry a
stock to its index and play it based on support and resistance.
Just remember that an AXP breakout isn't going to behave like
an SDLI breakout but then again, you're not going to have to
pay sky-high premiums for volatility either.

You don't have to pick a certain stock out of an index either.
You CAN just play the sector itself with options on the index.
"Aahh!" you say, "This is very cool!"  And yes, it is.  As
Pinnacle Capital Advisors states, "An industry sector affords
investors the opportunity to participate in market trends without
having to research and select specific stocks or groups of stock.
A market sector index is a simpler, more efficient measure of
movement within a given industry.  A contract within a market
sector index affords investors to focus efforts on overall
market movement rather than the risks behind a specific stock."

According to Thursday night's accounting in the Market Posture,
only five of the nineteen indexes tracked were bullish.  All of
the rest were neutral.  Those bullish indexes were:  Networking
(NWX), Banking (BIX), Insurance (IUX), Airline (XAL) and Oil and
Gas (OIX).  Pinnacle relates that the time frame for their calls
are two to three weeks into the future.  The Oil and Gas and
Insurance indexes have been bullish since the middle of May.
Support for the OIX is at 300.  It closed Friday at 308.28 or
right on it's ten day moving average.  Does it bounce from there
or does it go on to breakdown?  Oil and Gas are typically up
when the overall market is down as investors rush to defensive
plays.  Does it mean the overall market is becoming more bullish
as this one pares back?  So much to think about.  The IUX is
another one that's struggling to break free.  Here's a weekly
chart of the IUX:




Pinnacle says this one is bullish down to 620 - it's sitting
on 636 presently.  This was a sideways week, as 70% of them
are.  Let's look at the stocks that are in that index.  Wow,
AIG exerts an almost 43% influence on that index.  ALL and
AGC have the next highest weights.  Only AIG is significantly
above its 200 day moving average and had a down day on Friday
instead of pushing on through it's resistance.  ALL breached
its 200-day ma on Friday and indecision looks to rue the day
for AGC.  I'm not a buyer here but I'm too chicken for puts.
Aaarrgh!

Got to move on to warmer waters.  Check out Networking (NWX).
Labeled bullish on June 2nd when it crossed the 1100 mark.
Hot sector here.  Resistance will be about 1183 for this one.
We've got a little room to play.




Let's look closer.  What's in this one?  Click on NWX on
that page on the OIN site.  Oh yeah!  I love some of these
symbols.  That page doesn't say how much weight each company
is given but look at the companies in there:  Lucent (LU),
Ciena (CIEN), Cisco (CSCO), ADC Telecom (ADCT), 3Com (COMS)
to name a few.  The LU chart looks ugly to me but there are
several that I'd take a closer look at with my money.  CIEN
is a good old friend of mine.  The ADCT chart has one of those
beautiful left lower to right upper corner looks.  Don't count
on it coming down with a thud anytime too soon.  Coverage by
PaineWebber was just initiated on Friday with a "Buy" rating
and target of $95.  PE is high as they always are at 124 but
it's 76.5% owned by institutions.  I like the story.  COMS also
looks interesting.  This guy has a PE of 20 but it's got a huge
float of 333M so it isn't going to move like a high flyer but
it bears watching.  If it starts moving on volume, the
institutional buyers may be looking for value and are
picking it up.




Keep looking at the sectors for market leadership and perhaps
take an easy route by playing indexes.  Within the indexes, you
can start looking to what's leading the pack within.  There's
so many ways to pick and choose and to develop your own system.
Even if you have a system, it might pay to open the door to
looking at something different.

Here's to a profitable week ahead.

Contact Support



***********
OPTIONS 101
***********

Entry Point, Entry Point, Entry Point
By Jim Brown

I wrote this article as part of a ten part series late last year
and due to the large number of new readers requesting them we
are going to update and reprint them over the next ten weeks.
The charts and analysis are just as valid today for learning
how to pick stocks as they were when the article was first
written. It is the principle I am trying to get across not a
specific stock for trading on Monday.

For the entire article, including charts, please visit...
http://members.OptionInvestor.com/options101/061100_1.asp



***********
IN THE NEWS
***********

Those REITs Aren't As Safe As You May Think
By S.P. Brown

Let's face it, the stock market could use a mega-dose of
Ritilin, particularly in the new-economy sector where 3 to 5
percent daily price swings have become the norm.
Understandably, such intemperate behavior has sent many
investors in search of a safe haven.

Of course, the term "safe haven," like most investment terms,
is open to personal interpretation.  For one investor a safe
haven can mean a money market fund, while for another it can
mean a B2B Internet stock fund.  It all depends on one's risk
tolerance.

One investment sector that has been pushed recently as safe
haven is real estate investment trusts (REITs).  In fact, over
the past three months, the Dow Jones REIT Index (DJR) has
advanced 14 percent, partly due to many investors ditching the
new-economy roller-coaster.  In comparison, Nasdaq Composite
Index (COMPX) has tanked 20 percent.

To say real estate is one red-hot market, is like saying
Catherine Zeta-Jones has pleasant features - it's an
understatement.  The booming economy has pushed office rents
through the roof.  In San Francisco and Manhattan, office rents
have hit all-time highs, fetching up $100 per square foot in
both metropolises.

So, with the real estate market in full-bloom, many investors
are giving REITs the once over.  And why not?  At first glance
they appear to be a cheap and easy way to add real estate
exposure to a portfolio.  Furthermore, they boast high dividend
yields, which makes them a surrogate bond for many investors,
and they can be a safe temporary store of value for those folks
waiting for new-economy issues to settle down.

For other investors, REITs look like compelling contrarian
play.  From early 1998, REIT stocks have tumbled 17 percent,
while the COMPX has nearly tripled.  So battered are REITs that
they now trade at 85 percent of their estimated net asset
value, an historical low.

All of the above can be legitimate reasons for investing in
REITs.  However, there are definite risks to owning REITs, and
these risks can be quite considerable.

First, it's important to realize that REITs aren't the same as
corporations.  REITs pool the money of many investors for the
purchase of real estate, much as mutual funds do with stocks
and bonds.  Investors in REITs are called beneficiaries and
they purchase beneficial interests, which is similar to the
purchase of corporate stock.  Hence, the liquidity of REIT
shares.

Most REITs are run so trust officers, with the aid of paid
advisors, can buy, sell, mortgage and operate real estate
investments on behalf of the beneficiaries, which, in theory,
isn't much different than the way a corporation is run for the
benefit of its shareholders.

The most significant difference, though, between the REIT and
corporate structures is taxes.  If a REIT confines its
activities to real estate investments, and if the REIT has at
least 100 beneficiaries and distributes at least 95 percent of
its net income every year (90 percent in 2001), the IRS will
collect taxes on the distributed income only once - at the
beneficiaries' level.  However, failure to follow the rules
results in double taxation, and therein lies the problem.

Because of the strong incentive to distribute all earnings to
investors, most REITs carry little reserves on the balance
sheet.  If the market experiences a downturn, which it always
does, there is nothing in the till to support those juicy
dividends, which makes them highly variable.

What's more, like a bond, the value of REIT shares are highly
correlated with its dividend yield.  If the payout is
increased, the price goes up.  If the payout is cut, the price
goes down.

Admittedly, many common stocks are also correlated with their
dividend.  However, common stock dividends don't fluctuate to
the same degree that REIT dividends do because most
corporations have enough cash or short term investments to fall
back on to support the dividend until the economy picks up
again.  This is why most corporations are able to maintain
their dividend while posting zero, or even negative, earnings.

Another disadvantage of foregoing retained earnings is that
management can't fund expansion internally.  This can be
particularly frustrating for investors who have purchased a
REIT with outstanding management.

To grow the business, management must either issue more equity
or more debt - both are unpleasant alternatives for current
investors.  If more stock is issued, their position is diluted.
If more debt is issued, the financial risk of their investment
increases.  Most REITs prefer the latter option to the former,
which is why most of them have high debt-to-equity ratios,
sometimes as high as four times equity.

A high debt load adds an additional risk.  After all, the debt
must be serviced, which means REITs are very interest rate
sensitive.  The more it costs to service the debt, the less
that remains to pay shareholders.  And as explained previously,
the smaller dividends equate to smaller share prices.

So, in a REIT you basically have an investment tied to a
variable rate coupon payment.  However, unlike a variable rate
bond that usually increases when interest rates increase, REITs
move the opposite direction; when interest rates (meaning
costs) rise, dividend payments often fall, and vice versa.

But what about REITs as a proxy for real estate?
Unfortunately, they don't work that way.  REITs often act more
like stocks than real estate.  In fact the average REIT
correlation coefficient with the stock market is 0.70, meaning
REITs returns are more closely tied with the stock market than
with physical real estate, which has historically had a 0 to
0.35 correlation with sticks.

Oddly enough, though, over the past two years, REITs have
actually moved in the opposite direction of both real estate
and stocks.

So, in a nutshell, REIT investors need to keep in mind that
REITs are highly exposed to business risk, default risk,
interest rate risk and, not to mention, sector risk.  In fact,
last year when the economy was hitting on all cylinders and six
Federal Reserve interest rate hikes were just a distant
nightmare, REITs sold off for most of the year.

That doesn't sound like a particularly safe haven to me.



*************
DAILY RESULTS
*************

Index      Last    Week
Dow    10614.06 -180.70
Nasdaq  3874.84   61.48
$OEX     779.70  -12.99
$SPX    1456.95  -20.31
$RUT     523.06   10.03
$TRAN   2790.17  -39.19
$VIX      25.19    1.08

Calls              Week

PDLI     165.56   40.44  Tip-toed through the tulips.
HGSI     139.56   33.63  Surged 32% for the week!
ABGX     121.50   25.31  Welcome to Splitsville!
MUSE     144.38   19.38  Acting like a market shadow
RMBS     233.56   16.19  A 7.4% weekly gain ain't bad!
BRCD     147.00   13.00  Friday's pullback may be good entry
MRVC      46.00   10.44  New, many things drew us to this one
PLXS      99.19    9.25  New, a new 52-week high, no problem
YHOO     143.19    8.69  Party invitations were sent out Friday
SEPR     116.50    7.69  Analysts showed up right on cue Friday
CMTN      95.56    6.63  "BUY" would be the correct answer
ADI       94.72    5.75  Ample opportunity to enter this play
EXDS      92.75    5.63  Shot of adrenaline with confirmed split
SEBL     144.31    5.38  New, the king of CRM is back!
ITWO     133.44    4.32  B-2-B leading the charge higher
RBAK     115.88    3.31  We'll take the flat-line for the day.
GLW      212.00    3.12  "Glow Worm" lights the Street
CIEN     139.88    1.56  Great way to play the fiber-optics
LLTC      67.13    1.13  New, if you like relative strength, then.
MU        80.00   -0.06  Semiconductors have been sizzling hot!
TQNT     113.75   -0.62  Dropped, enthusiasm subsided
CHKP     225.50   -8.19  Is the glass half empty or half full?
SDLI     250.00  -10.38  Just a breather we call consolidation
SCMR      97.69  -12.31  Dropped, broke $100 psychological level

Puts

CTXS      41.19  -17.25  MSFT's fate worrying investors
NXLK      74.38  -13.13  New, closed well below its 200-dma
MMC      100.94   -9.88  New, so much for support!
TGT       56.25   -9.75  New, retail sales data hurts
MMM       81.94   -2.38  How quickly the tide can change
CAH       65.94    2.38  Dropped, not going to fight the tape


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

Calls

MRVC - MRV Communications
LLTC - Linear Tech
SEBL - Siebel Systems
PLXS - Plexus

Puts

MMC  - Marsh and McLennan Inc
NXLK - Nextlink Communications
TGT  - Target


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

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


CALLS

SCMR $97.69 -4.06 (-12.31) Unlike the NASDAQ which managed to hold
its ground in a week of choppy trading, SCMR continued to slip
from its recently gapped up plateau.  Friday, the stock gapped up
to open at $106.38 and quickly sold off from there.  It is
beginning to look like the deal to acquire Sirocco is wearing on
SCMR.  With the NASDAQ staying in positive territory and SCMR's
inability to continue holding above the $100 psychological level,
we feel that it is a good time to take our gains from this play
and put our money to work elsewhere.

TQNT $113.75 (-0.63) As one of the first Semiconductor stocks
to break out, TQNT was instrumental in helping to push the
NASDAQ back above the 3800 level on June 2nd.  After the
enthusiasm subsided, the buying volume dried up and TQNT
began consolidating its monster gains.  Our play gave us some
great profits, but the momentum that accompanied the breakout
appears to have dissipated.  Rather than wait for it to return,
we will take our profits and move on to other plays.

PUTS

CAH $65.94 (+2.38) The anemic selling volume in CAH last week
kept us from getting a decent entry point as the stock meandered
lifelessly between $61 and $64.  Then on Thursday afternoon, the
buyers came out of hibernation and pushed CAH up through the
$64 resistance level on increasing volume and the upward
pressure kept up throughout the day on Friday.  It looks like
the stock has put in a bottom in the low $60's, and rather than
fight the tape, we are dropping CAH this weekend.


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

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

Symbol - Stock          Splits/Date
RHI  - Robert Half Intl 2:1 06-12-00 ex-date 06-13
HC   - Hanover Comp.    2:1 06-13-00 ex-date 06-14
RMBS - Rambus           4:1 06-14-00 ex-date 06-15
HSP  - Hispanic Broad.  2:1 06-15-00 ex-date 06-16
CKH  - Seacor Smit Inc. 3:2 06-15-00 ex-date 06-16
IFIN - Investors Fin.   2:1 06-15-00 ex-date 06-16
CYBE - CyberOptics      3:2 06-15-00 ex-date 06-16
MXT  - Metris Companies 3:2 06-15-00 ex-date 06-16
JNPR - Juniper Networks 2:1 06-15-00 ex-date 06-16
IPAR - Inter Parfums    3:2 06-15-00 ex-date 06-16
NXLK - Nextlink         2:1 06-15-00 ex-date 06-16
CHP  - C&D Technologies 2:1 06-16-00 ex-date 06-19
DLTR - Dollar Tree      3:2 06-19-00 ex-date 06-20
RHB  - RehabCare Grp.   2:1 06-19-00 ex-date 06-20
MTZ  - MasTec Inc.      3:2 06-19-00 ex-date 06-20
SEIC - SEI Investments  3:1 06-19-00 ex-date 06-20
POOL - SCP Pool Corp.   3:2 06-19-00 ex-date 06-20
MEAD - Meade Inst.      2:1 06-19-00 ex-date 06-20
EXDS - Exodus Comm      2:1 06-20-00 ex-date 06-21
AAPL - Apple Computer   2:1 06-20-00 ex-date 06-21
KG   - King Pharma.     3:2 06-21-00 ex-date 06-22
CDWC - CDW Computer     2:1 06-21-00 ex-date 06-22
NVDA - NVIDIA Corp.     2:1 06-26-00 ex-date 06-27
MRCL - Micrel Inc.      2:1 06-27-00 ex-date 06-28
BRL  - Barr Lab.        3:2 06-28-00 ex-date 06-29
GMH  - Hughes Elec.     3:1 06-30-00 ex-date 07-03
REMC - REMEC, Inc.      3:2 06-30-00 ex-date 07-03
AMFC - AMB Financial    3:2 06-30-00 ex-date 07-03
ABGX - Abgenix, Inc.    2:1 07-07-00 ex-date 07-10
TQNT - TriQuint Semi.   2:1 07-11-00 ex-date 07-12
IWOV - Interwoven       2:1 07-13-00 ex-date 07-14
XETA - Xeta Corp        2:1 07-17-00 ex-date 07-18
TBL  - Timberland Comp. 2:1 07-17-00 ex-date 07-18
TIF  - Tiffany and Co.  2:1 07-20-00 ex-date 07-21
INTC - Intel Corp.      2:1 07-28-00 ex-date 07-31
AIG  - American Intl.   3:2 07-28-00 ex-date 07-31
POS  - Catalina Mktg.   3:1 08-17-00 ex-date 08-18

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



********************
THE PLAYS OF THE DAY
********************

Call Play of the Day:
**********************

CIEN - Ciena Corp $139.88 (+1.56)

See details in sector list

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


Put play of the day:
********************

TGT - Target Corp $55.94 (-10.06)

See details in sector list

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



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

SL  = Suggested stop loss. Sell if bid breaks this price.
OI  = Open Interest - the number of open contracts outstanding.
TP/P= True premium or Time premium
RRR = Risk/Reward/Ratio
ITM = In the money
ATM = At the money
OTM = Out of the money
ADV = Average Daily Volume

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

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

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

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

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

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



**********
CALL PLAYS
**********

********
HARDWARE
********

RBAK - Redback Networks $115.88 (+3.31)(+40.50)(+9.13)

Founded in 1996 and headquartered in Sunnyvale, Calif., Redback
Networks is a leading provider of advanced networking solutions
that enable carriers, cable operators, and service providers to
rapidly deploy broadband access and services.  The company's
market-leading Subscriber Management Systems (SMSs) connect and
manage large numbers of subscribers using any of the major
broadband access technologies such as Digital Subscriber Line
(DSL), cable, and wireless.  To deliver integrated transport
solutions for metropolitan optical networks, Redback's SmartEdge
multi-service platforms leverage powerful advances in
application-specific integrated circuit (ASIC), IP, and optical
technology.  With this product portfolio, Redback Networks is the
first equipment supplier focused exclusively on developing
integrated solutions for the New Access Network.

We'll take the flat-line on Friday, given the spectacular gains
RBAK has tacked on since making the call list.  If you throw out
the first hour of trading on Friday, RBAK traded in a narrow
range between $117.56 and $115.88.  This consolidation stage
over the $115 level is smartly building a support that we'll
watch closely going forward.  As for the first hour on Friday,
RBAK gapped open to $119.44, traded to a high of $120.56 and
within ten minutes, it reversed course and traded to the low
of the day at $115.19.  Now there is a perfect example of the type
of volatility we talk about in "amateur hour."  RBAK put in its
high and low of the day ten minutes into the session!  Technically,
RBAK's nearest resistance level lies at $120.  This is a very
significant level because if it can move through $120 convincingly,
overhead resistance is slim up to $150.  The reason being is on
April 10th and 11th, RBAK sold off from $155 to $115 in the panic.
Another technical aspect looks very positive for the stock.  RBAK
is now well over its 100-dma of $109.59.  Watch this level for
support and bounces if RBAK slides.  It is imperative that you
watch the market to see if the techs remain in favor on the Street,
given the massive gains during the past two weeks.  The
consolidation we have seen is encouraging, yet this market requires
a bit of skepticism.  If sellers do step in strongly, consider a
breach of $105 and downward a possible gap-closing move to $95.
Bounces from $105 certainly provide good entry.  Remember we have
been in since $72, so protect profits and trade the intraday swings.

Broadband and fiber-optic stocks have been hot lately.  With
such a streaky market, they can put on impressive gains relatively
quick.  Investors love these stocks and will chase for them.
Given that there is really no news for RBAK, other than the
investment in Telica mentioned on Thursday, watch these sectors
as well as the Internet sector to see if they continue their
advances after CPI on Tuesday.

***June contracts expire Friday***

BUY CALL JUL-110 BUK-GB OI= 134 at $20.50 SL=16.00
BUY CALL JUL-115 BUK-GC OI= 106 at $17.88 SL=14.00
BUY CALL JUL-120*BKK-GD OI= 273 at $15.88 SL=12.25
BUY CALL JUL-125 BKK-GE OI=  90 at $14.00 SL=11.25
BUY CALL OCT-140 BKK-JH OI=1383 at $23.00 SL=18.00

SELL PUT JUN-105 BUK-RA OI=  71 at $ 2.25 SL= 3.25
(See risks of selling puts in play legend)

Picked on May 28th at   $72.06     P/E = N/A
Change since picked     +43.81     52-week high=$198.50
Analysts Ratings     9-3-1-0-0     52-week low =$ 20.00
Last earnings 04/00  est= 0.03     actual= 0.05 surprise = 33%
Next earnings 07-12  est=-0.06     versus=-0.05
Average Daily Volume = 2.7 mln
/charts/charts.asp?symbol=RBAK


BRCD - Brocade Communications $147.00 (+13.00)

Brocade Communications is a provider of Fibre Channel switching
solutions for Storage Area Networks (SANs), which apply the
benefits of a networked approach to the connection of computer
storage systems and servers.  The company's family of SilkWorm
switches enables companies to cost-effectively manage growth in
their storage capacity requirements and improve the performance
between their servers and storage systems.  This provides the
ability of increasing the size and scope of a company's SAN,
while allowing them to operate data-intensive applications,
such as data backup and restore, and disaster recovery on the
SAN.

Along with many beaten down NASDAQ stocks, BRCD put in one
final bounce at its 200-dma in late May and very quickly
proceeded to break out of its bearish chart pattern.  The past
2 weeks have been very encouraging, as BRCD has moved up more
than 50%.  With such a strong move, a little consolidation was
to be expected and Friday's pullback may be giving us an
attractive entry.  Support near $145 held up well in light of
the anemic volume in the overall markets on Friday.  The next
level of support at $140-141 would provide an even more
attractive entry point.  We would use an intraday dip to this
level as an opportunity to play at a better price.  Volume in
BRCD was light on Friday, with only two-thirds of the average
number of shares trading hands, but the double bounce at $145
gives the appearance that investors are certainly not in a rush
to sell their shares at current levels.  An upgrade (see below)
always seems to help, and BRCD confirmed this pattern as the
stock held its ground on Friday.  Granted, the stock did give
up over $4 on the session, but in light of the strong gains over
the past 2 weeks, it seems a small price to pay.  Resistance
still sits at $156-158, but once this level has been cleared,
BRCD could make a quick trip to $170, especially if the NASDAQ
cooperates and heads higher as well.

Giving an additional boost to the price of BRCD, on Thursday,
DB Alex Brown raised their rating on the stock from Buy to
Strong Buy.  This followed Monday's announcement of David de
Simone's appointment to the newly-created position of vice
president of Platform Development.  With over 20 years of
experience in managing hardware and software development,
testing, and program management, de Simone will be responsible
for the hardware strategy for BRCD's SilkWorm family of
FibreChannel fabric switches.

BUY CALL JUL-145 UBZ-GI OI= 327 at $21.38 SL=16.00
BUY CALL JUL-150*UBZ-GJ OI=4427 at $19.00 SL=13.75
BUY CALL JUL-155 UBZ-GK OI=1001 at $16.75 SL=12.00
BUY CALL OCT-155 UBZ-JK OI=1042 at $31.75 SL=23.75
BUY CALL OCT-160 GUF-JL OI= 124 at $28.50 SL=21.25

SELL PUT JUN-140 UBZ-RH OI=  18 at $ 3.00 SL= 4.00
(See risks of selling puts in play legend)

Picked on June 6th at   $138.88     P/E = 694
Change since picked       +8.13     52-week high=$185.00
Analysts Ratings      8-4-2-0-0     52-week low =$ 12.91
Last earnings 05/00   est= 0.08     actual= 0.11
Next earnings 08-14   est= 0.12     versus= 0.01
Average Daily Volume = 3.09 mln
/charts/charts.asp?symbol=BRCD


CMTN - Copper Mountain Networks $95.56 (+6.63)

Copper Mountain develops and markets a comprehensive family of
DSL solutions that enable high-speed internetworking over
existing copper facilities.  The company's mission is to enable
carriers and other service providers to offer a full range of
high-performance, cost-effective data and voice services over
DSL that are easy to deploy, manage and use.  A leader in DSL
communications products for telecommunications and Internet
service providers, CMTN sells its products directly (77% of
sales) and through manufacturers and distributors.  The company
has partnerships with 3Com and Lucent, with Northpoint
Communications accounts for about 40% of CMTN's sales.

What do you do with a networking company with triple-digit
revenue growth and continues to blow away earnings estimates
every quarter?  If CMTN's chart is any indication, "buy" would
seem to be the correct answer.  Strong growth in the company's
client base, along with impressive April earnings helped the
stock to begin a nice recovery in late April.  Moving strongly
off the 200-dma (then at $57), CMTN had a nice run all the way
to $92.  Some consolidation was necessary, and the stock went
along with the weakness in the broad markets until late May,
when the latest advance began.  The rally continued last week,
pushing CMTN through the $92 resistance level and it was
encouraging to see the stock hold those gains in the face of
Friday's market weakness.  The benign PPI report did little to
help the stock, but looking at an intraday chart, it is clear
that investors didn't want to let their shares go at current
prices.  Intraday support is building near $94, with stronger
support between $90-92 (old resistance).  The stock continues
to be supported by the 5-dma (currently $92.06), adding to our
conviction of this level as support.  A volume-backed bounce at
either of these levels would be a good point to initiate new
positions as CMTN gets ready to head even higher.

CMTN likely got an added boost last week from its positive
showing at the last week's Supercomm 2000 conference in
Atlanta.  On Tuesday, Paul Johnson of Robertson Stephens
raised his 2000 earnings estimates from $0.91 to $0.93, citing
strong financial performance and the company's growing customer
base.

***June contracts expire Friday***

BUY CALL JUL- 90 KUA-GR OI=  84 at $14.75 SL=11.00
BUY CALL JUL- 95 KUA-GS OI= 137 at $12.25 SL= 9.00
BUY CALL JUL-100*KUA-GT OI= 157 at $ 9.88 SL= 7.00
BUY CALL SEP-100 KUA-IT OI= 159 at $16.63 SL=12.00
BUY CALL SEP-110 KUA-IB OI=2114 at $12.88 SL= 9.75

SELL PUT JUN- 90 KUA-RR OI= 115 at $ 1.88 SL= 2.50
(See risks of selling puts in play legend)

Picked on June 8th at    $94.19     P/E = 205
Change since picked       +1.38     52-week high=$115.00
Analysts Ratings      3-5-0-0-0     52-week low =$ 26.13
Last earnings 04/00   est= 0.11     actual= 0.20
Next earnings 07-18   est= 0.22     versus= 0.05
Average Daily Volume = 1.59 mln
/charts/charts.asp?symbol=CMTN


MRVC - MRV Communications $46.00 (+10.44)

MRV Communications, Inc. is a world-class leader in optical
network components and systems. The company has leveraged its
early leadership in fiber optic transmission into a well-focused
range of solutions, integrating switching, routing, access
servers and optical transmission systems. MRV has initiated and
funded cutting edge start-up companies including Zaffire, Inc.,
Charlotte's Networks, Hyperchannel, Zuma Networks and most
recently RedC Optical Networks, Inc., Optical Crossing and All
Optical, Inc.

With so many companies to choose from, what drew our attention
to MVRC?  To start with, a quick look at the chart shows a stock
that 3 months ago was selling for a pre-split price near $194.00.
Six weeks later you could have purchased your very own piece of
this communications company for about 79% less.  That's right, the
sell-off this spring saw shares of MVRC bottom out near $40 in
mid-April.  Again, we remind those of you looking at the chart,
the prices mentioned above are pre-split levels.  In early March
the company announced a 2-for-1 split, which took place on May
30th.  The sell-off, or "correction," and the split have brought
investors to what we feel is a heck of a buy.  The normal
post-split depression was a non-event for MVRC.  MVRC has been on
a shopping spree so far this year picking up three companies in
late April, with its latest acquisition coming the last week of May
with Geneva, Switzerland-based CES.  Another indicator that drew
us to the chip company was the volume on the recent move up the
chart.  Since the day of the split, MRVC has traded an average of
about 2.6 mln shares compared to the 1.7 mln seen the past 90 days.
The chat rooms are a speculating that an important announcement
could be forthcoming from the company.  At this point, we have to
view that information as strictly rumors.  It appears that we
have a company that was beaten up badly and has found new strength
from the recent shift in broad market sentiment, sector strength,
and the belief that MVRC is a great buy at current levels.
Technically, MRVC has support at $44.75, $42 and $40, with minor
resistance near $48.  Economic data due out next week could light
a fire under the major indices and our new play.  However, if
traders return with the sell button in their sights, stand back,
and allow MRVC to find support while patiently waiting for a
bounce prior to entering new plays.

On May 10th, MVRC held a special stockholders meeting, asking for
approval to increase the number of authorized shares from 80 mln
to 160 mln.  Although no announcement has been made, another split
certainly could be in the works.

BUY CALL JUL-40 VQX-GH OI= 573 at $10.50 SL= 7.50
BUY CALL JUL-45 VQX-GI OI= 513 at $ 8.00 SL= 5.75
BUY CALL JUL-50 VQX-GJ*OI=1092 at $ 6.00 SL= 4.00
BUY CALL OCT-50 VQX-JJ OI= 926 at $12.25 SL= 9.25

SELL PUT JUL-40 VQX-SH OI= 114 at $ 3.88 SL= 5.00
(See risks of selling puts in play legend)

Picked on Jun 11th at    $46.00    PE = N/A
Change since picked       +0.00    52 week high=$97.44
Analysts Ratings      1-1-0-0-0    52 week low =$ 5.00
Last earnings 04/00   est=-0.01    actual= 0.03
Next earnings 07/27   est= 0.03    versus= 0.01
Average daily volume = 1.76 mln
/charts/charts.asp?symbol=MRVC


GLW - Corning Inc. $212.00 (+3.12)

Corning provides communications technology at light speed.  The
materials pioneer is one of the world's top makers of fiber-optic
cable, which it invented more than 20 years ago.  Corning's
Telecom unit (about 50% of sales) makes optical fiber and cable
and photonic components.  The company's Advanced Materials unit
makes industrial and scientific products, including semiconductor
materials.  Its Information Display segment makes glass products
for TVs, VCRs, and flat-panel displays.  The company operates 40
plants in 10 countries.

GLW is known as the "glow worm" by Wall Street.  And the stock
has given investors reason to glow.  Despite the hardships for
tech stocks in 2000, GLW is up 92%.  The company has gained
popularity over the past two years for its fiber optic equipment,
but GLW operates in two other successful business segments.
Originally known as Glass Works, GLW has held onto its heritage
as a glass maker.  But in the 21st century, its glass products
are used in more than beakers and measuring cups.  The company is
a leading manufacturer of high-performance glass for computers
and display applications.  In fact, sales of flat-panel display
glass used in computers continues to grow at a rate of 50%.  The
company also makes advanced materials for the semiconductor
industry, polymers for biotechnology applications, and ceramics
for the automotive industry.  GLW operates in several of the
fastest growing segments of the economy, and the result has been
enviable earnings growth that has carried the stock higher.
After breaking out from its trading range two Fridays ago, GLW
spent the last week consolidating its gains.  Over the course of
last week, GLW formed a flag pattern.  That is, lower highs and
higher lows.  The constricted price was formed on decreasing
volume.  This "coiled spring" sometimes gives way to an explosive
burst, usually in the direction of the most recent trend.  If we
get another tame inflation report next week, GLW might be in a
position to retest its 52-week high.  Two possible ways to gain
entry into the play would be first to watch for a bounce off
support at $210 or wait for a move above $220 on good volume.  A
move above resistance at $220 might signal a break-away from its
flag pattern.

GLW has more than enough shares for a split after shareholders
approved the proposal to increase authorized shares at the
company's last meeting.  If the stock continues to climb next
week past the $200 level, GLW officials may decide to declare a
stock split.  It's been a long time coming, since the company
last split back in 1992.

BUY CALL JUL-200 GRJ-GT OI=145 at $25.63 SL=18.50
BUY CALL JUL-210 GRJ-GB OI=355 at $20.25 SL=14.50
BUY CALL JUL-220*GRJ-GD OI=675 at $15.75 SL=11.25
BUY CALL AUG-220 GRJ-HD OI=915 at $22.63 SL=16.50
BUY CALL NOV-230 GRJ-KF OI=222 at $32.38 SL=23.50

Picked on June 6th at   $217.25    P/E = 113
Change since picked       -5.25    52-week high=$226.44
Analysts Ratings      8-5-0-0-0    52-week low =$ 54.56
Last earnings 04/00   est= 0.55    actual= 0.64
Next earnings 07-24   est= 0.67    versus= 0.49
Average Daily Volume = 3.00 mln
/charts/charts.asp?symbol=GLW


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


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

The Option Investor Newsletter                    Sunday 6-11-2000
Sunday                                                      3 of 5


***************
CALLS CONTINUED
***************

*************
SEMICONDUCTOR
*************

CIEN - Ciena Corp $139.88 (+1.56)(+38.63)(-16.81)

Ciena makes multiplexing systems that increase the capacity of
long-distance fiber-optic telecommunications networks.  The
company's systems transmit signals simultaneously over the same
circuit.  Customers such as Sprint, Bell Atlantic, and MCI
Worldcom, use its lines for long-distance optical transport and
for shorter distances.  The company is expanding its product and
geographic breadth as it transforms itself from niche market
specialist to optical networking supplier.

The Telecom sector moved higher Friday on the heels of a tame
inflation report.  The telecom business is a cash intensive
operation, thus sensitive to the cost of money, namely interest
rates.  It's a bit of a paradox, as the economy slows, Wall
Street cheers.  But signs of a slowing economy lessens the threat
of inflation, which should lead to fewer interest rate hikes.
And companies operating in the Telecom sector like that idea, and
so do analysts.  PaineWebber initiated coverage on CIEN with a
Buy rating Friday morning, suggesting that the stock is a great
way to play the fiber optic area.  Analysts said that CIEN will
continue to grow as the demand for optical networking equipment
expands, they expect the company to grow sales by 66% in 2000.
PaineWebber added a 12-month price target of $175 on the stock.
CIEN gapped $6 higher Friday morning after the analyst comments.
But the gap was the extent of the action Friday as traders
started the weekend early and CIEN settled around $140, churning
near that level into the close.  With its wide intra-day swings,
CIEN provided several entry points last week, but was unable to
stay above resistance at $140.  However, a week of consolidation
might be healthy for our play.  Since the stock closed near
support Friday, you might consider an entry if CIEN bounces from
its current levels.  A more conservative entry point might be
found if CIEN clears congestion at $145 on healthy volume.  If
traders get nervous ahead of the CPI next week, look for CIEN to
find support at $136 and again at $132.  If CIEN bounces from
support, confirm direction and use its intra-day volatility to
target shoot for an entry point.

SuperComm 2000 provided fireworks last week for investors in the
Telecom sector.  CIEN was one of the crowd favorites at the
conference.  The company reaffirmed its claim as the leader in
optical networking services.  Gary Smith, CIEN's COO, said,
"These service concepts CIEN is showing at SuperComm are only the
beginning."  CIEN's impressive showing prompted SG Cowen and
Robertson Stephens to make favorable comments and push the stock.

***June contracts expire Friday***

BUY CALL JUL-135 UEE-GG OI=419 at $21.13 SL=15.50
BUY CALL JUL-140*UEE-GH OI=477 at $18.38 SL=13.25
BUY CALL JUL-145 UEE-GI OI=761 at $16.38 SL=11.75
BUY CALL OCT-140 UEE-JH OI=207 at $31.38 SL=22.75
BUY CALL OCT-145 UEE-JI OI=703 at $29.63 SL=20.25

SELL PUT JUN-130 UEE-RF OI=345 at $ 2.50 SL= 4.00
(See risks of selling puts in play legend)

Picked on May 25th at   $104.50    P/E = 794
Change since picked      +35.38    52-week high=$189.00
Analysts Ratings     11-8-1-0-0    52-week low =$ 26.81
Last earnings 04/00   est= 0.10    actual= 0.12
Next earnings 08-17   est= 0.16    versus= 0.01
Average Daily Volume = 6.67 mln
/charts/charts.asp?symbol=CIEN


RMBS - Rambus Inc. $233.56 (+16.19)(+54.38)(-10.75)

Rambus Inc. develops and licenses high bandwidth chip connection
technologies to enhance the performance of computers, consumer
electronics and communications products.  Current Rambus-based
computers supported by Intel chipsets include Dell, Compaq,
Hewlett-Packard, and IBM PCs and workstations.  Sony's
PlayStation video game system uses Rambus memory. Providers of
Rambus-based integrated circuits include the world's leading
DRAM, ASIC and PC controller manufacturers. Currently, eight of
the world's top-10 semiconductor companies license Rambus
technology.

The action, or lack thereof, in the broader markets was indecisive
on Friday, yet our play continued to gain ground.  A 1.6% gain may
not sound like much, but considering the lack of follow-through
buying elsewhere on tame inflation data, we were very pleased with
the way RMBS ended the week.  RMBS started out Friday making a new
high for the week at $242, but retraced to $226.  The plus, as we
see it, was the buying that showed up early in the afternoon as
traders bid the price back up going into the end of the session.
The volume came in a bit light, but still respectable with 4.98
mln shares traded.  For a Friday in the summer, we'll take
it.  Our play ended the week with a gain of 7.4%.  RMBS and others
in the sector survived a downgrade of industry giant Intel.  The
news was that the launch of INTC's first integrated processor,
code name Tinma, would be delayed because it needs to develop a
new method for connecting the chip to standard memory.  The
processor had originally been designed for Rambus.  RMBS's
4-for-1 split scheduled for Thursday seems to have kept Rambus
on track.  For now, we would expect more of the same from RMBS,
especially if the inflation data is benign on Tuesday.  Be aware
that the company expects to begin trading on a split adjusted
basis Thursday, June 15th.  If we do see the momentum continue,
open positions should be closed by the end of business on
Wednesday.

The major buzz for RMBS is the upcoming split.  Other than what
we mentioned above, the last release of major importance came
in late May when the company announced Vitesse Semiconductor had
licensed the Direct Rambus ASIC Cell for use in network ICs.

***June contracts expire Friday***

BUY CALL JUL-220 BYQ-GD OI=443 at $43.63 SL=31.50
BUY CALL JUL-230 BYQ-GF OI= 54 at $39.00 SL=28.25
BUY CALL JUL-240*BYQ-GH OI=105 at $34.75 SL=25.25
BUY CALL AUG-240 BYQ-HH OI=279 at $43.00 SL=31.25
BUY CALL AUG-250 BYQ-HJ OI=330 at $38.88 SL=28.25

SELL PUT JUN-220 BYQ-RD OI=559 at $ 7.75 SL=10.00
(See risks of selling puts in play legend)

Picked on May 28th at   $163.00    PE = N/A
Change since picked      +70.56    52 week high=$471.00
Analysts Ratings      1-1-2-0-0    52 week low =$ 58.50
Last earnings 04/00   est= 0.14    actual= 0.15
Next earnings 07-12   est= 0.16    versus= 0.08
Average daily volume = 4.08 mln
/charts/charts.asp?symbol=RMBS


SDLI - Spectra Diode Laboratories Inc. $250.00 (-10.38)(P2Wk +86.38)

SDL's products power the transmission of data, voice and
Internet information over fiber optic networks to meet the needs
of telecommunications, DWDM, cable television and satellite
communications applications.  They enable customers to meet the
bandwidth needs of increasing Internet, data, video and voice
traffic by expanding their fiber optic communications networks
more quickly and efficiently than would be possible using
conventional electronic and optical technologies.  SDL's optical
products also serve a variety of non- communications applications,
including materials processing and printing.

SDLI spent most of the week consolidating recent gains and
waiting for the green light to resume the upward momentum.
Investors may have to wait another day or two as SDL finished
the week in much the same way it had spent the first four
sessions.  Some traders suggest we may be in for more of a
pullback with several of the technical indicators just now
beginning to come off the top of the scale.  At this point,
we really believe investors are really just taking a break
waiting for more inflation data next week.  The volume on
Thursday and Friday would suggest that the current trend is
intact.  Combined shares traded the last two days of the week
barely matched any of the first three days.  As we said, it can
be nerve-wracking with open positions not knowing whether to wait
it out or just take profits and come back another day.  That
decision is a matter of personal preference.  We do believe if
the data this week is friendly, SDLI and the chip stocks should be
able to regain their footing and continue up the chart.  There was
little in the way of company news this week.  The only item of any
significance came on Monday when SDL announced it had completed
its acquisition of Photonic Integration Research, which was
announced in early May.  Our play has built good support near
$242.  A decline through that level with better than average
volume and it may be time to stand aside.  A bounce off the
support area between $242 and $245 again with solid volume could
be an attractive entry point for new plays.  A strong move back
through the $263 mark or the $270 area and our play should be back
on track.

This week's downgrade of chip giant INTC may have caused some
investors to take a second look at stocks in the semiconductor
business.  Several other brokerage firms came to the aid of
INTC and the sector.  Although no analysts commented on the SDLI,
most still have the company rated a Strong Buy.  The latest price
targets for the company remain near $325.

***June options expire Friday***

BUY CALL JUL-240 QJV-GH OI=104 at $41.00 SL=29.75
BUY CALL JUL-250*QJV-GJ OI=378 at $36.63 SL=26.50
BUY CALL JUL-260 QJV-GL OI=118 at $32.25 SL=23.50
BUY CALL SEP-250 QJV-IJ OI=441 at $55.38 SL=40.00

SELL PUT JUN-230 QJV-RF OI=503 at $ 5.13 SL= 6.75
(See risks of selling puts in play legend)

Picked on May 21st at   $196.00    PE = 500
Change since picked      +54.00    52 week high=$272.63
Analysts Ratings     13-8-0-0-0    52 week low =$ 21.63
Last earnings 04/00   est= 0.16    actual= 0.22
Next earnings 07-19   est= 0.27    versus= 0.09
Average daily volume = 3.55 mln
/charts/charts.asp?symbol=SDLI


ADI - Analog Devices $94.72 (+5.72)(+21.06)

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 has operations in the US, the Philippines, Taiwan, and
Ireland.

About two weeks ago, ADI joined its semiconductor index ($SOX)
in a rally that has yet to subside.  However, traders were
provided with ample opportunities to enter this momentum play at
the beginning of this week.  ADI experienced a mild consolidation
period where the share price buoyed at $85 and $88.  Then on
Thursday, the stock closed above former resistance ($95.31) and
hit a new high.  While $96.25 now serves as overhead resistance,
the psychological century mark is the real test.  If it can
breakout above $100, then ADI should be considered a split
candidate too.  Alright, if we must get technical about it, ADI
is a bit shy of the historical split range of about $130.  But,
taking a look back over time, it's evident Analog Devices likes
to split its stock.  The company affected 12 stock dividends since
1979 with the most recent in March 2000.  Currently, there's 600
mln shares authorized and about 354 mln outstanding.  This isn't
quite enough for a 2:1, but plenty for a 3:2 split.  So perhaps in
the near future, the zeal behind this play will take on a new
twist.  For now, pick your entry and exit points carefully.  The
first level of support is at $92 and $94, while $88, just under
the rising 5-dma ($90.03), is firmer.  Definitive bounces off the
latter are reasonable entries, although keep a sharp look out for
profit takers at these higher prices.

At the Supercomm 2000 on Tuesday, ADI announced that its ADSL
sales for 2000 are growing at three times the rate of the
industry.  They also took it a step further and reiterated
expectations for xDSL silicon sales to grow by as much as 700%
from 1999.  Investors just love this kind of revenue talk!  The
company also joined the CDMA Development Group (CDG), a
consortium of more than 115 companies joined together to lead
the global adoption and evolution of CDMA (Code Division
Multiple Access) wireless technology.

BUY CALL JUL- 90*AKI-GR OI= 435 at $12.38 SL=9.25
BUY CALL JUL- 95 AKI-GS OI= 448 at $ 9.88 SL=7.00
BUY CALL JUL-100 AKI-GT OI= 154 at $ 7.75 SL=5.50
BUY CALL JUL-105 AKI-GA OI=1566 at $ 6.00 SL=4.00

Picked on May 30th at    $75.00    P/E = 104
Change since picked      +19.72    52-week high=$96.25
Analysts Ratings     12-7-0-0-0    52-week low =$20.82
Last earnings 03/00   est= 0.28    actual= 0.32
Next earnings 08-16   est= 0.37    versus= 0.15
Average Daily Volume = 2.65 mln
/charts/charts.asp?symbol=ADI


MU - Micron Technology Inc $80.00 (+0.75)(+14.63)

Micron is one of the world's leading makers of semi-conductor
memory components.  They design, manufacture, and market a
variety of complex circuit boards, memory modules, system level
assemblies, and PCs.  Although approximately two-thirds of its
sales revenues come directly from the dynamic random-access
memory (DRAM) components and other related chips.  To keep
competitors Hyundai and Samsung on their toes, Micron is
developing embedded memory for the digital video market.  Texas
Instruments and Intel both have interests Micron.

If you aren't a fan of ADI, then take a look at MU.  This stock
is definitely a favorite of the crowd.  Semiconductors as a
whole have been sizzling hot!  First off, they're the sexy
stocks of the month and second, chips are in short supply.  Many
chip companies are struggling to meet customer's demands.  And
to put the icing on the cake, as the supply increases, the DRAM
prices keep rising.  So it goes that MU has magnified its share
price by over 33% in just two weeks time.  Moreover, the positive
remarks by analysts certainly aren't hindering MU's progress.
Again this week, Dan Niles of Lehman Brothers came forward with
his Buy recommendation and six-month price target of $100.
Another analyst, Gregory Mischou at UBS Warburg LLC joined the
ranks and reiterated a Buy rating for MU as well as issued a 12-
month price target of $110.  Trading this week however was
rather tame, with the exception of Monday's late day push into
new territory.  For the third consecutive session, investors'
excitement set the stage for a new level of resistance.  The 52-
week record to beat is now $82.50.  It's also good news that $75
and $76 proved to be a solid level of support during Wednesday's
pullback.  Although, the $80 mark should serve as the next
launching point, just above the 5-dma ($79.15).  The speculation
is for another breakout ahead of the company's earnings' report.

Currently, Micron's Corporate Affairs doesn't have an earnings
date nailed down.  The company is targeting the week of June
19th to report after the market close.  A confirmed release date
will be available very soon.  Keep this time frame in mind as
you plan your strategy.  OIN never recommends holding over the
announcement.  It's better to exit early then to take the
unnecessary risk of a post-event decline.

BUY CALL JUL-75*MUY-GO OI=2145 at $12.75 SL=9.50
BUY CALL JUL-80 MUY-GP OI=1327 at $10.00 SL=7.00
BUY CALL JUL-85 MUY-GQ OI=1395 at $ 7.63 SL=5.25
BUY CALL JUL-90 MUY-GR OI=2363 at $ 4.00 SL=2.50

Picked on June 1st at    $74.00    P/E = 100
Change since picked       +6.00    52-week high=$82.94
Analysts Ratings     10-5-4-1-0    52-week low =$18.69
Last earnings 03/00   est= 0.81    actual= 0.58
Next earnings 06-20   est= 0.31    versus=-0.05
Average Daily Volume = 5.76 mln
/charts/charts.asp?symbol=MU


LLTC - Linear Technology Corp. $67.13 (+1.13)

Linear Technology designs, manufactures, and markets a broad
line of standard high performance linear integrated circuits.
These circuits translate analog data (such as sound, pressure,
temperature, and speed) into digital information that can be
used by electronic devices, and to regulate and control power
and voltage.  The company's amplifiers, regulators, interface
circuits, and other chips are used in a wide variety of
products, including cellular phones, radar systems, satellites,
computers, and factory automation systems.  Primarily through
its distributor network, LLTC sells its products to more than
15,000 manufacturers, with more than 50% of sales generated by
non-US customers.

If you like relative strength, then you're going to love LLTC.
After breaking out above the $60-61 resistance level on June
2nd, the stock followed the broad markets as they spent most of
last week consolidating their strong gains from the week before.
Friday was a very quiet day on the NASDAQ, but LLTC investors
weren't paying attention.  Bidding the share price higher by
more than $5 on volume 30% greater than the daily average is
enough to get our attention.  The real clincher was posting a
new all-time high of $67.38, and closing just a fraction below
that level.  As the NASDAQ continued to flatline throughout
the afternoon, LLTC saw volume increase smartly, right up to
the close.  With an ADV of 3.87 mln shares, it was really
encouraging to see over 1.5 mln shares trade hands in the
final hour.  So where do we go from here?  LLTC will need to
move convincingly above the $67 level, as the stock may see
some resistance here.  With intraday support near $64, and
stronger support at $61, look for intraday pullbacks to provide
better entry points.  Wait for the selling to abate, and then
enter on the strength of increasing buying activity.  If the
buying volume is still strong on Monday, (entirely possible,
given Friday's strong close) consider new positions as LLTC
moves up through $68.

This play is entirely momentum and technically driven, as there
hasn't been so much as a peep in the news about LLTC since the
company posted record sales numbers with its April earnings
report.  The company's CEO, Robert H. Swanson impressed
investors by stating, "The March quarter was an outstanding
quarter for us as we achieved record levels of bookings, sales
and profits with sales increasing 14% and profits 17%
sequentially from the December quarter."  With numbers like
that, it's easy to see why investors are making a bee-line for
shares of LLTC.

BUY CALL JUL-65*LLQ-GM OI=610 at $ 7.63 SL=5.25
BUY CALL JUL-70 LLQ-GN OI=385 at $ 5.13 SL=3.00
BUY CALL JUL-75 LLQ-GO OI= 92 at $ 3.50 SL=1.75
BUY CALL AUG-70 LLQ-HN OI=509 at $ 7.63 SL=5.25
BUY CALL AUG-75 LLQ-HO OI=487 at $ 5.75 SL=3.75

SELL PUT JUL-60 LLQ-SL OI= 99 at $ 2.63 SL=4.00
(See risks of selling puts in play legend)

Picked on June 11th at   $67.13     P/E = 80
Change since picked       +0.00     52-week high=$67.38
Analysts Ratings     7-10-2-0-0     52-week low =$27.63
Last earnings 04/00   est= 0.22     actual= 0.23
Next earnings 07-18   est= 0.25     versus= 0.17
Average Daily Volume = 3.87 mln
/charts/charts.asp?symbol=LLTC


********
INTERNET
********

ITWO - I2 Technologies $133.44 (+4.31)(+33.63)(-2.75)

I2's RHYTHM supply chain management software helps manufacturers
plan and schedule production and related operations such as raw
materials procurement and product delivery.  Companies that use
RHYTHM include:  3M, Dell, Ford, and Motorola.  Maintenance,
training, and other services account for more than a third of
sales.  I2 is using acquisitions of complementary technologies
and companies to position itself as a leader in the market for
Internet-based production process applications.

The B-2-B sector has led the charge higher since the market hit
bottom on May 23rd.  The CS First Boston B-2-B eCommerce Index is
up an amazing 33% since that time.  The rebound in the group
reflects growing investor bullishness for the leading companies
in the sector.  Analyst seem upbeat about the group and are
expecting upside revenue and earnings surprises in the near-term.
Wall Street's bullish outlook can be seen in all the noise the
analysts have been making recently.  Just last Friday, CS First
Boston reiterated its Buy rating on ITWO, DLJ reiterated its Buy
and raised its price target, and finally, CIBC World Markets
reiterated its Buy rating, raised it target price to $150, and
raised its 2000 earnings estimates to 39 cents per share.  The
rise in earnings estimates is warranted considering the rapid
pace at which ITWO continues to ink contracts.  Last week, Best
Buy (BBY) said they had bought supply chain and e-commerce tools
from IWTO.  BBY will use the ITWO tools to integrate its
merchandising and financial planning to improve its customers'
experience.  The deal came on the heels of an announcement by
ITWO to create an electronic marketplace for technology
industries, to be called E2Open.com.  Analysts love the fact that
ITWO is increasing its profitability and executing efficiently.
Despite the host of analyst comments Friday, ITWO edged lower
along with the rest of the B-2-B sector in what appeared to be a
sweep of profit taking.  If the selling spills over into Monday's
trading, watch for ITWO to find support at $130 and consider an
entry if the stock rebounds from that level.  Otherwise, wait for
a bold move above resistance at $140 to look for an entry.

ITWO said late Thursday that shareholders had approved the
proposed buyout of Aspect Development (ASDV).  ITWO officials
said they expected the deal to close within the next five days.
With the merger coming to a close, ITWO may be alleviated from
the arbitrage pressure the stock has been under since the deal
was announced.  We may see some short positions covered in the
coming days which would give the stock a nice pop.

BUY CALL JUL-130 QYJ-GF OI=125 at $20.63 SL=14.75
BUY CALL JUL-135*QYJ-GG OI= 87 at $18.00 SL=13.00
BUY CALL JUL-140 QYJ-GH OI=151 at $15.88 SL=11.25
BUY CALL AUG-135 QYI-HG OI= 49 at $24.13 SL=17.50
BUY CALL NOV-140 QYI-KH OI= 55 at $34.13 SL=24.75

Picked on May 27th at    $95.50    P/E = 642
Change since picked      +37.94    52-week high=$223.50
Analysts Ratings     8-17-2-0-0    52-week low =$ 13.06
Last earnings 03/00   est= 0.05    actual= 0.07
Next earnings 07-20   est= 0.08    versus= 0.05
Average Daily Volume = 4.03 mln
/charts/charts.asp?symbol=ITWO


YHOO - Yahoo! Inc. $143.19 (+8.69)(+22.44)(-8.25)

Yahoo! Inc. is a global Internet communications, commerce and
media company that offers a comprehensive branded network of
services to more than 145 million individuals each month
worldwide. As the first online navigational guide to the Web,
www.yahoo.com is the leading guide in terms of traffic,
advertising, household and business user reach, and is one of
the most recognized brands associated with the Internet. The
company also provides online business services designed to
enhance the Web presence of Yahoo!'s clients, including audio
and video streaming, store hosting and management, and Web
site tools and services. The company's global Web network
includes 22 local World properties outside the United States.

The invitations to the party were sent out Friday in the form
of tame inflation data.  The problem?  Very few chose to attend.
Just when it appeared as though we may have a repeat of the
previous Friday's performance in the YHOO and the broad markets,
someone turned the lights out.  YHOO gapped up about $2 and
promptly faded from there.  Some traders seem to believe that
until next week's data is released, we would see little if any
follow-through to the recent momentum in the market.  As we
said, very few chose to participate in the session on Friday.
How bad was the attendance?  Less than half of what was expected.
The first four days of the week, YHOO averaged about 8.7 mln
shares per day, while Friday just 4.3 mln were traded.  Another
factor indirectly affecting YHOO and others is earnings warning
season.  Several influential analysts have recently "called a
bottom" in the NASDAQ and also attempted to direct investors back
to the "quality" Internet companies like our favorite, Yahoo!.
The analysts may be on target, but all it takes is a big name or
two to come out with an earnings warning, and the apple-cart can
be quickly upset.  We certainly aren't upset about this week's
gains for our play.  After all, finishing 6.4% to the good is
still a respectable move given the current market environment.
What's in store for the week ahead.  More data to digest.
Favorable news and our play could challenge and take out the
resistance level at the 50-dma of $151.84, with the next hurdle
coming up near $160 area.  During the past two sessions, YHOO has
formed support between $141 and $142, but don't forget the 200-dma
back at $136.30.  For the time being, move you stops up if you
have existing positions.  As for new plays, we would suggest
considering scaling into positions based on your individual risk
tolerance.  Don't forget to check the volume prior to participating
in any move higher.

On Wednesday, Gomez Advisors, a leading e-commerce authority for
both consumer and e-business, announced a new content agreement
with YHOO.  Under the terms of the agreement, Gomez's proprietary
Internet Banker Scorecards will be profiled in the banking center
on Yahoo!.  Gomez Scorecards assist consumers who want to conduct
business on the Internet by helping them identify firms whose
Internet offerings best meet their needs.

***June contracts expire Friday***

BUY CALL JUL-135 YMM-GG OI=3912 at $19.38 SL=14.00
BUY CALL JUL-140*YMM-GH OI=2766 at $16.88 SL=13.00
BUY CALL JUL-145 YMM-GI OI=1441 at $14.63 SL=10.50
BUY CALL JUL-150 YMM-GJ OI=4788 at $12.38 SL= 9.75
BUY CALL OCT-150 YMM-JJ OI= 825 at $23.63 SL=18.50

SELL PUT JUN-140 YMM-RH OI=2293 at $ 3.00 SL= 4.00
(See risks of selling puts in play legend)

Picked on May 28th at   $112.06    PE = 651
Change since picked      +31.13    52 week high=$250.06
Analysts Ratings    16-13-3-0-0    52 week low =$ 55.00
Last earnings 04/00   est= 0.09    actual= 0.10
Next earnings 07-11   est= 0.10    versus= 0.05
Average daily volume = 10.2 mln
/charts/charts.asp?symbol=YHOO


EXDS - Exodus Communications $92.75 (+5.63)(+25.13)(-9.19)

Exodus provides Internet system and network management solutions
for enterprises with mission-critical Internet operations. They
have pioneered the Internet Data Center (IDC) market and is one
of the leading providers of Internet server hosting to the
growing number of companies using the Internet.  At present,
Exodus also has twenty Internet Data Centers where clients store
their servers in secure vaults.  Clients include CBS Sports,
eBay, Lycos, Yahoo!, MSNBC, and Hewlett-Packard.

The dynamic momentum that thrust EXDS upwards over the past
couple weeks got a shot of adrenaline on Wednesday.  Exodus
announced that its shareholders approved an increase in
authorized shares to 1.5 bln and confirmed a payable date of
June 20th for a 2:1 stock split.  This gives us just six more
sessions to make our trades.  If you want to open new positions
there's light support at $92, then $90, but confirm a bounce
with volume first.  A break over the 50-dma ($91.59) is a
bullish sign and may signal the start of a profitable split run.
Once we see the upside of Friday's intraday high tackled
($98.75), then resistance lies at the sometimes illusive $100
level.  Because life isn't always fair, we can't rule out the
possibility of a pullback, so take precautions or be on the
sidelines if EXDS dips under $90.  A slide back to old
resistance at $80 near the 10-dma ($81.28) isn't out of the
question in an uncertain market.  The next week, however, should
fare well with Friday's economic data further indicating a
benign outlook.  So if all the stars move into alignment and
the momentum continues to mount, you'll want to look for an
exit no later than the split date.  OIN never recommends
holding over the event as the risk of a depression far
outweighs the potential gains.

Exodus also made some management changes this week.  Ellen M.
Hancock was appointed Chairman of the Board and Don Casey,
credited with the Wang turnaround, joined the company as
president and COO.  On Thursday, Source Track, an e-purchasing
company, announced they chose EXDS for their hosting needs.

***June options expire Friday***

BUY CALL JUL- 85 DUB-GQ OI= 707 at $16.75 SL=12.00
BUY CALL JUL- 90*DUB-GR OI= 878 at $14.25 SL=10.50
BUY CALL JUL- 95 DUB-GS OI= 579 at $12.13 SL= 9.00
BUY CALL JUL-100 DUB-GT OI=1816 at $ 9.88 SL= 7.00
BUY CALL SEP-100 DUB-IT OI=1079 at $17.38 SL=13.50

SELL PUT JUN- 90 DUB-RR OI= 771 at $ 2.75 SL= 4.50
(See risks of selling puts in play legend)

Picked on May 28th at    $62.00    P/E = N/A
Change since picked      +30.75    52-week high=$179.63
Analysts Ratings     22-9-0-0-0    52-week low =$ 17.75
Last earnings 03/00   est=-0.26    actual=-0.23
Next earnings 07-21   est=-0.24    versus=-0.14
Average Daily Volume = 7.92 mln
/charts/charts.asp?sysmbol=EXDS


*******
BIOTECH
*******

ABGX - Abgenix Inc. $121.50 (+25.31)

Abgenix uses genetically engineered mice to develop antibody
therapeutics for inflammatory and autoimmune disorders, cancer,
and transplant-related conditions.  The company's four antibody
products use the XenoMouse technology, which Abgenix bought from
Japan Tobacco.  Treatments for disorders, cancer, and psoriasis
are in clinical trials.  The company has alliances with
Millennium Pharmaceuticals, Pfizer, and Amgen.

Welcome to Splitsville!  Last Friday, ABGX's Board of Directors
approved a 2-for-1 stock split.  The payable date for the split
was set for July 7th.  ABGX's split announcement added fuel to
an already strong Biotech sector last Friday.  The AMEX Biotech
Index ($BTK) surged 6.99% higher in Friday's subdued trading.
Shares of ABGX have come a long way since Memorial Day, and
Friday's split announcement helped the stock to clear resistance
at $115.  ABGX's return of momentum came after Wall Street
re-examined the company's prospects and realized the potential
its proprietary technology holds.  The company plans to use its
XeonMouse technology to build a large and diversified product
pipeline.  ABGX has established corporate partnerships with the
biggest names in the biotech and pharmaceutical industries.  Most
recently, ABGX linked with Abbott Labs, SmithKline Beecham, and
with Pfizer to combat cancer.  ABGX has established itself as a
leader in the development of monoclonal antibodies.  Analysts
estimate that ten years from now, there could be more than 100
products on the market, up from 8 today.  They estimate the
potential revenue from monoclonal products to be more than $50
bln.  The tremendous potential has investors running to
accumulate shares of ABGX and moving the stock higher.  ABGX
gapped $6 higher Friday morning, and continued to climb into the
weekend.  Feel free to look for entry points at current levels if
momentum carries over next week, the next level of resistance is
at $130.  If the profit takers return from hiding, look for ABGX
to trace a higher low, and find support at its 5-dma, currently
at $110.  Consider an entry at that level if the stock bounces.

Recently, ABGX inked a deal with Abbott Labs (ABT) to generate
fully human antibodies to target several diseases using its
XenoMouse technology.  Under the agreement, ABGX could receive
research and license fees, and royalty payments.  ABT will
manufacture and market any products developed.  The contract
marks yet another savvy move by ABGX's management to take full
advantage of its technology, and generate revenues.

***June contracts expire Friday***

BUY CALL JUL-115 AXY-GC OI= 5 at $22.75 SL=16.00
BUY CALL JUL-120*AXY-GD OI=67 at $20.13 SL=14.50
BUY CALL JUL-125 AXY-GE OI= 3 at $18.13 SL=13.00
BUY CALL OCT-125 AXY-JE OI= 0 at $32.00 SL=23.25  Wait for OI!
BUY CALL OCT-130 AXY-JF OI=30 at $30.25 SL=21.75

SELL PUT JUN-110 AXY-RB OI= 0 at $ 2.75 SL= 4.50
(See risks of selling puts in play legend)

Picked on June 8th  at  $112.00    P/E = N/A
Change since picked       +9.50    52-week high=$206.50
Analysts Ratings      3-3-0-0-0    52-week low =$  7.38
Last earnings 03/00  est= -0.11    actual= -0.09
Next earnings 07-27  est= -0.05    versus= -0.11
Average Daily Volume  =   786 K
/charts/charts.asp?symbol=ABGX


SEPR - Sepracor $116.50 (+7.69)(+17.63)(-8.56)(P3wk +7.75)

Sepracor develops and commercializes new, patented forms of
existing pharmaceuticals by purging them of nonessential
molecules.  The company's products can reduce side effects,
provide new uses, and improve safety, performance, and dosage.
Sepracor focuses its efforts on gastroenterology, neurology,
psychiatry, respiratory care, and urology.  The company is also
developing its own new drugs to treat infectious diseases and
conditions of the central nervous system.

The analysts showed up right on cue Friday morning after SEPR
executives delivered bullish comments at the PaineWebber Growth
& Technology Conference Thursday evening.  First Union initiated
coverage on SEPR with a Buy rating and set a near-term price
target of $130.  Analysts from First Union said SEPR is poised
for strong growth, particularly from internal operations and
product development.  Analysts also said that consolidation
within the Biotech sector is not far off, suggesting that big
pharmaceutical companies such as PFE/WLA, GLX, and SBH are likely
acquirers of young, fast-growing firms such as SEPR.  After the
positive analyst comments Friday morning, SEPR gapped higher by
over $2 at the opening bell, clearing resistance at $114.  The
stock continued to rally into the weekend on slightly above
average volume, but failed to test resistance at $118.  SEPR is
still sitting on enough authorized shares for a stock split.  As
the market has somewhat stabilized, a few brave companies are
announcing splits.  We'll watch for SEPR executives to further
help our cause and possibly announce a split in the coming weeks.
Technically, SEPR is looking strong.  Momentum is gaining in the
Biotech sector as investors continue to move capital into the
group.  Last week's rally boosted the stock back into its
ascending channel which began in early April.  SEPR still faces
overhead congestion at $118, but a move above that level might
position the stock to retest its 52-week high.  Watch for the
momentum in the Biotech sector to continue next week, and look
for an entry if SEPR clears resistance at $118.  If the stock
stumbles, look for the pattern of higher lows to prevail, and
consider an entry if SEPR bounces from support at $114 or below
at $112.

SEPR executives will be presenting at yet another analyst meeting
that begins Monday.  The company is a keynote presenter at the
Goldman Sachs Healthcare Conference in California.  Last week's
conference worked in our favor, if SEPR's management delivers
more bullish comments to Wall Street, the analysts might follow
suit and deliver more upgrades.

***June contracts expire Friday***

BUY CALL JUL-110 ERU-GB OI= 512 at $16.75 SL=12.00
BUY CALL JUL-115 ERU-GC OI=1028 at $14.00 SL=10.50
BUY CALL JUL-120*ERU-GD OI= 309 at $11.75 SL= 8.75
BUY CALL OCT-120 ERU-JD OI= 963 at $22.88 SL=16.50
BUY CALL OCT-125 ERU-JE OI=   2 at $20.75 SL=15.00

SELL PUT JUN-110 ERU-RB OI= 155 at $ 2.38 SL= 4.00
(See risks of selling puts in play legend)

Picked on May 7th  at   $103.25    P/E = N/A
Change since picked      +13.25    52-week high=$126.81
Analysts Ratings      5-4-2-0-0    52-week low =$ 27.50
Last earnings 03/00  est= -0.96    actual= -0.76
Next earnings 07-24  est= -0.55    versus= -0.56
Average Daily Volume  =   986 K
/charts/charts.asp?symbol=SEPR


HGSI - Human Genome Sciences $139.56 (+33.63)

Human Genome Sciences, Inc., founded in 1992, is a pioneer in
the use of genomics, the study of all human genes, and the
development of new pharmaceutical products.  They are a leader
in moving these genomics-based drugs into patient-based clinical
trials.  In 1999, three HGS drugs were tested in patients.  Their
goal is to become a global pharmaceutical company that discovers,
develops, manufactures and sells our own genomics-based drugs.

Our play in HGSI certainly got off to a nice start.  Actually,
HGSI surged about 32% for the week.  A look at the chart shows
Monday's move through resistance at $120 was impressive.  The
breakout over resistance in the $132 area was equally impressive.
With the volume and sentiment in the broad markets in question,
investors weren't skittish at all about pouring money into HGSI
and others in the genomics field.  Much of the enthusiasm came
from an announcement earlier this week that Celera could finish
the complete sequencing of the human genome by the end of the
month, nearly a year ahead of original estimates.  With a
complete sequencing of the human genome, drug makers can attempt
to identify genes linked to diseases and develop medicines to
stop them.  We said above that the "enthusiasm" is what is driving
the price higher, and that's the key to this play and others
in the industry.  Investor enthusiasm, plain and simple.  In
this momentum situation, many times technical indicators and
earnings are put on the shelf while traders and investors stumble
all over themselves to jump into a stock with "enthusiasm."
Please don't misunderstand, we aren't saying that its a bad thing.
Compare the energy behind the $22 gain on Friday which came on
better than average volume to the sentiment in the broad markets
where traders couldn't wait to get out and start enjoying the
weekend.  HGSI closed near its high of the day, which certainly
bodes well for early next week.  If the "enthusiasm" continues,
there's not much in the way of resistance until about the $170
level.  Intraday support comes into play between $134 and $132,
followed by $128 and $122.  These would provide a suitable entry
on bounces accompanied by solid volume.

HGSI received two mentions from analysts this week.  One from
Merrill Lynch, who upgraded the company to a Long-term Accumulate,
and the other from AG Edwards.  Analysts at AG Edwards initiated
coverage of the genomics company with an accumulate rating and a
price target of $140-$150.  The rate HGSI is going, that kind of
price target should not be too tough to achieve.

***June contracts expire Friday***

BUY CALL JUL-130 HHA-GF OI=343 at $26.63 SL=19.25
BUY CALL JUL-140*HHA-GH OI=237 at $21.88 SL=15.75
BUY CALL JUL-150 HHA-GL OI=246 at $18.00 SL=13.00
BUY CALL OCT-140 HHA-JH OI=106 at $38.38 SL=27.75

SELL PUT JUN-130 HHA-RF OI=  0 at $ 3.50 SL= 5.00
(See risks of selling puts in play legend)

Picked on June 8th at   $117.56    PE = N/A
Change since picked      +22.00    52 week high=$232.75
Analysts Ratings      1-5-2-0-0    52 week low =$ 19.38
Last earnings 04/00   est=-0.33    actual=-0.35
Next earnings 07/27   est=-0.21    versus=-0.05
Average daily volume = 2.20 mln
/charts/charts.asp?symbol=HGSI


PDLI - Protein Design Labs $165.56 (+40.44)(+25.07)

Protein Design Labs develops human and humanized monoclonal
antibodies to prevent and treat diseases.  The FDA approved the
company's first humanized antibody product, Zenapax
(daclizumab), for the prevention of kidney transplant rejection
and there are seven other antibodies in the developmental
pipeline.  Global patents have been issued for the PDLI's
humanization technology and currently they have business
agreements with Eli Lilly and Genentech.

During this week's trading, PDLI "tip-toed through tulips" and
came out smelling like a rose while other high-flyers stepped on
mine fields.  With the human-genome industry moving closer to a
key breakthrough in mapping and decoding the human gene, the
sector is starting to take the limelight once again.  There's no
doubt PDLI is leading the revival.  Just take a peek at the
daily chart!  Rising from the trenches of $93 and $95 just a
couple of weeks ago, PDLI amplified its share price by an
astonishing 78%, or $72.  Can't beat those apples by a long
shot.  The favorable piece of inflation data on Friday gave
PDLI the green light to jump out of the gate.  It swiftly moved
through light resistance at the $150 level and captured $23.56
in total gains.  And it gets a medal for finishing just a
fraction from its intraday high.  So why not just hop on the
bandwagon and see the money roll in?  For starters, PDLI is
primed to take a breather at some point.  Therefore, while the
momentum is intensifying, entries become much more riskier as
the play progresses.  To put it plainly, a sharp pullback could
see PDLI freefall to $150, or lower to $140 (and that's
conservative).  Take notice that bottom entry points have been
in-line with the rising 5-dma indicator - currently at $145.19.
So erring on the side of caution, be patient.  Oh, you're one of
the high rollers with an aggressive risk-oriented portfolio to
match!  Well then, you may want to look for additional plays on a
breakout off Friday's intraday support of $157 to $160, but be
forewarned of the perilous exposure.  Remember this is a pure
momentum run, although it's possible that PDLI could turn into
a split play in the very near future.  On Thursday June 15th,
shareholders will vote on a proposal to increase the number of
authorized shares from 40 mln to 90 mln at the company's Annual
Meeting of Shareholders.  An approval would clear the way for
the BoD to announce a stock dividend.  There aren't any
guarantees, but PDLI is a candidate above the $150 price level.

PDLI's CEO, Laurence Korn, reported to investors on Tuesday that
company revenues are expected to reach $35 mln in the first half
of 2000, which matches revenues in all of 1999.  He said in the
interview that revenues were "bolstered by growing royalties
from monoclonal antibodies it has licensed to other pharmaceutical
firms, including Genentech's (DNA) breast cancer treatment
Herceptin and MedImmune's (MEDI) Synagis for the prevention of a
respiratory virus common in infants".  The good cheer extended
into Thursday too.  Matthew Geller of CIBC World Markets came
forward with a Strong Buy reiteration and a whooping price target
of $309!

***June contracts expire Friday***

BUY CALL JUL-160 RPV-GL OI= 5 at $30.75 SL=24.00
BUY CALL JUL-165 RPV-GM OI= 2 at $28.25 SL=22.00
BUY CALL JUL-170*RPV-GN OI=65 at $26.50 SL=20.75
BUY CALL JUL-175 RPV-GO OI= 6 at $24.63 SL=19.25

SELL PUT JUN-140 PQI-RZ OI=50 at $ 2.13 SL= 3.75
(See risks of selling puts in play legend)

Picked on June 4th at   $125.13    P/E = N/A
Change since picked      +40.43    52-week high=$338.00
Analysts Ratings      2-2-4-0-0    52-week low =$ 19.25
Last earnings 03/00   est=-0.04    actual= 0.04
Next earnings 08-04   est= 0.19    versus=-0.14
Average Daily Volume = 1.45 mln
http://www.optioinvestor.com/charts/charts.asp?symbol=PDLI


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

CHKP - Check Point Software $225.50 (-8.19)(+71.19)(+1.13)

Check Point Software Technologies is a worldwide leader in
securing the Internet.  The company's Secure Virtual Network
(SVN) architecture provides the infrastructure that enables
secure and reliable Internet communications.  SVN secures
business-to-business(B2B) communications between networks,
systems, applications and users across the Internet, Intranets
and extranets.  Check Point's Open Platform for Security (OPSEC)
provides the framework for integration and interoperability
with "best-of-breed" solutions from over 200 leading industry
partners.

The economic data came out and was viewed with, "Is the glass
half full or half empty scenario."  Those that perceived the news
as half full bid shares of CHKP up to $235 in the first fifteen
minutes of trading.  Then, those that saw the glass as half
empty took over.  CHKP fell back to support just above the
$220 level late in the day, and that's where our play finished
the week.  For now, we won't drink from either side of the glass
as the volume on Friday left something to be desired since only
954K shares traded.  CHKP will likely be on hold until a new
round of data hits the Street.  We see a couple of things coming
to light with this one.  First, Check Point did fall back early
last week filling the gap from the previous Friday's open.  The
buying that came as a result was encouraging, and suggested the
our play could be preparing for its next leg up.  We will need to
see the volume return and a convincing penetration of the high near
$235 to confirm a breakout.  This week two new viruses reportedly
found their way to computers and cell phones.  The fact that we
didn't see a bit more interest in CHKP on news of the "hack
attacks" is interesting.  Many times that kind of scare is usually
good for a short-term pop in the price.  At this point, it appears
as though investors chose to remain focused on the inflation data
and Fed rather than the new viruses.  How do we proceed?  Support
is still near the $220 level and at the 5-dma of $218.  Resistance
shows up near $235.75.  Most traders will continue to take their
cue from the reports due out Tuesday and Wednesday.  For traders
with existing positions, keep your stops in place.  For those
interested in new plays, in may be prudent to ease your way into
new positions, depending on your risk tolerance.

There was little in the way of news this week.  Thursday, Wayne
Johnson III, at Robinson-Humphrey initiated coverage of CHKP
with a Buy rating.  His 12-month price target for the software
company came in at $280.00.  Johnson joined 15 other analysts
that currently have the company rated as either a Strong Buy or
a Buy.

BUY CALL JUL-210 YKE-GB OI=188 at $38.00 SL=27.50
BUY CALL JUL-220 YKE-GU OI=356 at $33.13 SL=24.00
BUY CALL JUL-230*YKE-GV OI=364 at $28.50 SL=20.75
BUY CALL OCT-220 YKE-JU OI=200 at $54.88 SL=39.75

SELL PUT JUN-210 YKE-RB OI=248 at $ 3.88 SL= 5.00
(See risks of selling puts in play legend)

Picked on May 25th at   $160.25    PE = 194
Change since picked      +65.25    52 week high=$295.00
Analysts Ratings     12-4-0-0-0    52 week low =$ 21.34
Last earnings 04/00   est= 0.35    actual= 0.40
Next earnings 07-12   est= 0.42    versus= 0.26
Average daily volume = 1.83 mln
/charts/charts.asp?symbol=CHKP


MUSE - Micromuse Inc $144.38 (+19.38)

Founded as a network management solutions reseller, Micromuse
today is a leading provider of real-time fault and service-
level management software.  Its Netcool suite helps
telecommunications and Internet service providers ensure the
uptime of network-based customer services and applications.  The
company's software is used in the OSS and NOC centers of many of
the world's leading service providers such as AOL, Cellular One,
and Charles Schwab.

Some stocks buck the market trend and some act like its shadow.
MUSE tends to correlate more with the latter characteristic, as
was the case on May 30th.  When the NASDAQ resurfaced above 3400,
MUSE followed the market's lead and rose above its light
resistance at $80.  By the following day the share price eased its
way through stubborn opposition at $100 and was poised to run.
And run it did.  Support is now at much higher levels of $125 and
$130.  And short-term, support could very well develop between
$135 or even at Friday's intraday level of $143 and $144.
Currently, the closest technical indicator, the 5-dma ($135.76),
is a dot in the rearview mirror.  Obviously, the technical
breakthrough got the attention of a variety of traders.  While
volume's been respectable, it's been by no means outstanding.
Therefore, look for heavier trading activity to propel it through
the next hurdle of $150.  This move would be a bullish indication
that the momentum can tow the mark.  If nothing else, analysts
cheered for MUSE this week.  First, there was Wendell Laidley at
CSFB who reiterated his Strong Buy recommendation and issued a
target price of $150.  And on Wednesday, Hampton Adams at CIBC
World Markets initiated new coverage with a Strong Buy rating.
Then Bob Lam at Bear Stearns & Co finished off the week with his
Buy recommendation for MUSE.  We're betting too that MUSE will
continue to rise to the occasion in the coming days.  Play it
smart though and don't buy too soon.

The company announced that it recently added a bunch of new
clients and extended its services.  Urban Media selected
Micromuse's Netcool(R) software to manage its nationwide voice
and data network as did Demon, an Internet service provider in
the UK.  Also, the leading communications company Cable &
Wireless selected it to provide real-time monitoring of its Web
hosting center in London.  The new center, which is one of
Europe's largest, will have the capacity to host every website
currently running in the UK.  In the product arena, Micromuse and
Singlepoint LTD, a leading provider of critical event notification
software, jointly announced an agreement to integrate
Singlepoint's AlarmPoint natural language network event
notification system with the Netcool suite.  But, the company's
big news is the availability of Netcool/OMNIbus for Voice
Networks(TM), a real-time fault monitoring solution designed
specifically for carrier-class network environments.

BUY CALL JUL-140 UZQ-GH OI= 6 at $22.50 SL=17.50
BUY CALL JUL-145*UZQ-GI OI=48 at $19.13 SL=13.75
BUY CALL JUL-150 UZQ-GJ OI=25 at $16.88 SL=12.25
BUY CALL JUL-155 UZQ-GK OI  0 at $15.75 SL=11.25  Wait for OI!

Picked on June 8th at  $146.00     P/E = N/A
Change since picked      -1.63     52-week high=$206.00
Analysts Ratings     9-5-0-0-0     52-week low =$ 18.63
Last earnings 03/00  est= 0.07     actual= 0.08
Next earnings 07-19  est= 0.09     versus= 0.05
Average Daily Volume =   651 K
/charts/charts.asp?symbol=MUSE


SEBL - Siebel Systems $144.31 (+5.38)

Siebel is a leading provider of sales automation and customer
service software.  Its main product, Siebel Sales Enterprise,
offers client information and decision support across a
corporation's worldwide computer network.  Field personnel can
access Siebel applications through wireless devices as well.
Glaxo Wellcome, Prudential Insurance, and Lucent are among
Siebel's clientele.

You may have heard of customer relationship management (CRM).
It's a hot topic among corporate America.  The idea behind CRM is
to enable organizations to sell to, market to, and service their
customers across multiple channels, including the Web, call
centers, and dealer networks.  Wall Street likes the idea of CRM,
investors especially like the companies that provide software and
applications to implement CRM.  With a commanding 17% market
share, SEBL is the king of CRM.  SEBL continues to awe Wall
Street with its impressive growth due to strong sales of its
e-CRM applications.  Since SEBL was the first-to-market with its
e-business applications, the company has been able to leverage
its product base, and expand into new markets.  SEBL has over 65
corporate partnerships with tech heavyweights such as IBM, ARBA,
ITWO, and PALM.  The company is expected to grow earnings at a
brisk 41% annually over the next five years.  Analysts aren't shy
about endorsing the company, just last week, CIBC World Markets
reiterated its Strong Buy rating and set a $155 near-term price
target.  DLJ said SEBL is the dominant player in its space, and
Robertson Stephens raised its rating to a Strong Buy.  The strong
support from Wall Street helped SEBL to quickly rebound from the
tech-wreck last spring.  The stock has been on a steady march
higher using its 5-dma as support.  SEBL finished Friday near its
day high, you might consider an entry at current levels as long
as the momentum continues.  A bounce off support at $140 might
provide an additional entry point if SEBL stumbles.  The next
area of resistance for the stock is just above at $148, a
conservative trader might wait for SEBL to clear congestion
before entering the play.

In the coming weeks, SEBL is scheduled to present at several
tradeshows and analyst meetings.  The company will meet with
customers and analysts at the e-Business Conference & Expo,
scheduled to begin Tuesday.  Thereafter, SEBL will visit Mexico,
Australia, and Canada to showcase its suite of e-business
offerings at a variety of meetings.

BUY CALL JUL-140 SGW-GH OI= 201 at $17.50 SL=12.50
BUY CALL JUL-145*SGW-GI OI=1753 at $15.00 SL=11.00
BUY CALL JUL-150 SGW-GJ OI=  42 at $12.88 SL= 9.75
BUY CALL AUG-145 SGW-HI OI= 279 at $19.75 SL=14.50
BUY CALL NOV-150 SGW-KJ OI= 607 at $27.38 SL=19.75

Picked on June 11th at  $144.31    P/E = 222
Change since picked        0.00    52-week high=$175.13
Analysts Ratings     13-4-0-0-1    52-week low =$ 23.44
Last earnings 03/00   est= 0.14    actual= 0.17
Next earnings 07-21   est= 0.18    versus= 0.12
Average Daily Volume = 5.00 mln
/charts/charts.asp?symbol=SEBL


****
MISC
****

PLXS - Plexus Corp $99.19 (+9.25)

Plexus is a contract developer and manufacturer of electronic
products for companies in the medical, telecom, industrial, and
computer markets.  The company operates in two divisions: product
design and engineering, and assembly of circuit boards, memory
chips, and other electronic components.  Lucent and GE account
for 16% and 12% of sales respectively.  Plexus is ramping up
manufacturing in efforts to establish an international presence.

You want a new 52-week high, no problem.  PLXS has shown
unrelenting strength despite a down market, analyst downgrades,
and rising interest rates.  PLXS was downgraded last Wednesday by
AG Edwards to a Maintain from a Buy.  Analysts justified their
actions by saying PLXS had reached their price target.  DB Alex
Brown said they had suspended coverage on PLXS, along with
several other stocks in the Semiconductor sector.  PLXS moved
about $6 higher after the downgrades to set a new 52-week last
Friday.  Maybe the analysts should have checked the stock's high
relative strength rating and the company's stellar earnings
before making their comments.  PLXS is a little know electronics
firm that has been moving higher without much hesitation this
year.  Wall Street expects the boom in the Semiconductor sector
to last another 18 months.  And analysts agree that since PLXS
diversified its product offerings over several industry segments,
the company is positioned well for future growth.  Institutional
money managers are warming up to PLXS as well.  Professionals
currently own about 57% of the stock, but that number could move
higher noting the surge in volume over the past month as PLXS has
traced new highs.  The stock has used its 10-dma for support
during its climb this year, currently at $91.  As PLXS edged
ever-so-close to $100 last Friday, we're looking for the stock to
extend its gains as it moves past the psychologically important
century mark.  Watch closely Monday morning to see if PLXS can
hurdle the $100 level, look for an entry if the stock clears that
level.  PLXS has consistently traced higher highs and higher lows
this year.  If the stock falters, watch for a bounce off support
at $95 or at the 10-day for a possible entry.

Along with its building momentum, there is another possible event
that may act as a catalyst for our play.  PLXS is yet another
stock on the split docket.  The stock is trading well into split
territory, and has plenty of shares to authorized for a split.
The last time PLXS split was in 1997, when the stock was trading
around $56.

***June contracts expire Friday***

BUY CALL JUL- 90 QUA-GR OI=19 at $16.88 SL=12.25
BUY CALL JUL- 95*QUA-GS OI=65 at $14.25 SL=10.50
BUY CALL JUL-100 QUA-GT OI=27 at $11.75 SL= 8.50
BUY CALL SEP-100 QUA-IT OI= 0 at $17.25 SL=12.25  Wait for OI!
BUY CALL DEC-105 QUA-LA OI=23 at $21.38 SL=15.00

SELL PUT JUN-110 QUA-RS OI=10 at $ 2.88 SL= 5.00
(See risks of selling puts in play legend)

Picked on June 11th at  $99.19    P/E = 73
Change since picked       0.00    52-week high=$100.00
Analysts Ratings     9-5-1-0-0    52-week low =$ 24.44
Last earnings 03/00  est= 0.45    actual= 0.49
Next earnings 07-19  est= 0.52    versus= 0.39
Average Daily Volume  =  304 K
/charts/charts.asp?symbol=PLXS



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SEE DISCLAIMER IN SECTION ONE


The Option Investor Newsletter                    Sunday 6-11-2000
Sunday                                                      4 of 5


*****
LEAPS
*****

By Mark Phillips
Contact Support

Is it still a rally?  After posting a 600+ point gain the week
before last, the NASDAQ seemed mired in fast-drying cement last
week.  Although we would have liked to see the index continue
its run right through the 4000 level, there remains a nagging
concern that the June 2nd 150 point gap up (between 3580 and
3730) will have to be filled before we can really get moving
any higher.  The DJIA headed lower all week, plagued by one
earnings or revenue warning after another.  Companies like PG,
CC, MCD are seeing slowing sales, lending credence to the theory
that the economy is slowing and the recent spate of interest
rate hikes is having the desired effect.  But here's the rub;
most of the recent hikes have yet to be felt in the economy, and
the Fed isn't giving any indication that it is done yet.  The
latest round of economic reports is all pointing to a slowing
economy, and hopefully the CPI report on Tuesday will continue
the pattern.  There is still a ton of money on the sidelines and
if we get an indication that the Fed is happy with the slowing
of the economy, investors will likely start putting their money
to work.  The money is likely to flow into those high-growth
stocks on the NASDAQ, since they are not as sensitive to
interest rates as those stodgy old NYSE stocks.  Refusing to
clarify the murky picture, the VIX barely budged last week,
mired between 24.50-27.00.  Drifting lazily with the broad
markets, our volatility indicator closed out the week right in
the middle of its normal range at 25.19.  So where do we go
from here?  I hate to keep harping on this issue, but volume is
likely to be your best indicator of the direction of the market.
We need to see strong volume to push the market significantly
higher or lower, and this may not be forthcoming until the June
FOMC meeting when Greenspan takes what we hope will be his last
shot at the equity markets for awhile.  Until then, this
continues to be a stock-pickers market, and good entry points
will continue to be rewarded.  If you profited from the recent
move up in the market, don't be afraid to take some money off
the table.  As Jim frequently reminds us, taking small profits
on a regular basis is a much more reliable road to capital
appreciation than waiting for that home run that nets a 1000%
gain.  LEAPS give us lots of time to be right, so pick your
favorite plays, and decide what entry point you would be happy
with.  There's a pretty good chance that your patience will be
rewarded, and getting those attractive entry points makes money
management a lot easier.  Watch the VIX for a trip back into
the buy-zone near 30, look for buying volume to pick up, and
check your predetermined entry points.  If everything lines up,
pull the trigger; otherwise stand aside.  This is not the time
to back up the truck, but rather to nibble at attractive plays
as your entry points come to you.


Current Plays

SYMBOL  SINCE     LEAPS         SYMBOL   PICKED   CURRENT  RETURN

EMC    11/07/99  JAN-2001 $ 40  EMB-AH   $ 7.69   $32.38   321.07%
                 JAN-2002 $ 45  WUE-AI   $ 9.50   $34.50   263.16%
IBM    11/07/99  JAN-2001 $100  IBM-AT   $13.63   $28.63   110.05%
                 JAN-2002 $110  WIB-AB   $16.50   $34.00   106.06%
CSCO   11/14/99  JAN-2001 $ 40  CYQ-AH   $ 9.56   $28.00   192.89%
                 JAN-2002 $ 45  WIV-AI   $11.00   $31.13   183.00%
NT     11/28/99  JAN-2001 $37.5 ZOO-AU   $11.13   $25.63   130.28%
                 JAN-2002 $37.5 WNT-AU   $15.13   $31.00   104.90%
TXN    12/12/99  JAN-2001 $ 55  TNZ-AK   $11.13   $32.50   192.00%
                 JAN-2002 $ 60  WGZ-AL   $14.25   $38.25   168.42%
SUNW   12/19/99  JAN-2001 $ 80  SUX-AP   $17.63   $23.38    32.61%
                 JAN-2002 $ 90  WJX-AR   $22.00   $30.50    38.64%
CY     01/16/00  JAN-2001 $ 40  ZSY-AH   $ 9.13   $19.25   110.84%
                 JAN-2002 $ 40  WSY-AH   $12.63   $24.75    95.96%
ERICY  01/30/00  JAN-2001 $16.3 RQC-AO   $ 4.94   $ 8.00    61.94%
                 JAN-2002 $16.3 WRY-AO   $ 6.75   $10.25    51.85%
NSM    02/27/00  JAN-2001 $ 70  ZUN-AN   $18.50   $16.25   -12.16%
                 JAN-2002 $ 70  WUN-AN   $24.25   $26.25     8.25%
AOL    03/12/00  JAN-2001 $ 60  AOO-AL   $14.00   $ 8.13   -41.93%
                 JAN-2002 $ 65  WAN-AM   $18.63   $13.75   -26.19%
AXP    03/12/00  JAN-2001 $43.3 AXP-AP   $ 7.25   $15.88   119.03%
                 JAN-2002 $46.6 WXP-AQ   $ 9.33   $18.50    98.29%
WM     03/19/00  JAN-2001 $ 25  WM -AE   $ 5.00   $ 6.75    35.00%
                 JAN-2002 $ 30  WWI-AF   $ 5.38   $ 6.38    18.59%
QCOM   03/26/00  JAN-2001 $150  AUA-AJ   $39.25   $ 5.50   -85.99%
                 JAN-2002 $160  XQO-AL   $52.88   $15.50   -70.69%
AMD    04/16/00  JAN-2001 $ 70  AMD-AN   $17.50   $32.00    82.86%
                 JAN-2002 $ 70  WVV-AN   $26.00   $42.88    64.92%
CMGI   04/16/00  JAN-2001 $ 50  ZB -AJ   $21.50   $22.38     4.09%
                 JAN-2002 $ 55  WCK-AK   $27.75   $30.88    11.28%
JDSU   04/16/00  JAN-2001 $ 80  XJU-AP   $27.50   $45.50    65.45%
                 JAN-2002 $ 80  YJU-AP   $39.63   $60.38    52.36%
VSTR   04/16/00  JAN-2001 $ 90  ZTB-AR   $23.88   $50.88   113.07%
                 JAN-2002 $ 90  WWP-AR   $35.00   $65.88    88.23%
YHOO   4/30/00   JAN-2001 $140  YMM-AH   $32.13   $35.50    10.49%
                 JAN-2002 $140  WYZ-AH   $46.38   $54.88    18.33%
MOT    5/14/00   JAN-2001 $33.3 MOT-AY   $ 6.58   $ 7.88    19.76%
                 JAN-2002 $36.6 WMA-AZ   $ 9.54   $11.13    16.66%
NOK    5/21/00   JAN-2001 $ 50  NZY-AJ   $10.25   $15.63    52.49%
                 JAN-2002 $ 50  IWX-AJ   $17.25   $22.50    30.43%
HD     5/28/00   JAN-2001 $ 50  ZHD-AJ   $ 6.25   $ 6.63     6.08%
                 JAN-2002 $ 50  WHD-AJ   $11.38   $12.00     5.45%
XLNX   5/28/00   JAN-2001 $ 70  ZIZ-AN   $14.63   $29.50   101.64%
                 JAN-2002 $ 70  WXJ-AN   $23.38   $39.50    68.95%

To review the play description on any of our current plays,
go to the LEAPS section for the date the play was added.

Option Selection: Notice that many of our LEAP plays have moved
considerably since initially being picked.  The listed options
may therefore be deep in the money and very expensive.  When
entering a new position, look to buy LEAPS according to your
suitability level, but note that we typically initiate strikes
that are slightly out of the money from the stock's current
price.

Leap of the Week

YHOO - Yahoo! Inc. $143.19

All hail the hero of the Internet!  We're counting on this
Internet mainstay to lead the tech sector higher into July
earnings.  YHOO will announce its numbers on July 11th, making
this the ideal time to enter new positions, before the usual
run-up into earnings.  After shadow-boxing with its 200-dma for
the past 2 months, YHOO looks like it finally has the upper
hand.  Not only has the stock moved above this moving average,
but it is also above the 50-dma ($131.63) and is using the
5-dma ($140.81) for support as it climbs back into the spotlight.
The recent strength on the NASDAQ and in the Internet sector
have helped to push the stock above resistance at $140, and
repeated bounces at this level look like good entry points.
Alternatively, if you prefer to enter on strength, wait for
buyers to push YHOO through resistance at $147 before putting
jumping into the fray.

BUY CALL JAN-2001 $140.00 YMM-AH at $35.50
BUY LEAP JAN-2002 $150.00 WYZ-AJ at $51.38

New Plays

NXTL - Nextel Communications $57.38

Emerging as one of the future 800lb gorillas in the race to
provide wireless Internet access, NXTL spent several months on
our play list, before being booted off.  April earnings came
in strongly, but the negative market environment was too much.
NXTL plunged through the 200-dma at $50, and didn't stop
falling until it hit the high $30's.  Now, only a month later,
the picture is much rosier; the stock has been moving nicely
higher for the past 2 weeks, crossed effortlessly through the
200-dma (now at $51.83), and closed above the 50-dma ($54.75)
on Friday.  Investors are showing their conviction for all
things wireless by pumping up the volume; in an anemic market
Friday, NXTL posted more than double its ADV, gaining $4.50.
In the event of a market pullback, NXTL should see strong
support between $50-52, reinforced by the 200-dma.  This looks
like an excellent level to set your sights on for target
shooting new positions.  If the run continues next week and
you can't keep from playing, wait for a volume-backed move
through resistance at $60 (also the site of the 100-dma) before
jumping in.

BUY CALL JAN-2001 $60.00 ZFG-AL at $12.25
BUY LEAP JAN-2002 $60.00 YFG-AL at $19.25


Drops

None



*********
PUT PLAYS
*********

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.

****

CTXS - Citrix Systems $41.19 (-17.25)

Supplying application server products and technologies that
enable effective and efficient enterprise-wide deployment and
management of Microsoft Windows applications is Citrix Systems'
core business.  The company's MetaFrame and WinFrame product
lines, developed under license and strategic alliance agreements
with Microsoft, permit organization to deploy Windows
applications without regard to location, network connection, or
type of client hardware platforms.  It's products are marketed
through multiple indirect channels such as distributors,
value-added resellers and original equipment manufacturers in
the United States, Europe and the Asia-Pacific region.

Continued worries about the fate of Microsoft is adding to the
downward pressure on CTXS.  The newswires on Friday were full
of this theme as the stock got slammed for the second day in a
row, giving up over $10 on extremely heavy volume of more than
50 million shares.  Dain Rauscher Wessels analyst Sarah Mattson
jumped on the bandwagon and cut the stock from Strong Buy to
Buy, citing indications that CTXS' business might experience a
lag during the current quarter.  Mattson left her revenue and
earnings forecasts unchanged, but cut her 12-month price target
from $135 to $90.  Investors have become increasingly concerned
with the fate of CTXS, due to fact that the company relies so
heavily on adapting MSFT software for networks.  Adding insult
to injury, the company's CFO failed to show up for a speech at
the PaineWebber investor conference on Thursday, and CTXS VP
and General Manager, Chris Phoenix gave a speech instead.
Although there was nothing eventful in the speech, the
irregularity added to investor concerns and the selling
continued fast and furious on Friday morning.  Falling as low
as $40.63 during amateur hour, the stock saw very little
strength for the remainder of the session.  After recovering
to $43.50, shares of CTXS drifted lower for the balance of the
day, closing fractionally above the day's low.  Friday's drop
puts the stock below the late-May lows near $44, and this level
will create resistance going forward.  Use rallies to resistance
as a good point to initiate new positions, but wait for volume
and price action to confirm that the rally is losing strength
before playing.  Support appears near $39 and conservative
traders may want to wait for continuing weakness to push the
price through this level before jumping aboard.

BUY PUT JUL-45*XSQ-SI OI= 91 at $9.63 SL=6.75
BUY PUT JUL-40 XSQ-SH OI=741 at $6.13 SL=4.00

Average Daily Volume = 6.15 mln
/charts/charts.asp?symbol=CTXS


MMM - Minnesota MNG & MFG Inc $81.94 (-2.38)

The Minnesota Mining and Manufacturing Company (3M) is a leading
manufacturer of a variety of industrial, consumer and medical
products.  With operations in more than 60 countries, 3M is a
major player in the global economy.  The Company's technologies
have spawned a seemingly endless flow of groundbreaking products
with more than 50,000 products in its cache.  From Scotch tape
to industrial sandpaper, 3M has had an influence on the daily
lives of consumers worldwide.  The company was founded at the
turn of the century in 1902 in Two Harbors, MN.

So what happened to the defensive stocks that were supposedly
enticing the beaten down tech traders of not long ago?  How
quickly the tide can change when the high-flyers are once again
making golden promises.  As the NASDAQ and DOW are lifted higher
by the pristine techs and leading bluechips chips, MMM is in
anguish.  Tuesday's slide under a rather firm support of $84 was
the "technical" clincher.  Courting the depths of its all-time
low ($78.19), MMM is currently establishing a pattern of lower-
lows and lower-highs.  While this is a good sign, we'd like to
see an increase in the stock's trading volume.  Our expectations
are still for further downdrafts in a cooperating market, but
play it safe.  For confirmation, look for MMM to make a
definitive move under $81, or better yet through Thursday's low
of $80.44 before adding new positions.  The price range is
rather tight with overhead resistance at $82 just below the 5-
dma ($82.56) and 10-dma ($83.69).  This narrow channel could
indicate MMM is finding a bottom or on the flip side, preparing
for a sharp downward move.  So if you have open positions, keep
stops in place.  News is rather scarce for MMM, but there was a
tidbit at the end of May.  The BoD of the 3M Foundation approved
over $7.5 mln for educational institutions and programs throughout
the US and over $1.7 mln for the support of art organizations.

BUY PUT JUL-90 MMM-SR OI=128 at $9.25 SL=6.25
BUY PUT JUL-85*MMM-SQ OI=535 at $5.63 SL=3.50
BUY PUT JUL-80 MMM-SP OI=500 at $2.88 SL=1.50

Average Daily Volume = 1.62 mln
/charts/charts.asp?symbol=MMM


MMC - Marsh & McLennan Companies $100.94 (-9.88)

As the world's largest insurance brokerage company, MMC could
be called the ultimate middleman.  After purchasing UK broker
Sedgwick Group, the firm formed Marsh, Inc. to hold its risk
and insurance units including J & H Marsh & McLennan (risk
and insurance brokering); Guy Carpenter & Co. (reinsurance);
Seabury & Smith (insurance program management services); and
Marsh & McLennan Risk Capital (insurance industry investment
and advisory services).  The company also owns Putnam
Investments, which provides investment management services
such as research and accounting for publicly held investment
companies.

So much for support!  After moving up to challenge resistance
at $111 on the back of the market recovery after the holiday
weekend, MMC ran out of willing buyers and began falling back.
Rather than finding support near $104 though, the stock
continued its decline, falling through both the 30-dma ($103.75)
and the 50-dma ($102.50).  The volume has been falling over the
past few days, managing only a paltry 416 K shares on Friday.
This declining volume does cause us some concern, as it could be
an indication of the stock finding support near $100, but it
could just be an extension of the very weak market-wide volume
on Friday.  The benign PPI report on Friday did little to allay
investor concerns, and MMC could be facing further declines as
investors hold their breath ahead of the June FOMC meeting.
Conservative entries can be had as MMC drops through the $100
level, and takes a run at the next level of support near $95.
Bounces up to the $104 level can also be used for new entries
as the stock fails to move through it and rolls over.  Keep an
eye on the volume; if it increases as the price rolls over, this
will be a good indication of further weakness.

BUY PUT JUL-105 MMC-SA OI= 4 at $8.13 SL=5.75
BUY PUT JUL-100 MMC-ST OI= 3 at $4.75 SL=3.00
BUY PUT JUL- 95*MMC-SS OI=56 at $3.13 SL=1.50

Average Daily Volume = 928 K
/charts/charts.asp?symbol=MMC


NXLK - Nextlink Communications $74.38 (-13.13)

NEXTLINK is a provider of local and long distance voice, data
and Internet services with the technology know-how, network
assets, and management team needed to succeed in a competitive
environment.  They have a history of successfully creating
shareholder value, NEXTLINK is committed to providing outstanding
opportunities for individual and institutional investors who want
to own the future of integrated communications.

With all the good news surrounding this company you'd think it
would be on our list new calls.  So what's the problem with
Nextlink?  Some attribute the weakness this week as a nothing
more than a technical pullback and a "gap filling" measure after
its recent $44 gain.  That may be true, but the volume has been
average or better which suggests, it could be more than simple
profit taking.  Others point to the deal to buy Concentric
Network which was announced in January.  Concentric shareholders
will vote on the merger June 15th.  Its a $2.9 bln stock deal
which will add Internet services for business customers.  At this
point, prices are well within the "collar", however, the results
of the merger may be weighing on investors minds.  The wild card
in this play is the upcoming 2-for-1 split next Friday for NXLK.
There still are a few days for a split run to kick in, yet,
the action this past week doesn't appear to suggest that the
company is setting up to move higher.  Friday NXLK lost over 5%,
while the Telecom sector managed to chalk up a gain of about 1%.
Again, not what you'd expect to see on a stock that's preparing to
take flight.  Jim Friedland, an analyst at Robertson Stephens, had
kind words for Nextlink on Thursday.  He initiated coverage of
the telecom company with a Buy rating, saying "they believe the
company is well-positioned to emerge as one of the two or three
consolidators of the CLEC market."  How do we suggest traders
approach our new play?  The economic data due to come out next
week could drive NXLK and the major indices lower or bring an
abundance of new money back into the markets.  Friday, Nextlink
closed below its 200-dma at $77.76, which doesn't bode well
for the new week.  Other technical indicators are coming off
the ceiling, pointing lower as well. Further weakness or bounces
up to resistance at $77 or the $79 area followed by more selling
could be viewed as an attractive entry point.  For now, we would
suggest keeping stops close or be prepared to take profits, in
light of potential market moving data to be released.

BUY PUT JUL-80 QNF-SP OI= 222 at $12.38 SL=9.25
BUY PUT JUL-75 QNF-SO OI= 129 at $10.63 SL=7.50
BUY PUT JUL-70*QNF-SN OI=2864 at $ 8.13 SL=5.75
BUY PUT OCT-65 QNF-VM OI= 385 at $10.88 SL=8.25

Average daily volume = 2.13 mln
/charts/charts.asp?symbol=NXLK


TGT - Target Corp $55.94 (-10.06)

Target Corporation, formerly Dayton Hudson, is a general
merchandise retailer with three main operating divisions
consisting of Target, Mervyn's, and the Department Store
Division (DSD).  The company also operates Daytons, Hudsons, and
Marshall Fields, three more upscale department stores mainly
located in the Midwest.  In all, there are approximately 1,200
stores in the US.  Target Corporation also owns catalog retailer
Rivertown Trading and department store apparel supplier
Associated Merchandising.

Retail stocks may not be the cream of the crop on the Street,
but this week many were sent spiraling and TGT was no exception.
After LJR Redbook Research's weekly sales report said that US
retail same-store sales fell 0.3% from the same week a month ago
many investors cut their holdings on Tuesday.  Same-store sales
are considered the best measure of a retailer's results because
they exclude the effect of store openings and closing in the
past year.  Big-box retailer, TGT, retreated a significant
$6.75, or 10.5% on that fateful day.  Reports of flat May sales
at Circuit City stores also brought the retail sector down to
its knees.  The S&P Retail Index slumped almost 3.5%.  Many
analysts speculated that investors were spooked by fears that a
slower economy would hurt sales overall.  On Wednesday, TGT
experienced a slight reprieve after Morgan Stanley repeated a
Strong Buy recommendation, but worries about weakness in early
June sales prevailed.  And in contrast to the positive
reiteration, analyst Dean Ramos at George K. Baum & Co cut TGT
down to a Buy from a Strong Buy.  The mold was cast.  TGT
couldn't rise above $60 to save itself.  By Friday it was clear
investors had turned their backs on the retail sector.  Already
under the 10-dma ($61.55) and 5-dma ($59.51), TGT slithered
lower too.  The increasing volume on Friday's descent is
definitely a bearish indication.  An additional sign of its
ultimate demise would be a clean break through $53.75, the
stock's all-time low.

BUY PUT JUL-60 TGT-SL OI=315 at $6.00 SL=4.00
BUY PUT JUL-55*TGT-SK OI=437 at $3.13 SL=1.50

Average Daily Volume = 1.96 mln
/charts/charts/asp?symbol=TGT



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

The Option Investor Newsletter                    Sunday 6-11-2000
Sunday                                                      5 of 5


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

Candlestick Basics: Reversal Patterns

One of the most commonly used indicators in candlestick chart
analysis is the "Star."  The Star is a signal that a trend may
be coming to an end.  The pattern occurs when the current day's
candlestick has a small body that gaps away from a large body in
the prior session.  Stars can occur near resistance or support
and the color of the Star is generally not significant.  If the
Star has no body, it is called a "Doji Star."  The significance
of this pattern is a change in the market environment.  The
appearance of a Star during a substantial rally indicates that
buying strength is dwindling and the stock is susceptible to a
correction.  In contrast, a Star that occurs in the middle of a
major downtrend suggests that buyers may be gaining control of
the issue.  Overall, the emergence of a Star indicates that the
previous bias in the market (buying or selling) is beginning to
equalize and thus a change in character may soon occur.

The Star is the primary indication in a number of basic reversal
patterns; Shooting Star, Doji Star and the Morning/Evening Star.
The Morning Star pattern occurs at the end of a downtrend.  It
consists of a lengthy black body followed by a small body which
begins below the previous day's (closing) low.  The final line
is a white body that is enveloped by the black body of the first
session.  The appearance of the small body (the Star) after a
major downtrend suggests that selling is at an end and when the
following session produces an opening gap with a white body, the
bullish pattern is confirmed.  While the gap-up is not necessary
to define the pattern, it does produce much better results.  Of
course there are many variations of the Morning Star, the most
common of which includes more than one Star in the reversal
pattern.

In bullish markets, the Evening Star is often the kiss of death.
It is also an important "exhaustion" signal when observed in an
area of congestion and confirmed by other negative signals.  The
pattern is similar to an "Island Top" reversal used by bar chart
technicians but the candlestick version reflects the potential
reversal in a much better fashion.  When the Evening Star occurs
during a major up-trend, there is cause for concern.  The first
line is the last bullish indication; a long, white body.  The next
candlestick is the Star, the first signs of a top formation.  The
final candlestick is a black body that intrudes well into the body
of the initial (white) candlestick.  As with the previous reversal
pattern (Morning Star), it is best when there is a gap between the
body of the middle candlestick (Star) and the opening (or closing)
prices of the surrounding sessions.  In any case, the low point of
the Star's body should be well above the closing high of the first
candlestick.





Volume is an important component of technical reversal patterns.
When trading volume is light during the final phase of a trend
(the first candlestick) and increases during the beginning stages
of a reversal (the candlestick following the last Star), there is
a higher probability of follow-through in the new character.  The
enthusiasm with which investors accept the new direction can be
defined by the presence (or lack) of trading activity.  In fact,
when the overall trend is less defined, the change in volume can
be almost as significant as the actual candlestick formation.

Next week, will review another popular pattern, the "Magic Doji."

Steve Nison's "Japanese Candlestick Charting Techniques" is an
excellent resource, available in the OIN bookstore.

Good Luck!



SUMMARY OF PREVIOUS PICKS
*****
NOTE: Using Margin doubles the listed Monthly Return!

Stock  Price  Last   Call  Strike Price   Profit  Monthly
Symbol Picked Price  Month Sold   Picked  /Loss   Return

ITXC   40.06  42.00   JUN  35.00  6.75  *$  1.69  11.0%
PSSI    9.50   8.97   JUN   7.50  2.63  *$  0.63  10.0%
FHS    11.38  11.56   JUN  10.00  2.13  *$  0.75   8.8%
NERX   14.75  16.81   JUN  12.50  2.69  *$  0.44   7.9%
HSIC   18.25  18.00   JUN  17.50  1.31  *$  0.56   7.2%
STAA   13.50  13.50   JUN  12.50  1.38  *$  0.38   6.8%
CYBS   14.94  18.75   JUN  12.50  3.00  *$  0.56   6.8%
EGOV   15.44  22.88   JUN  12.50  3.50  *$  0.56   6.8%
CENT   11.81  11.31   JUN  10.00  2.50  *$  0.69   6.4%
SMRT    8.53   9.13   JUN   7.50  1.50  *$  0.47   5.8%
WGR    22.50  21.31   JUN  20.00  3.25  *$  0.75   5.6%
MENT   18.31  18.06   JUN  17.50  1.25  *$  0.44   5.6%
CWST   12.63  12.38   JUN  10.00  3.00  *$  0.37   5.6%
CAIR   22.88  22.63   JUN  17.50  6.38  *$  1.00   5.3%
BEAM   12.44  18.59   JUN  10.00  3.00  *$  0.56   5.2%
ANET   12.94  14.75   JUN  12.50  1.13  *$  0.69   5.1%
AAS    22.00  25.75   JUN  20.00  2.88  *$  0.88   5.0%
CCCG   13.50   9.91   JUN  10.00  4.00   $  0.41   4.7%
WGR    21.00  21.31   JUN  17.50  4.13  *$  0.63   4.1%
LPNT   20.63  19.25   JUN  17.50  3.75  *$  0.62   4.0%
PXD    14.06  13.56   JUN  12.50  1.88  *$  0.32   3.8%
ADAC   17.38  20.00   JUN  15.00  2.75  *$  0.37   3.7%

MED     9.44   8.00   JUL   7.50  2.69  *$  0.75   6.9%
ALSC   26.88  29.38   JUL  22.50  5.88  *$  1.50   4.4%

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

Comments:

Ccc Information (CCCG) continues to hold steady though any move
below the June - April low should be considered an exit signal.
Keep an eye on Western Gas (WGR) and Pioneer Natural (PXD) as
they consolidate towards their respective 30 dma's.  Lifepoint
Hospitals (LPNT) is nearing its 50 dma; the next support area is
near $17.

Positions Closed:

Boise Cascade (BCC) - A small loss can be a good thing!
Digital River (DRIV) - No strength in the recent rally.


NEW PICKS
*********


Sequenced by Company
*****

Stock  Last  Call  Strike Option  Last  Open Cost  Days to Monthly
Symbol Price Month Price  Symbol  Bid   Intr Basis Expiry  Return

ARTT   18.38  JUN  15.00  AOQ FC  3.75  227  14.63    7    11.0%

CYTO    7.97  JUL   5.00  UOR GA  3.38  190   4.59   42     6.5%
GENE   27.75  JUL  20.00  GUG GD  9.25  231  18.50   42     5.9%
IBC    14.94  JUL  12.50  IBC GV  3.25  149  11.69   42     5.0%
LYNX   32.63  JUL  25.00  ULX GE  9.75  14   22.88   42     6.7%
TGEN   12.25  JUL   7.50  GNU GU  5.25  4     7.00   42     5.2%
ZD     11.38  JUL  10.00   ZD GB  2.25  203   9.13   42     6.9%

Sequenced by Return
*****

Stock  Last  Call  Strike Option  Last  Open Cost  Days to Monthly
Symbol Price Month Price  Symbol  Bid   Intr Basis Expiry  Return

ARTT   18.38  JUN  15.00  AOQ FC  3.75  227  14.63    7    11.0%

ZD     11.38  JUL  10.00   ZD GB  2.25  203   9.13   42     6.9%
LYNX   32.63  JUL  25.00  ULX GE  9.75  14   22.88   42     6.7%
CYTO    7.97  JUL   5.00  UOR GA  3.38  190   4.59   42     6.5%
GENE   27.75  JUL  20.00  GUG GD  9.25  231  18.50   42     5.9%
TGEN   12.25  JUL   7.50  GNU GU  5.25  4     7.00   42     5.2%
IBC    14.94  JUL  12.50  IBC GV  3.25  149  11.69   42     5.0%


Company Descriptions

LB-Last Bid price, OI-Open Interest, CB-Cost Basis or break-even
point, DE-Days to Expiry, MR-Monthly Return.

*****
ARTT - Advanced Radio Telecom  $18.38  *** One-Week Play! ***

Advanced Radio Telecom is a provider of broadband wireless Internet
Protocol (IP) access services at speeds up to 155 Mbps.  ARTT
currently owns and operates broadband wireless metropolitan area
networks in San Jose, Seattle, Portland, Ore., and Phoenix, and
plans to expand to 40 markets over the next three years.  Though
Advance Radio announced on Thursday that its subsidiary, ART Nordic
A.B and Norway's BaneTele, plan on building a next generation end-
to-end IP network within Norway, it really doesn't explain the
jump in price on Friday.  The short-term technicals have been
increasingly bullish and the heavy volume on Friday bodes well
for future upside potential.  Reasonable short-term speculation
for those with a bullish outlook on ARTT.

JUN 15.00 AOQ FC LB=3.75 OI=227 CB=14.63 DE=7 MR=11.0%

Chart =
 /charts/charts.asp?symbol=ARTT
*****
- July Plays -
*****
CYTO - Cytogen  $7.97  *** Biotech's are Hot! ***

Cytogen is a biopharmaceutical company engaged in the development
and marketing of products to improve diagnosis and treatment of
cancer and other diseases.  Their diagnostic imaging agents, used
in cancer detection, include ProstaScint and OncoScint CR/OV.
They also market Quadramet, a proprietary cancer therapeutic
agent for pain relief in patients with metastatic bone lesions.
The Biotech sector is hot and appears to be the "current" growth
sector of choice for many investors and institutions.  We favor
the technical breakout in Cytogen on heavy volume, as the stock
has now taken out the May high.  The 13 dma has just crossed
above the 30 dma (both exp.) and the May high is now a support
level.

JUL 5.00 UOR GA LB=3.38 OI=190 CB=4.59 DE=42 MR=6.5%

Chart =
 /charts/charts.asp?symbol=CYTO
*****
GENE - Genome Therapeutics  $27.75  *** Biotech - Part II ***

Genome Therapeutics identifies and validates novel drug targets
by applying its integrated platform technologies of high
throughput sequencing, disease gene identification, and
functional genomics.  They possesses genomics and related
proprietary technologies, which they intend to use to identify
and validate gene targets.  Together with their partners
(Schering-Plough, bioMérieux, Inc. and others) , they plan to
develop novel therapeutic, vaccine and diagnostic products.
They focus on the discovery and characterization of novel targets
in pathogens that are responsible for many serious diseases.
The drug stocks are climbing faster than a Cessna off the coast
of Florida!  Again, a technical breakout from a stage I base,
supported by heavy volume in a hot, hot sector.  Genome has now
closed above both the May and April highs and is displaying
several buy signals.  Of course, we prefer to speculate near
technical support and don't forget your due diligence.

JUL 20.00 GUG GD LB=9.25 OI=231 CB=18.50 DE=42 MR=5.9%

Chart =
 /charts/charts.asp?symbol=GENE
*****
IBC - Interstate Bakeries   $14.94  *** Buyout Speculation! ***

Interstate Bakeries Corporation is one of the largest bakers and
distributors of fresh bakery products in the United States.  The
company produces, markets, distributes and sells a wide range of
breads, rolls, snack cakes, donuts, sweet goods and related
products.  These products are sold under national brand names
such as Wonder, Hostess and Home Pride, as well as regional brand
names, including Butternut, Dolly Madison, Drake's and Merita.
Speculators are moving into Interstate Bakeries as rumors of a
buyout or merger.  The food sector is also considered a safety
sector ("people still have to eat") during times of uncertainty
("interest rates?"), and the volatility of Interstate's options
offer a conservative entry point.  Though the stock is still in a
downtrend, a stage I base appears to be forming on increasingly
bullish technicals.

JUL 12.50 IBC GV LB=3.25 OI=149 CB=11.69 DE=42 MR=5.0%

Chart =
 /charts/charts.asp?symbol=IBC
*****
LYNX - Lynx Therapeutics  $32.63  *** Return of the Biotech's ***

Lynx Therapeutics is engaged in the development and application
of novel technologies for the discovery of gene expression patterns
and genomic variations important to the pharmaceutical, biotech.,
and agricultural industries.  These technologies are based on
Megaclone, its unique and proprietary cloning procedure.  Megaclone
is the foundation for its analytical applications, including MPSS,
which provides gene sequence information, and Megatype, which is
expected to provide disease or trait association information.  Yes,
it is getting redundant - a technical breakout in a Biotech stock.
We favor the bullish move on heavy volume, that took out both the
April and May highs, which now offer support.  Money is being
moved into the Biotech sector as investors, leery of the recent
Tech landmines, still desire strong growth potential.  Cautious
speculation with a reasonable risk/reward outlook.

JUL 25.00 ULX GE LB=9.75 OI=14 CB=22.88 DE=42 MR=6.7%

Chart =
 /charts/charts.asp?symbol=LYNX
*****
TGEN - Targeted Genetics  $12.25  *** Biotech's et al! ***

Targeted Genetics develops gene therapy products and technologies
for the treatment of acquired and inherited diseases.  The company
now has two lead products in clinical trials for treating cystic
fibrosis and treating cancer.  They are engaged in preclinical
product development activities in the areas of hemophilia,
rheumatoid arthritis, cardiovascular disease and HIV vaccines.
Not only is Targeted Genetics in a burning hot sector, they also
had some favorable news this week on their Phase I clinical trial
of tgAAV-CF, the Company's gene therapy product for the treatment
of cystic fibrosis.  As for the technicals, it's de`ja-vu all over
again - a breakout from a stage I base on heavy volume.  Targeted
Genetics offers another Biotech to choose from with a conservative
entry point.

JUL 7.50 GNU GU LB=5.25 OI=4 CB=7.00 DE=42 MR=5.2%

Chart =
 /charts/charts.asp?symbol=TGEN
*****
ZD - Ziff Davis  $11.38  *** IPO speculation! ***

Ziff Davis is the leading information authority for buying, using
and experiencing technology and the Internet.  The company is the
largest technology and Internet magazine publisher and the sixth
largest magazine publisher in the United States.  Ziff-Davis, 69
percent owned by Softbank, plans to spin off its ZD Events trade-
show business and also plans to merge with its Internet unit,
ZDNet.  There is lots of merger/buyout speculation in the media
sector which is an added benefit for Ziff Davis.  We favor the
heavy volume on the current rally that has helped push the stock
price above the May high.  The technicals are increasingly bullish
and Ziff Davis has now moved above its 50 dma.

JUL 10.00 ZD GB LB=2.25 OI=203 CB=9.13 DE=42 MR=6.9%

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



*************************
NAKED PUT PERCENTAGE LIST
*************************

By Ryan Nelson

Stock  Stock  Strike Option  Option Margin Percent Support
Symbol Price  Price  Symbol  Price  At 25% Return  Level

AMD     88.75   90   AMD-RR   3.75   2219   17%      86
AETH   187.47  180   HEX-RP   9.88   4687   21%     180
BRCD   147.00  140   UBZ-RH   3.00   3675    8%     140
CHKP   224.63  220   YKE-RU   7.13   5616   13%     218
CIEN   139.69  135   UEE-RG   3.75   3492   11%     130
CMTN    95.63   95   KUA-RS   3.88   2391   16%      95
DNA    133.81  130   DNA-RF   9.00   3345   27%     123
ETEK   231.19  230   FNY-RF   7.88   5780   14%     230
EXDS    92.75   90   DUB-RR   2.75   2319   12%      89
EXTR    82.00   80   EUT-RP   3.00   2050   15%      80
GLW    212.00  210   GRJ-RB   5.00   5300    9%     208
INCY    85.69   80   IPQ-RP   2.38   2142   11%      82
ITWO   133.44  130   QYJ-RF   4.50   3336   13%     130
JNPR   226.63  220   JUY-RD   9.13   5666   16%     220
MLNM   121.56  115   QMR-RC   2.63   3039    9%     114
PDLI   165.00  145   RPV-RI   3.13   4125    8%     150
PEB     71.06   70   PEB-RN   4.25   1777   24%      69
PHCM    91.50   90   UMN-RR   2.19   2288   10%      87
PMCS   187.00  180   SZI-RP   4.38   4675    9%     180
RBAK   115.88  110   BUK-RB   3.63   2897   13%     115
RMBS   233.06  230   BYQ-RF  11.63   5827   20%     225
SDLI   250.00  240   QJV-RH   8.00   6250   13%     245
SEBL   143.50  140   SGW-RH   3.13   3588    9%     140
SNDK    73.25   70   SWQ-RN   2.00   1831   11%      70
SSTI    98.56  100   SSU-RT   7.13   2464   29%      95
TQNT   113.75  110   TNN-RB   3.50   2844   12%     110
VRSN   198.00  190   QVZ-RR   6.25   4950   13%     185
VRTS   135.63  135   VUQ-RG   4.38   3391   13%     132
YHOO   143.19  140   YMM-RH   3.00   3580    8%     140


YHOO




AGGRESSIVE   SELL PUT JUN-150 YMM-RJ at $8.63 = 24%
MODERATE     SELL PUT JUN-145 YMM-RI at $5.25 = 15%
CONSERVATIVE SELL PUT JUN-140 YMM-RH at $3.00 =  8%


SEBL




AGGRESSIVE   SELL PUT JUN-145 SGW-RI at $5.38 = 15%
CONSERVATIVE SELL PUT JUN-140 SGW-RH at $3.13 =  9%


JNPR




AGGRESSIVE   SELL PUT JUN-230 JUY-RF at $13.88 = 25%
MODERATE     SELL PUT JUN-220 JUY-RD at $ 9.13 = 16%
CONSERVATIVE SELL PUT JUN-210 JUY-RB at $ 5.63 = 10%



***********************
CONSERVATIVE NAKED PUTS
***********************

"Idleness and pride tax with a heavier hand than kings and
parliaments."

That famous quote from Ben Franklin was never more appropriate
than it is in today's difficult and demanding financial markets.

The majority of traders have an opinion about the condition of
the stock market and the manner in which they can profit from
its future movement.  When asked about recent positions, most
will reply with confidence that the strategies they use will
result in a successful outcome.  Unfortunately, a high degree
of conviction can frequently lead to failure.  The trouble
begins soon after the initial trading decision has been made.
As the new position matures, the reasons for the trade, whether
accurate or timely, are often adjusted to support the original
outlook.  The facts just seem to fall into place.  The market
character; the earnings outlook; the potential for bullish
announcements.  All of the available supporting evidence is
included in the rationalization, whether relevant or not and a
plethora of reasons to remain in the position are marshaled in
defense of this decision.

Its no different with analysts and financial gurus; those that
attempt to forecast the market's future on a regular basis.
Each and every one has a long list of justifications for the
current trends or "why the market has declined" and "when the
market will recover."  Inflationary issues, economic conditions,
developments in technology, and changes in the political arena
are all given as common explanations for situations that have
yet to be proven "predictable."  The problems with attempting to
explain the events of the past, or forecast the outcome of the
future are numerous but the primary reason to avoid this trait
is simple.  Once we have entered a position with this attitude,
we will continue to assemble and connect information in a manner
which will support our original conclusion, rather than reflect
the actual conditions of the market.

The fact is, the majority of investors have trouble recognizing
that all situations change and there is no perfect and complete
method of knowing when, where, and how these developments will
occur.  In early stages of learning and throughout most of our
adult lives, we are trained to make decisions in a positive and
absolute manner.  We are taught to endorse and defend our ideas
with resolve.  We strive to be correct!  It is a conditioned
response, and simply a matter of existence in today's society.
Based on the customs of our culture, changes in opinion are often
seen as a failure to arrive at the proper solution during the
initial assessment.  That is why it is so difficult to admit when
we are wrong, to take the loss (even when it is small), and to
reassess the position and correct our original observations.
Human nature is the culprit here and until one can overcome the
debilitating effects of pride and presumption, there is little
hope for prosperity in the stock market.

For most traders, profit comes from the successful participation
in specific positions.  As with any investment or speculative
venture, the key is to remain alert for signs of changing trends
in character or direction, and respond promptly and decisively
when and if such events occur.  One manner in which that can be
accomplished is through the use of trading systems.  Next week,
we will review one of the most common (and successful) methods
of money management; "Trading Stops."

Good Luck!



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


SUMMARY OF PREVIOUS PICKS
*****

Stock  Price  Last   Put   Strike Price   Profit  Monthly
Symbol Picked Price  Month Sold   Picked  /Loss   Return

MED     9.44   8.00   JUN   7.50  0.38  *$  0.38  36.4%
BBSW   28.63  27.81   JUN  22.50  0.63  *$  0.63  21.5%
ITXC   40.06  42.00   JUN  30.00  0.69  *$  0.69  17.2%
ADAC   20.31  20.00   JUN  17.50  0.44  *$  0.44  16.6%
ADAC   17.38  20.00   JUN  15.00  0.56  *$  0.56  15.8%
ADVP   16.75  19.13   JUN  12.50  0.38  *$  0.38  14.8%
MSM    22.06  21.38   JUN  17.50  0.50  *$  0.50  14.7%
BBSW   17.00  27.81   JUN  12.50  0.38  *$  0.38  14.6%
MRVC   35.56  46.00   JUN  25.00  0.50  *$  0.50  14.3%
ADEX   19.56  18.00   JUN  15.00  0.69  *$  0.69  13.0%
BFO    65.13  68.88   JUN  55.00  1.00  *$  1.00  12.8%
TMAR    9.25  10.50   JUN   7.50  0.25  *$  0.25  12.3%
MATK   18.88  18.38   JUN  15.00  0.31  *$  0.31  11.0%
YRK    25.94  26.06   JUN  22.50  0.56  *$  0.56  10.8%
UNM    20.19  22.44   JUN  17.50  0.56  *$  0.56  10.2%
ADVP   17.13  19.13   JUN  12.50  0.31  *$  0.31   9.0%
GZMO   17.19  14.38   JUN  10.00  0.31  *$  0.31   9.0%
CLPA   29.38  24.81   JUN  15.00  0.63  *$  0.63   8.4%
WLV    16.94  16.94   JUN  15.00  0.50  *$  0.50   8.1%
CLPA   27.19  24.81   JUN  15.00  0.44  *$  0.44   8.1%
NGH    20.88  25.50   JUN  17.50  0.38  *$  0.38   7.7%
VRTL   17.00  17.38   JUN  10.00  0.31  *$  0.31   7.3%
NGH    21.19  25.50   JUN  17.50  0.25  *$  0.25   7.2%
ALL    26.75  26.69   JUN  22.50  0.44  *$  0.44   6.9%
XTO    17.69  20.50   JUN  15.00  0.38  *$  0.38   6.9%
VRC    20.81  21.50   JUN  17.50  0.38  *$  0.38   6.1% New ticker
TRMB   36.00  49.81   JUN  25.00  0.44  *$  0.44   5.0%

FSII   16.00  15.94   JUL  12.50  0.50  *$  0.50   8.4%

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

Comments:

Cell Pathway (CLPA) manufactured some follow-through to last
Friday's rally and appears to be out of danger.  Doesn't Trimble
(TRMB) make you wish you had just bought a few calls?  Wolverine
Tube (WLV) appears to be failing to take out the May high, not a
good sign.  Watch York International (YRK) closely as it is on
the verge of violating a 3 month trendline.  A follow through of
Friday's rally should keep the stock safely above our sold strike.
E-MedSoft.com's (MED) decline on Friday is very worrisome - mind
your stop loss exit.  Remember, a break-even exit is a good thing,
and yes, I sometimes have to relearn that too.




NEW PICKS
*********

Sequenced by Company
*****

Stock  Last  Put   Strike Option  Last  Open Cost  Days to Monthly
Symbol Price Month Price  Symbol  Bid   Intr Basis Expiry  Return

CEGE   27.25  JUL  17.50  UCG SW  0.44  170  17.06   42     5.4%
CREAF  28.00  JUL  22.50  RFQ SX  0.69  114  21.81   42     7.8%
EFCX   10.56  JUL   7.50  FUS SU  0.44  0     7.06   42    12.5%
MPPP   19.19  JUL  10.00  PUM SB  0.38  71    9.62   42     6.5%
OMKT   19.00  JUL  12.50  OQM SV  0.38  50   12.12   42     6.6%
PILT   15.31  JUL  10.00  PTU SB  0.38  173   9.62   42     8.0%
SYMM   20.00  JUL  15.00  SQG SC  0.38  0    14.62   42     6.3%

Sequenced by Return
******

Stock  Last  Put   Strike Option  Last  Open Cost  Days to Monthly
Symbol Price Month Price  Symbol  Bid   Intr Basis Expiry  Return

EFCX   10.56  JUL   7.50  FUS SU  0.44  0     7.06   42    12.5%
PILT   15.31  JUL  10.00  PTU SB  0.38  173   9.62   42     8.0%
CREAF  28.00  JUL  22.50  RFQ SX  0.69  114  21.81   42     7.8%
OMKT   19.00  JUL  12.50  OQM SV  0.38  50   12.12   42     6.6%
MPPP   19.19  JUL  10.00  PUM SB  0.38  71    9.62   42     6.5%
SYMM   20.00  JUL  15.00  SQG SC  0.38  0    14.62   42     6.3%
CEGE   27.25  JUL  17.50  UCG SW  0.44  170  17.06   42     5.4%


Company Descriptions

LB-Last Bid price, OI-Open Interest, CB-Cost Basis or break-even
point, DE-Days to Expiry, MR-Monthly Return.

*****
CEGE - Cell Genesys  $27.25  *** Biotech Sector ***

Cell Genesys is engaged in the development and commercialization
of gene therapies to treat major, life-threatening diseases,
including cancer and AIDS.  Cell Genesys currently has two gene
therapy programs, the clinical programs and the pre-clinical
programs.  The clinical programs include GVAX(TM) cancer vaccines
in Phase I/II studies to treat specific types of cancer, such as
lung and prostate cancers, and T cell gene therapy for AIDS,
which is undergoing Phase II testing.  Cell Genesys also develops
and commercializes human monoclonal antibodies for pharmaceutical
applications, including inflammation, auto-immune disorders and
cancer.  The biotechnology group is on the move and traders have
become interested in the issue amid reports the company's factor
IX blood-clotting protein performed well in recent tests, with no
discernible ill effects.  The bullish pattern suggests a recovery
from the recent sell-off is underway and in this case we simply
favor a conservative entry into a momentum-based position.

JUL 17.50 UCG SW LB=0.44 OI=170 CB=17.06 DE=42 MR=5.4%

Chart =
 /charts/charts.asp?symbol=CEGE
*****
CREAF - Creative Technology  $28.00  *** The New CMGI? ***

Creative Technology develops, manufactures, and markets a wide
array of advanced multimedia solutions for PC entertainment,
education, music and productivity tools marketed under the
"Blaster" family name.  They market a wide variety of products,
including game system and PC-DVD speakers, MP3 players, sound
cards, and other electronic offerings. Creative Technology's
third-quarter profit surged almost fivefold, thanks to success
in recent Internet investments.  With big competition in sound
card manufacturing, CREAF has become a buyer of technology
startups.  Last year, CREAF established a $100 million fund for
investments in new companies from MediaRing.com, which develops
software enabling phone calls, to Lafe Technologies, a maker of
unique electronics products.  The question now is whether these
investments will be successful in the current market environment.

JUL 22.50 RFQ SX LB=0.69 OI=114 CB=21.81 DE=42 MR=7.8%

Chart =
 /charts/charts.asp?symbol=CREAF
*****
EFCX - Electric Fuel  $10.56  *** On The Move! ***

EFCX is engaged in the design, development and commercialization
of its proprietary zinc-air battery technology for portable
consumer electronic devices such as cellular telephones, laptop
computers, personal digital assistants and camcorders, as well as
for electric vehicles and defense applications.  They offer their
products through several marketing partners as well as through
direct online sales.  Electric Fuel recently opened a UK Sales and
Marketing office in London, from which the company will focus its
sales of the unique ZincAir batteries for cellular telephones in
the United Kingdom.  EFCX is in the process of establishing a
London-based operating subsidiary, which will serve as the base of
its marketing.  The company also announced that the leading UK and
European cellular retailer will begin selling their batteries
through its network of retail stores.  That's probably not the cause
of the current rally but it's enough to provide some optimism for
future revenues.

JUL 7.50 FUS SU LB=0.44 OI=0 CB=7.06 DE=42 MR=12.5%

Chart =
 /charts/charts.asp?symbol=EFCX
*****
MPPP - MP3.com  $19.19  *** Music To My Ears! ***

MP3.com is developing an innovative approach to the promotion and
distribution of music.  The MP3.com Web site offers a variety of
attractive benefits to artists and consumers.  MP3 utilizes the
Internet and file formats that make music files smaller to enable
artists to distribute and promote their music and to enable
consumers to conveniently access this music.  Time Warner's Music
Group and BMG Entertainment recently became the first of the big
five record labels to settle copyright infringement lawsuits with
MP3.com.  MP3 has agreed to pay up to $20 million in exchange for
licensing agreements to offer users the record companies' music.
The settlement was hailed by analysts as historic and three other
record companies, Sony Music, Universal, and EMI are expected to
settle similar claims against MP3.com in the next few weeks.

JUL 10.00 PUM SB LB=0.38 OI=71 CB=9.62 DE=42 MR=6.5%

Chart =
 /charts/charts.asp?symbol=MPPP
*****
OMKT - Open Market  $19.00  *** Own This One! ***

Open Market develops, markets, licenses and supports a family of
application software products that allow its customers to engage
in business-to-business Internet commerce, information commerce
and commercial publishing.  Their software includes a wide range
of functionality required to effectively conduct business on the
Internet, allowing companies to attract customers to their sites,
interest them in acting upon an offer, complete a transaction and
service them once a transaction has been completed.  Open Market's
solution is comprised of application software products along with
maintenance, support, professional services and training.  OMKT
was recently listed as a "new buy" at Paine Webber with a price
target of $30 to $35.  Based on the bullish chart pattern, most
investors agree with the outlook.

JUL 12.50 OQM SV LB=0.38 OI=50 CB=12.12 DE=42 MR=6.6%

Chart =
 /charts/charts.asp?symbol=OMKT
*****
PILT - Pilot Network Services  $15.31  *** On The Rebound? ***

Pilot Network Services provides a wide range of secure Internet
services that incorporate high-bandwidth connectivity and enable
secure electronic business over the Internet.  Pilot's services
include secure access and gateway services, secure hosting and
electronic commerce services, and secure extranet and virtual
private networking services.  This bottom-fishing position is
based on the recent technical recovery and the bullish outlook
for the industry group.  Our cost basis is near the 52-week low
for the issue and in the event of a future consolidation, the
support should begin near that price range.

JUL 10.00 PTU SB LB=0.38 OI=173 CB=9.62 DE=42 MR=8.0%

Chart =
 /charts/charts.asp?symbol=PILT
*****
SYMM - Symmetricom  $20.00  *** DSL Technology Leader ***

Symmetricom designs, manufactures and markets advanced network
synchronization and timing products and intelligent access
systems.  Their solutions play a critical role in the operation
and quality of service of both traditional narrowband voice and
data networks and emerging broadband communications networks,
enabling their customers to maximize network efficiency.  SYMM
recently unveiled a new technology that is designed to allow ADSL
providers to augment their customer base and allow hundreds of
thousands of additional businesses and consumers to experience
the benefits of ADSL-enabled high-speed Internet access.  SYMM's
new GoLong extender is targeted to solve the performance issues
when transmission distances increase beyond 3 miles from the
central office.  Using Symmetricom's proprietary ADSL network
extension technology, providers can now double the distance to
which they can offer ADSL service.  That's impressive technology
in today's Internet-driven society.

JUL 15.00 SQG SC LB=0.38 OI=0 CB=14.62 DE=42 MR=6.3%

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



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

Inflation Fears Plague The Market...

Friday, June 9

The market ended mixed today after a report on wholesale prices
left investors uncertain about the direction of the economy.  The
Dow ended down 54 points at 10,614 while the Nasdaq Composite
rose 49 points to 3874.  The S&P 500 Index fell 4 points to 1456.
Trading volume on the NYSE was a light 791 million shares, with
advances beating declines 1,672 to 1,189.  Activity on the Nasdaq
was subdued at 1.26 billion shares.  Technology advances beat
declines 2,414 to 1,575.  In the bond market, the U.S. 30-year
Treasury fell 3/32, pushing its yield up to 5.89%.


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

Active Soft.   ASWX   JUL45P/JUL55P   $0.75   credit  bull-put
Network App.   NTAP   JUL60P/JUL65P   $0.62   credit  bull-put
Juniper Net.   JNPR   JUL350C/J165P   $9.00   credit  strangle

Our new combination plays offered very few opportunities for
favorable position entries.  Network Appliances was the only
spread that traded at our suggested credit (on a simultaneous
order basis).


Portfolio plays:

Industrial stocks moved lower in today's session despite the
tame figures from the Producer Price Index.  After a brief
rally attempt during the morning, blue-chip stocks began to
slide on concerns over the Fed's next move with interest rates.
Although analysts said Friday's data showed no signs of mounting
inflationary pressures, investors remained cautious ahead of the
upcoming retail sales report and statistics from the Consumer
Price Index.  On the Nasdaq, biotech stocks posted impressive
gains while the chip sector remained the best-performing area of
the market, keeping the composite index positive throughout the
day.  On the Dow, financial and retail issues guided the average
lower as profit warnings dampened investor enthusiasm.  News of
discouraging results from McDonald's (MCD) ended any hope for a
bullish session.  Sales at the Golden Arches have been miserable
and Merrill Lynch analysts said it was the worst month for the
company in two years.  In the broad market, defense, gaming and
telecom stocks advanced while consumer products, restaurants and
agricultural issues slumped.

Our portfolio had little activity of interest.  Ciena (CIEN) led
the technology section with a $4 gain and Sepracor (SEPR) topped
the Major Drug group, up almost $5 to $116.  Our Covered-Calls
with LEAPS position is at maximum profit above $100.  Johnson &
Johnson (JNJ) managed a small recovery today, and Celgene (CEGE)
led the biotech group with a $2.68 rally to $27.  Our new bullish
position is profitable with a break-even basis at $22.  Ashland
Oil (ASH) rebounded from a recent slump and the debit spread is
now offering a favorable early-exit profit.  Pep Boys (PBY) also
made a small upside move and the timing is excellent, providing
a great opportunity to roll into the July options.  The surprise
of the day was once again Novoste (NOVT), which rallied back to
$45 on increasing volume with no news.  The current speculation
is that the company will be bought by Johnson & Johnson (JNJ) or
Medtronics (MDT).  Of course there is no easy way to confirm or
deny the rumors so we will just have to rely on the technicals.
A move through $47 on increasing volume would signal a potential
change in character and that's the indication we will use to
determine our next action.  Those of you who wish to avoid the
excitement might try to close the position during any pullback
in Monday's trading.  Regardless of the outcome, the learning
experience will be well worth the time involved in monitoring
the issue.

Good Luck!

Questions & comments on spreads/combos to Contact Support
******************************************************************
                         - NEW PLAYS -
******************************************************************
CVG - Convergys  $48.75  *** Reader's Request! ***

Convergys Corporation is a provider of outsourced information
and customer management products and services.  The company
focuses on developing long-term strategic relationships with
clients in customer-intensive industries; telecommunications,
Internet services, cable, broadband, satellite broadcasting,
utilities, technology, financial services, consumer products,
healthcare and pharmaceuticals.  Convergys serves its clients
through two operating subsidiaries; the Information Management
Group, which develops complex software to provide outsourced
billing and information services, and the Customer Management
Group, which provides outsourced customer, employee and other
marketing support services.

One of our subscribers was kind enough to point out the bullish
trend in this stock and he also requested that we identify a
favorable spread position in the issue.  Based on the positive
technical outlook and a small premium disparity, the best way to
profit from any future upside movement may involve the simplest
of techniques; a debit spread.


PLAY (conservative - bullish/debit spread):

BUY  CALL  JUL-35  CVG-GG  OI=152  A=$14.25
SELL CALL  JUL-45  CVG-GI  OI=434  B=$5.75
INITIAL NET DEBIT TARGET=$8.25  ROI(max)=20% B/E=$43.25


This play is based on the current price or trading range of
the underlying issue and the recent technical history or trend.
Current news and market sentiment will have an effect on this
issue.  Please review the play thoroughly and make your own
decision about the future outcome of the position.

Chart =
/charts/charts.asp?symbol=CVG
******************************************************************
ISSI - Integrated Silicon Solutions  $35.31

Integrated Silicon Solution designs, develops and markets high
performance memory devices including static random access memory
(SRAM), low and medium density dynamic random access memory, and
nonvolatile memory (NVM), as well as voice recording devices and
certain microcontrollers and embedded memories.  The company's
memory devices are used in popular networking applications,
telecommunications, data communications, disk drives and other
peripherals, personal computers, instrumentation and automation,
and other consumer products.

The majority of semiconductor issues have performed well in the
past year but many of the smaller-cap issues are just beginning
to achieve institutional attention.  Integrated Silicon Solutions
is one of the companies that is now gaining favor among mutual
fund managers and based on their bullish opinion, the future is
bright for this unique chip-making business.  Several funds have
turned in stellar performances this year but the leader through
May was the Schroder Micro Cap Fund (SMCFX), up a whopping 56%
during the first three months of the year.  This fund attempts
to provide long-term capital appreciation and one their primary
holdings is Integrated Silicon Solutions.  That says something
about the potential of this issue and with help from favorable
option premiums, we are going to speculate on the future
performance of the company's share value.


PLAY (conservative - bullish/diagonal spread):

BUY  CALL  OCT-25  XUS-JE  OI=99   A=$13.00
SELL CALL  JUL-35  XUS-GG  OI=432  B=$4.00
INITIAL NET DEBIT TARGET=$8.75  INITIAL TARGET ROI(max)=14%

Chart =
/charts/charts.asp?symbol=ISSI
******************************************************************
MACR - Macromedia  $101.00  ** New Trading Range? ***

Macromedia develops and distributes original technologies and
innovative software tools, servers and services to a range of
customers including developers, consumers and large corporate
accounts.  Macromedia's software products and technologies are
focused on maximizing opportunities in three key areas: Web
Publishing, Web Learning, and Shockwave.com.  Macromedia's
family of Web Publishing products works together as a complete
solution to streamline Web workflow from concept to design,
development to production.  Their Attain Enterprise Learning
System is an integrated enterprise-wide solution for managing
the online learning process from planning, administering, and
delivering curricula, to tracking, storing, and reporting
learner progress from any browser, anywhere in the world.  The
company's new consumer business, shockwave.com, intends to
release various products and services that form the basis of
this business over the coming months.

There are a number of articles concerning MACR's new products
and developments in the multimedia and graphics software
industry but our position is based simply on a the bullish
technical outlook.  The stock has recently graduated to a new
trading range and investors appear to support the move as the
current rally has exhibited excellent retail buying interest.
We favor a cost basis near the recent technical bottom in this
low risk, credit-spread position.


PLAY (conservative - bullish/credit spread):

BUY  PUT  JUL-65  MRQ-SM  OI=7    A=$1.06
SELL PUT  JUL-70  MRQ-SN  OI=100  B=$1.50
INITIAL NET CREDIT TARGET=$0.62  ROI(max)=14% B/E=$69.38

Chart =
/charts/charts.asp?symbol=MACR
******************************************************************
EXDS - Exodus  $92.75  *** Split Rally? ***

Exodus Communications is a provider of complex Internet hosting
for enterprises with mission-critical Internet operations.  The
company offers sophisticated system and other network management
solutions along with technology professional services to provide
optimal performance for customers' Web sites.  Exodus delivers
its services from geographically distributed, state-of-the-art
Internet Data Centers connected through a dedicated and redundant
backbone network.  The company's tailored solutions are designed
to integrate with existing enterprise systems architectures and
to enable customers to outsource the monitoring, administration
and optimization of their equipment, applications and overall
Internet operations.  Exodus offers an integrated portfolio of
solutions that provide customers with a scalable, secure and
high-performance platform for the development, deployment and
proactive management of mission-critical Internet operations.

Companies in the Internet hosting sector have made a noticeable
recovery in the past few sessions and with many of them still
trading at greatly reduced prices, this group is certain to
remain in the spotlight.  Exodus is one of the top companies in
the industry and analysts believe the issue is poised for future
gains.  The stock is currently rated a "strong buy" at Banc Of
America and Deutsche Banc AB.   Analysts at Dresdner Kleinwort
Benson Securities also recently began coverage of the company
with a "buy" rating and a 12-month target of $120 per share.
In addition, Exodus is planning an increase in the company's
authorized common stock to 1.5 billion shares.  The upcoming
two-for-one split, to be effected in the form of a dividend,
will be issued on or about June 20 to owners of record on June
7, 2000.  Our outlook for the company is bullish and with any
rally in the issue, our position will have little chance of a
negative outcome.


PLAY (conservative - bullish/credit spread):

BUY  PUT  JUL-60  DUB-SL  OI=109  A=$1.25
SELL PUT  JUL-65  DUB-SM  OI=335  B=$1.88
INITIAL NET CREDIT TARGET=$0.75  ROI(max)=17% B/E=$64.25

Chart =
/charts/charts.asp?symbol=EXDS
******************************************************************
                   - INDEX OPTION SPREADS -
******************************************************************
As a trader, you may be familiar with options on individual stocks
where you have the right to buy (call option) or the right to sell
(put option) a particular stock at some predetermined price within
some predetermined time. The buyer has the rights and the seller
the obligations. With index options the basic ideas are the same.
Index options allow you to make investment decisions on a specific
market industry or on the market as a whole. Spread strategies can
be made with index options similar to those made with individual
stock options. Many professional traders employ index spreads as a
hedge strategy. We favor debit positions on the SPX for momentum
and hedge or longer-term plays and OTM credit spreads on the OEX
when the risk/reward is favorable. Low ROI disparity spreads will
be listed (when available) for the conservative index trader.
*******************************************************************
OEX - S&P 100 Index  $779.70     OTM Credit-Spreads

The Standard & Poor's 100 Index is a capitalization-weighted index
of 100 stocks from a broad range of industries.  The component
stocks are weighted according to the total market value of their
outstanding shares.  The impact of a component's price change is
proportional to the issue's total market value, which is the share
price times the number of shares outstanding.

OBSERVATIONS:

For OTM credit spread trades, we like to use the actively-traded
S&P 100 Index options because they contain much more premium than
options on individual stocks and provide an underlying instrument
less prone to huge, gapping moves.  Review the 'Market Sentiment'
section for specific technical information on the S&P 100 Index.


Aggressive...

PLAY (Bearish):
BUY  CALL  JUL-850  OEX-GJ  OI=411  A=$3.00
SELL CALL  JUL-840  OEX-GH  OI=606  B=$4.12
NET CREDIT TARGET=$1.12 ROI=12%

PLAY (Bullish):
BUY  PUT  JUL-730  OEZ-SF  OI=225  A=$6.88
SELL PUT  JUL-735  OEZ-SG  OI=195  B=$7.38
NET CREDIT TARGET=$0.50 ROI=11%

By combining two credit spread positions, you can participate
in a popular neutral strategy known as the Long Iron Condor.  It
is often used with range-bound positions and is a limited risk,
limited profit strategy that gives you a wide range for success.

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



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

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