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Daily Newsletter, Sunday, 07/02/2000

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******************************************************************
MARKET STATS FOR LAST WEEK AND PRIOR WEEKS
******************************************************************
        WE 6-30          WE 6-23          WE 6-16          WE 6-9
DOW    10447.89 + 43.14 10404.75 - 44.55 10449.30 -164.76  -180.70
Nasdaq  3966.11 +120.77  3845.34 - 15.22  3860.56 - 14.28  + 61.46
S&P-100  790.25 +  9.18   781.07 -  7.67   788.74 +  9.04  - 12.99
S&P-500 1454.60 + 13.12  1441.48 - 22.98  1464.46 +  7.51  - 20.31
RUT      517.23 +  6.82   510.41 -  3.33   513.74 -  9.32  + 10.03
TRAN    2645.37 + 14.66  2630.71 - 42.48  2673.19 -116.98  - 39.19
VIX       22.26 -  3.63    25.89 +  2.34    23.55 -  1.64  +  1.08
Put/Call    .48              .61              .53              .45
******************************************************************

Russell shuffle combines with quarter end window dressing to
close the week on an up note.

What a week. The Dow traded in almost a 300 point range but
ended the week only +43 points from where it started and all
of those points came at the close. The Nasdaq closed the week
up +120 points which is +130 points over Thursday's low. To
say that Friday was pivotal would be an understatement. The news
that moves came in the form of the Russell shuffle and the end
of quarter window dressing. The Russell shuffle was a significant
portion of the almost 600 million shares that traded in the last
15 minutes of the day. The NYSE traded 400 million in the last
ten minutes and the Nasdaq traded well over 200 million in the
last 15 minutes.

End of quarter window dressing was obvious as well. Huge
"buy-on-close" orders for big cap blue chips while avoiding
broader stocks were clearly window dressing. In the last 5 min
on the NYSE there were block buy orders for 3 mil of GE, 1 mil
of LU, 1 mil of PFE. This was very encouraging. Funds don't
place single orders for $153 million of GE stock if they think
there is weakness ahead. Similarly $57 million of Lucent and
$47 million of Pfizer represents a significant vote of
confidence in the market going forward. The Nasdaq was not
left out in the buying frenzy. Almost 5 million shares of
MSFT traded in the last 15 min as well as 4 million shares of
ORCL. The Russell was not the only index juggling the numbers
on Friday. The S&P was also reclassed with stocks moving from
growth to value or value to growth which causes more Maalox
moments for fund managers as they move into and out of their
different fund families.










In spite of the lackluster numbers logged by the major indexes
I thought the week was bullish. The Nasdaq recovered from a
bout of profit taking on Thursday to close near the high of the
week. Traders tried to take it down on Thursday but were unable
to break below the low set on the previous Friday. They also
tried to retest 10300 on the Dow with no luck. 10340 was hit
several times on Friday at the open and again near the close
but that was as close as they could get. With the Fed out of
the way until August there could be a positive surprise ahead.

The inflation numbers were tame this week and signs of life
are creeping back into the market. The IPO market has been
reborn. A large slate of new stocks hit the market this
week and some racked up really impressive numbers. There were
some losers but the point I focused on was the number of stocks
coming to market, over 15, and the big wins by several, up
+200% or better. If the IPO market is showing a pulse then
the broader market should not be far behind.

Internet stocks are also showing a pulse. Even AMZN which
traded at an 18 month low got some help from Henry Blodget,
Internet analyst at Merrill Lynch. Drawing an analogy from
AOL in 1996, at $1.56 a share, unloved and called a permanent
loser, he felt Amazon will also rise again. He felt a 400%
gain over the next couple years would not be unreasonable.
Whether it happens or not the point here is some major
analysts are coming out of the closet and starting to say
positive things about beat up Internet stocks.

When talking about beaten up stocks look at MSFT. After a
bounce when the stock moved into the current phase of the
trial MSFT consolidated all week. The rally into the close
on Friday and the apparent bottom of $77 for two weeks has
got investors nibbling on it again. With Windows2000 sales
coming in higher than expected, several new products
recently announced and trial news several months away, the
possibility of an earnings run is gaining strength. That
cannot be bad for the Nasdaq going forward.

Oracle is coming close to testing the March high of $90
again, closing at $84. Oracle shareholders are rooting
for a breakout to give them a 400% return from the July
1999 price of $19.94. Dell is close to breaking over $50
again after spending much of the last two months in the
low $40 range. Even CSCO appears to have bottomed at $61
and is moving up again. INTC is the laggard of the Nasdaq
four but after slowly giving back most of the big gains
made on June 15th it appears that the back filling is almost
complete and with the announcement of the Pentium 4 this
week it may be time for INTC to move into a "buy" status.

Since the Nasdaq lives and dies on the fortune of these
five stocks the future is actually looking up. Monday will
be shakeout and settlement day for the Russell shuffle last
week and is a wildcard. Monday is also likely to be the
lightest volume trading day of the entire year and as such
it is impossible to forecast direction. When we come back
from the July-4th holiday the earnings warning season should
be about over and the only major dip in the road ahead will
be the non-farm payroll numbers on Friday.

Shucks, even stocks that warned were gaining cheerleaders
on Friday. Ericsson warned on Thursday that the higher cost
of the new high tech phones may crimp sales and tanked
the entire sector. Friday Goldman Sachs added ERICY and
NOK to their recommended list and Lehman Brothers said the
market over reacted and mentioned good things about the
sector. The drug sector hit a new all time high as well
as the networking index. The advance decline line actually
was positive most of the week.

Not all things were rosy. Some analysts point to the new
high on the drug index as a defensive move showing that
many are looking for a safe harbor during the coming
summer months. Morgan Stanley analyst Byron Wiens stopped
just short of calling himself a bear in a TV interview.
He has been bullish in the recent past. Financials remain
weak even after the no-hike announcement from the Fed.
Money flowed out of equity funds last week to the tune
of -$427 million. Internet funds saw some of their biggest
outflows in some time. Part of the blame for the Internet
outflows was the high profile failures of Boo.com,
Craftshop.com and Toysmart.com as well as the recent
negative press on the Ecommerce sector.

Using these negative events like fund outflows as contrairian
indicators, the herd is normally wrong on entry and exit points,
then now would be the time to buy. While I am feeling positive
today and the Nasdaq close over 3900 looks like a possible
breakout, I am not ready to fire the starter pistol but it
is definitely cocked and locked! The thing holding me back
is the descending diamond pattern on the Dow. While it
appears 10300 support should hold, the Dow still needs to
move above 10700 and hold to confirm a breakout to the upside.
There are plenty of stocks available to contribute to the cause.
The Dow 30 is littered with flaming wrecks. IBM is dropping
like a rock on earnings and currency concerns. GM looks
like the wheels came off their marketing campaign as the
stock hit an 18 month low. AT&T needs to phone home for
help as it too hit an 18 month low. Alcoa is only one dollar
from a 52 week low. CAT is trading at a three year low.
Dupont is also at a three year low. HON a 12 month low.
IP is trading at levels not seen since 1993. Need I go on?
If it was not for the tech stocks in the Dow we would
be singing a very different tune as to market outlook.
If we had a high profile tech warning or two and the tech
stocks in the Dow pulled back a little in sympathy we
could be in real trouble. 30% of NYSE stocks are already
trading at 52 week lows. We all know the Nasdaq does not
need the Dow to rally but it will need its help to make a
major move. Of course, it is always possible for a Nasdaq
rally to pull the Dow out of its slump. (We can hope for
miracles!)

All Dow Charts
http://members.OptionInvestor.com/misc/dow30.asp

The key here is the Fed. With no more hikes at least until
August this is the first time in since Y2K began that we are
free to focus on earnings and not the Fed. With earnings
warnings almost over and the bond market poised to rally
there is some excitement in the air. Muted, but it is there.
The first six months of Y2K are history and the markets
are bruised and battered but the fight is not over. Investors
are not ready to go into hiding and start hoarding cash under
their pillow just yet. Even with stocks like T, PG, XRX, HON
trading at -50% off their recent highs there are other stocks
that got an early start on the fourth. Looking like bottle
rockets, RMBS, SDLI, RBAK and others are bringing back memories
of QCOM from last year. Bear markets are in the eyes of the
beholders as well as bull markets. T, PG, HON stockholders
are losing hundreds of millions of dollars while RMBS
shareholders are cheering all the way to the bank. Clearly
we are in a stock pickers market. Now that the Fed has
gone into hibernation for the summer we can be hopeful
that the gains from individual stocks will spread into the
broader market. Still we need to be vigilant if we have
money invested in anticipation of any summer rally. If
money comes off the sidelines into those beaten up Dow
stocks above then other investors will feel more confident
about spending cash now on the sidelines. The cash is there
and ready to go to work. Bear trap rallies, and any rally
starting next week will be suspect, are short, sharp and
die on low volume. This makes volume the warning flag.
After Wednesday we need to watch the volume as the truth
or consequences indicator. Strong volume means it is real,
low volume signals another run to the sidelines. Get your
track shoes ready. The prize in either instance goes to
the swiftest.




Now that I have you all pumped up and looking for a rally
behind every tick, I am going to throw in my dose of reality.
Our friend the VIX is flashing red at 22.26. Those of you
who have been readers for some time know that the VIX is a
measure of market volatility based on option contract prices
on the OEX. VIX values below 22 normally correspond to
market tops while values over 30 generally correspond to
market bottoms. The VIX is seldom wrong and then only by
a day or two. Also the VIX is more of a broader market
indicator than a Dow or Nasdaq indicator. Of the stocks
in the S&P only 39% are tech stocks. Therefore the Nasdaq
can move contrary to the VIX for short periods of time.
Still at 22.26 we need to be even more cautious about
opening new long positions. Wait for that volume before
making a move. Remember, non-farm payrolls are Friday.

Trade smart, don't buy too soon.

Jim Brown
Editor


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**************
EDITOR'S PLAYS
**************

Last week I reviewed three stocks which I thought would be
good plays for Monday. Two of the three charged off and never
looked back. The third, HGSI, did a perfect "buy on rumor,
sell on news" -$25 drop at the open to give us a great entry
but then faltered the rest of the week. Here are the follow
ups to last weeks column.

For the charts and recommendations from last week, click here:
http://members.OptionInvestor.com/editorplays/062500_1.asp

RBAK



The chart last week showed a stair step pattern with a small
intraday pull back on Friday when the Nasdaq was very negative.
The chart indicated underlying strength in an otherwise weak
market. Go back and look at the pattern again and you will
see the consolidation levels clearly. Using the same chart I
would project a possible pull back in RBAK soon since four of
the last five days have been up. Nothing goes up or down in
a straight line. Congratulations if you played this on Monday.

BRCD



Brocade also showed a pattern of pull backs after strong
runs. The key on BRCD to me was the double bottom intraday
on the previous Friday. If you look at the charts from last
week it was very clear and gave me a strong buy signal.
BRCD added almost +$30 since the open on Monday. Somebody
please tell me you played BRCD based on last Sunday's column!

HGSI - Human Genome



HGSI - "watch for a buy the rumor, sell the news dip" These
were the closing words on the HGSI chart last week. WOW! Did
we get one. If you were waiting to play HGSI on Monday you
were greeted by a -$25 drop at the open. If you patiently
waited until after amateur hour and then for the rebound to
begin you could have made some decent money. After dropping
as low as $127 after the open it rebounded to almost $150 by
the close. Volatility anyone?


New plays *******************


MRVC - MRV Communications



MRVC looks like it is coiling under $68 and could be getting
ready for a breakout. The candles are getting longer since
June 27th as buyers and sellers battle for control. However,
the strong trend of higher lows looks like a forecast of
who the winners will be. I would buy on a breakout above
$68 and a positive market.

JNPR - Juniper Networks






JNPR has had a good strong run with few weak spots. The
drop on Friday could hhave been profit taking from the
recent gains before the holiday weekend. I like the
apparent bottom at $138 all day. I would want to see
some confirmation of direction after the big spike at
the close before taking a position. Conservative traders
should wait for a breakout over $150 and a positive
market.

MSFT - Microsoft



Microsoft is looking better now that the case is out of judge
Jackson's court. $80 was tested several time last week and
I would be a buyer on a breakout over $80 for an earnings run
into the July 19th earnings announcement. Conservative traders
shold wait for a breakout over the recent high of $82 and a
positive market. As always we do not recommend holding over
an earnings announcement.


**********

My current positions are still VOD, NOK, MSFT leaps. I came
real close to closing my Nokia leaps on the Ericcson weakness
last week. I think they have seen a bottom and I am still
holding.

I am not currently trading due to pressing business requirements
related to bringing you, the reader, an entire new wave of
products to aid your trading. Until this crush is over I
will continue to pick three stocks from the current OIN picks
that I think have a good chance for success and diagram my
reasons. This is strictly for educational purposes only and
are not recommendations. You should use the stocks profiled
in OIN as a starting place for your personal research.

As always, wait for positive stock, sector and market before
opening new positions.

Good Luck

Jim



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

A Thirty Minute Session
By Austin Passamonte

All those who remained awake through six hours of market
slumber on Friday were treated to 30 minutes of action before
the bell. A typical day before holiday weekend had all the
buyers and portfolio decorators rush back to their tickers
after a nice morning round of golf. I know that's where they
were because the course I played was clogged with Mercedes in
the parking lot!

Seriously though, this late-day rally was panacea to the bulls
tired of watching quote screens scroll red. By market close
the Dow added 43.14 for the week and the Comp 120.78 - hardly
what we've seen in prior pre-earnings season but it's still
progress.

From lush green pastures of the bullish camp it was nice
to see market leaders on both boards post solid gains. If a
sustained rally is to materialize our generals must lead the
charge, including the financial sector. We can probably toss
out this coming Monday's "action" from the bell-curve while
waiting for Wednesday to indicate where we go from here.

Over in the woods at the bear's den, evidence is gradually
piling up to convict this market of stagnation at best and
maybe we won't talk about the worst. Key leading indicators
keep rolling over to the warning zone one by one. Will the
alarm eventually go off?

For those who've been around awhile, we've seen rallies
appear from deep within the crevices of doom and market
crashes spurred by a spoken sentence or two on CNBC. No
doubt the markets are winding themselves into the tightest
coil witnessed in quite some time. An eventual explosion is
inevitable to major highs or lows.

May we suggest you watch the signs objectively and prepare
to buy calls or puts to profit handsomely from this release?
Remember, put options will add huge returns to your account
just as call options can in the right direction. With the
luxury of being unidirectional equity traders, we shouldn't
care which way the market chooses to run so long as it runs
long and hard! Wouldn't that be a most pleasant change?


MARKET SENTIMENT INDICATORS
---------------------------

VIX
The CBOE Market Volatility Index measures certain S&P 100
option pricing to determine investor sentiment. Historically,
readings near 30 signal possible market bottoms while levels
near 20 indicate possible market tops.

Thur 6/29 close: 22.02           Fri 6/30 close: 22.26


CBOE Equity Put/Call Ratio
The CBOE equity put/call ratio is a contrarian-sentiment
indicator. Numbers above .75 are considered bullish, .75 to
40 neutral and bearish below .40

*************************************************************
                             Tues       Thurs         Fri
Strike/Contracts            (6/27)      (6/29)      (6/30)
*************************************************************

CBOE Total P/C Ratio         .57          .48         .48
Equity P/C Ratio             .47          .42         .47


Peak Open Interest (OEX)
CBOE index put/call ratio is a contrarian-sentiment indicator.
Numbers above 1.5 are considered bullish, 1.5 to .75 neutral
and bearish if below .75

**************************************************************
                      Tues         Thurs         Fri
Strike/Contracts     (6/27)        (6/29)       (6/30)
**************************************************************

All index options      N/A          N/A         .97
OEX Put/Call Ratio     .91          .97         .61


OEX Maximum Open Interest Strikes/Contracts:

Puts                700 / 6426       770 / 5410    770 / 5496
Calls               880 / 6308       800 / 3949    790 / 6370
Put/Call Ratio        1.02             1.37           .86


OEX S/R (Support/Resistance) Ratio Index
The OEX S/R ratio is a formula to gauge possible support
or resistance based on open-interest disparity. Divergence
of numbers may indicate future market direction.

OEX                    Fri         Tues         Thurs
Benchmark:             (6/30)       N/A         (7/6)

Overhead Resistance:
(815 - 830)            38.41
(810 - 790)             4.84

OEX Close:             790.25

Underlying Support:
(790 - 770)             2.28
(765 - 750)             1.90

What the S/R measure indicates: Net open-interest ratios are
very high above current OEX level while underlying support is
comparatively light. The OEX has considerable downside pressure
with little upward support in comparison. A large move in
either direction seems favored to the downside.


CBOT Commitment Of Traders Report:
Biweekly COT report discloses positions held by small specs,
large specs and commercial traders of index futures contracts
on the Chicago Board Of Trade. Small specs are the general
public, large specs primarily funds with commercials being
financial institutions. Commercials are historically on the
correct side of future trend while small specs are not.
Extreme divergence between each signals a possible market turn
in favor of commercial trader's direction.


                 Large Specs    Small Specs    Commercials
DOW futures
Total O/I;        7,161          8,435           28,719
Net contracts;    2,219 short    1,281 short      3,501 long
%long/short;        31% short      15% short        12% long

NASDAQ 100
Total O/I;       10,771          17,334          89,812
Net contracts;    4,777 long      6,423 long     11,200 short
Percent S/L         44% long        37% long        12% short

S&P 500
Total O/I;       35,404          215,951         613,538
Net contracts;      840 long      36,659 long     37,498 short
Percent S/L;         2% short        17% long         6% short


BULLISH SIGNALS

The end of earnings warnings
The time has come for warnings to fade and profits to appear.
Most of the pre-announcements should have trickled out by
the end of last week.

Interest rates
5.89% on the 30-year Treasury Bond may be signaling the rate
fears are over. Fed-Fund futures are pricing in one more hike
of .25 at this time, subject to change.

Corporate Earnings
Last quarter earnings expected to be very strong, especially
for the tech sector.

******

BEARISH SIGNALS

Failing NASDAQ
Although it hasn't broken major support levels, failure to
hold above 4,000 is a concern. A close above this crucial
mark next week would be important.

Energy Prices
Relief may be a long time coming. It will be difficult to
curb inflation with gas and oil prices remaining high.
Ultimately, this affects profit margins. August Crude closed
@ $32.50 Friday with bullish technical futures charts. A run
towards $40 per barrel is considered possible, but seasonal
energy patterns typically bottom by late summer.

Volatility Index (22.26)
Today's close at 22.26 warns us that a top may be near.

COT Report
Friday's updated figures show small spec traders heavily
long S&P 500 contracts while commercial positions remain
at several-year lows, net short. Divergence suggests possible
market turn in favor of commercials.

OEX Put/Call Ratio
Friday's OEX put/call ratio slipped below the .75 neutral
zone to .61, considered bearish territory.



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

As of Market Close - Sunday, July 2, 2000

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

DOW Industrials   10,200  10,775  10,447    BEARISH   6.29
SPX S&P 500        1,350   1,500   1,454    BEARISH   6.29
OEX S&P 100          725     800     790    BEARISH   6.29
RUT Russell 2000     450     550     517    Neutral   5.05
NDX NASD 100       3,000   4,000   3,763    Neutral   5.30
MSH High Tech        800   1,050   1,015    Neutral   6.06

XCI Hardware       1,250   1,600   1,524    Neutral   5.30
CWX Software       1,050   1,350   1,279    Neutral   6.06
SOX Semiconductor    850   1,280   1,140    Neutral   6.29
NWX Networking       900   1,240   1,235    BULLISH   6.02
INX Internet         500     650     551    BEARISH   5.30

BIX Banking          485     565     508    BEARISH   6.30 **
XBD Brokerage        450     515     495    Neutral   6.22
IUX Insurance        575     650     616    Neutral   6.20

RLX Retail           810     920     865    BEARISH   6.09
DRG Drug             360     425     421    BULLISH   6.27
HCX Healthcare       725     850     859    BULLISH   6.15
XAL Airline          140     165     158    BULLISH   5.25
OIX Oil & Gas        275     310     295    Neutral   6.30 **

Posture Alert
The DOW Industrials continued to find support at the 10,335
level, while the NASDAQ Composite struggles with resistance
at 4,000.  A break either way in one of these indexes could
trigger equity markets in the prevailing direction.



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

"When a Person is Wrong, The First Thing He or She Should do is
Cease to be Wrong!"
By Buzz Lynn
sectortrader@OptionInvestor.com

Or, if you can't beat 'em, join 'em.  This weekend we implement
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helpful of any other individuals that I've read.  (If you want
to discover his wisdom for yourself, pick up and read a copy of
Reminiscences of a Stock Operator by Edwin LeFevre.)  His belief
was simple.  If we aren't getting our expected outcome, we should
change our approach.  In other words, we should be trading what
the market gives us rather than sticking to a play that has gone
against us in hopes that it will come back.  If you have been
trying to trade this market for a direction, either up or down,
you are likely frustrated and a bit lighter in the wallet for your
efforts.  We aim to give you a starting point to change that this
weekend by giving our slant on the strategy we like best for
playing a particular sector.  It still means we can go short or
long.  But we can also do strangles, straddles, or spreads that
ease the need for us to be right about the short-term direction.
For instance, instead of giving you rangebound support and
resistance on the QQQ, then suggesting a long or short play
(depending on the market) where time decay (theta) has lately
outstripped intrinsic gain, why not try to profit by selling a
strangle to let time decay work in your favor?  Sound interesting?
Look for it below.

On a related note, our aim at Sector Trader is to help you trade
sectors more profitably without having to be right on just one
stock pick.  We want to know what you like so far about Sector
Trader, or what you'd change.  Have a favorite strategy that works
for you?  Have an index you like to trade that you think other
readers may like too?  Is there a piece of information you'd like
to consistently see in the write-ups?  Tell us your success
stories - or your worst nightmare and the wisdom you gained from
it.  What would help you to trade sectors for better more
consistent profits?  Rest assured we'll do our very best to
deliver what you want in concise readable, tradable and hopefully
profitable form.  Let us know.  We want to hear from you!

Now, without further delay, we bring you the weekend sector
trades.  Good luck!

Oh, one other item.  Remember the RKH (regional banks) and UTH
(utilities) HOLDRS that began trading the week before last?  In
what must be a new record, they began trading options last
Tuesday, a mere week after their introduction.  Though they are
now available, we won't offer them in our plays until they develop
more of a track record with some steady trading volume.  No reason
you can't keep them on your own radar though.  We'll be keeping it
on ours too.


Index             Last    Mon    Tue    Wed    Thu    Fri    Week

QQQ NASDAQ-100    93.31   2.50  -1.28   1.63  -2.34   1.69   2.19
HHH Internet     108.25  -3.19   2.63   0.00  -2.69   1.69  -1.56
BBH Biotech      177.75   5.75  -5.00   7.88  -3.88   1.50   6.25
PPH Pharm.       105.81   2.19   0.81   0.00   2.69   2.06   7.75
TTH Telecom       74.38  -0.25  -0.50  -0.94  -0.75   0.56  -1.88
IAH I-net Arch.   91.50   1.94  -1.69   2.19  -2.19   1.69   1.94
IIH I-net Infr.   62.44   2.38  -0.63   3.00   0.25   0.94   5.94
BHH B2B           41.19  -0.81  -0.63   1.69  -0.50   2.00   1.75
BDH Broadband     89.81   2.06  -1.81   1.25  -1.44   1.69   1.75
SMH Semicon.      94.00   0.00  -3.13   0.50  -2.19   1.31  -3.50
RKH Reg. Bank     91.75   0.75   0.81  -0.50  -2.13  -2.25  -3.31
UTH Utilities     88.44  -0.25  -2.88   1.63  -0.69  -1.56  -3.75


**************
Updates
**************

QQQ - NASDAQ 100 $93.31 (+2.19 last week) Stuck in between the
rails on the train track?  That headlight coming at us isn't a
beacon in the night.  It's time decay, or theta, steeling away the
value of our options just by the passage of time.  There are two
ways to profit in this situation.  The first way to trade this is
to sell a strangle.  That means simultaneously selling an OTM call
and an OTM put with the expectation that QQQ will remain in the
trading range until expiration.  In this case, we might sell the
$95 call and 90$ put.  Ideally, both would expire worthless on
July 21st if QQQ remains in the $90 to $95 trading range.  The
second is to derail the train, or hope the QQQ breaks from its
rut.  We attempt to profit from this by buying a straddle, which
is the simultaneous purchase of a put and a call at the same
strike price of the same month.  With volatility and time premium
far from historical lows, we would be hoping for a big enough
break from the trading range in either direction with enough
profit to cover the net cost of buying the position.  The big
break will also result in higher implied volatility, which should
re-inflate time premiums - a bonus!.  We can win directionally and
mathematically, but we need to buy enough time to be right and
still have about two months remaining if we need to sell the
position back if it's not working.  However, time decay would be
working against us.  Sticking to old axiom of "buy low volatility
and sell high volatility", we favor selling the strangle since the
volatility is falling and we want to profit from having time decay
work against the guy who BOUGHT the strangle.  Just be sure to
protect yourself with a stop loss to buy back the position if the
market decides in a major breakout of the range (say 25% loss, but
your risk tolerance may differ).  If your broker won't let you
enter these positions, you can always trade straight puts and
calls using $90 as support and $95 as resistance, but that's a
tough way to make a living right now.

Short Strangle:

SELL CALL JUL-95 QVQ-GQ OI= 7856 at $3.25
SELL PUT  JUL-90 QVQ-SL OI=20538 at $2.50

Net Credit = $5.75 or greater
Stop Loss  = $7.25

Average Daily Volume = 26.9 mln
/charts/charts.asp?symbol=QQQ

-----

PPH - Pharmaceuticals $105.81 (+7.75 last week) MRK, PFE, JNJ, BMY
and SGP are floating this sector very nicely.  Meanwhile LLY only
gave up $1.75 since it's spectacular $15 gain on Thursday
resulting from its successful sepsis drug trials.  As long as the
economy is perceived in a state of flux regarding inflation, drug
stocks should remain a safe haven.  So, were you able to buy that
dip to the first level of support at $102.50 suggested on Thursday
night?  For those who pulled the trigger, congratulations on a
nice entry.  PPH closed at $104 and tacked on another $1.81 after
Friday's closing bell in a breakthrough of intraday resistance at
$104.  Given the strength, we'd view that as new support and a
suggested target at which to shoot.  PPH has broken out into blue
sky and has no lingering overhead resistance.  The chart is about
as pretty as we've seen lately with the 5-dma also at the $102.50
support level if $104 doesn't hold.  That said, remember to use a
trailing stop to protect your profits and enjoy the ride.

BUY CALL JUL-100 PPH-GT OI= 24 at $6.50 SL=4.50
BUY CALL JUL-105 PPH-GA OI=115 at $2.94 SL=1.50
BUY CALL AUG-105 PPH-HA OI= 24 at $4.75 SL=3.00

SELL PUT JUL-100 PPH-ST OI= 0 at $0.38 SL=1.00, no OI

Average Daily Volume = 118 K
/charts/charts.asp?symbol=PPH

-----

TTH - Telecom $74.38(-1.88 last week) There's going to be a
shuffle of the components this week thanks to the merger of BEL
and GTE.  They will combine to become Verizon (VZ) and will become
a single component of TTH in the other two's place.  VZ will then
become the largest component of this HOLDR.  It's tough to call
this issue right now so tighten up your stops if you are playing
the short side.  Here's why.  Support appears to be forming at
$73, a point of former resistance, and Friday's recovery from that
low going into the close was pretty strong.  Before you think
we've become bullish on the sector though, note that TTH also ran
bearishly into resistance at $74.50.  This also happens to be the
30-dma, which could provide resistance going forward in addition
to the pressure that TTH is already getting from the downward
trending 10 and 50-dma.  Every time it fails at resistance, the
technical pressure gets worse.  Now MACD too has crossed into
negative territory.  For that reason we remain interested in the
short side, but will approach it with caution.  Look at any bounce
south of Friday's close as a potential entry level.  If it
continues to move up though, you'll want to consider an exit.
Otherwise, a descent under $73 could be a conservative put buying
opportunity that takes TTH under water.

BUY PUT  JUL-80 TTH-SO OI= 0 at $6.50 SL=4.50, no OI
BUY PUT  JUL-75 TTH SO OI= 0 at $2.94 SL=1.50, no OI
BUY PUT  JUL-70 TTH-SN OI= 0 at $0.94 SL=0.25, no OI
BUY PUT  AUG-70 TTH-TN OI= 0 at $1.69 SL=0.75, no OI

Average Daily Volume = 79 K
/charts/charts.asp?symbol=TTH

------

BBH - Biotech $177.75 (+6.25 last week) A great performance came
from biotech this week as CRA made it official - they had
completed a map of human genome.  The anticipation of the
announcement sent the index up with overall profit taking limited
to a small handful of issues.  Otherwise AMGN, DNA, SEPR, QLTI,
and MEDI provided the lift on Friday.  Selling the news was
limited in scope.  Notice that has created a consolidating 5-10
day long stair step with a short 5-day lift up on two occasions
over the last month?  It looks like it's getting ready to move up
again.  Note that $172.50 and $175 are acting as historical
support, while the 5 and 10-dma, both roughly $176.50 are
providing technical support.  BBH is getting a bit congested here
so keep your stops in place to protect your profits.  Otherwise a
bounce from the 5 and 10-dma could make a good entry.  If you see
a move under $174 without any hope of recovery, better step aside
and move on to another play as that would indicate a loss of
strength in the sector.

BUY CALL JUL-170 BBH-GN OI=1264 at $14.88 SL=11.00
BUY CALL JUL-175 BBH-GO OI= 130 at $12.00 SL= 9.00
BUY CALL JUL-180 BBH-GP OI= 466 at $ 8.88 SL= 6.00, MORE RISK
BUY CALL AUG-175 BBH-HO OI=  25 at $18.38 SL=13.25

SELL PUT JUL-170 BBH-SN OI= 127 at $ 5.25 SL=7.50

Average Daily Volume = 637 K
/charts/charts.asp?symbol=BBH

------

IIH - Internet Infrastructure $62.44 (+5.94 last week) Nice move
last week for IIH which continues to show higher lows on the chart
at its 5 and 10-dma, both roughly at $60.25.  Friday, IIH closed
at its high of the day in a final burst of strength.  AKAM was the
big mover Friday on what looks like plain old window dressing or
index shuffling at the end of the second quarter - no specific
news.  Only four of the components were in the red with all others
nicely in the green.  That said, continue to look for resistance
at $63.  If you like, you can consider going long on a move over
$63, however that may get you into the position with some
congestion since the next resistance would be a breakout at $64.
We think a more prudent strategy would be to go long at support in
the $60 to $60.50 area.  Wait for the play to come to you.  Just
make sure you see a bounce first.  If it falls under $60, that
would be a violation of support and our cue to move on to another
play.

BUY CALL JUL-60 IIH-GL OI=203 at $4.88 SL=3.00
BUY CALL JUL-65 IIH-GM OI= 37 at $2.63 SL=1.25
BUY CALL AUG-60 IIH-HL OI=  0 at $7.00 SL=5.00, no OI
BUY CALL AUG-65 IIH-HM OI=  7 at $4.50 SL=2.75

Average Daily Volume = 296 K
/charts/charts.asp?symbol=IIH


**************
No Play
**************

IAH
BHH
SMH
BDH
HHH
RKH
UTH


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


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

For the week of July 3, 2000

Monday

Auto Sales               Jun    Forecast:  6.8M    Previous:  6.8M
Truck Sales              Jun    Forecast:  7.4M    Previous:  7.3M
NAPM Index               Jun    Forecast: 53.0%    Previous: 53.2%
Construction Spending    May    Forecast: -0.2%    Previous: -0.6%

Tuesday

Markets Closed in Observance of Independence Day

Wednesday

NAPM Services            Jun    Forecast: 61.5%    Previous: 61.5%
Leading Indicators       Jun    Forecast: -0.2%    Previous: -0.1%

Thursday

Initial Claims           07/01  Forecast:  305K    Previous:  306K
Factory Orders           May    Forecast:  2.9%    Previous: -3.9%

Friday

Nonfarm Payrolls         Jun    Forecast:  260K    Previous:  231K
Unemployment Rate        Jun    Forecast:  4.0%    Previous:  4.1%
Hourly Earnings          Jun    Forecast:  0.4%    Previous:  0.1%
Average Workweek         Jun    Forecast: 34.5H    Previous: 34.5H


Week of July 10th

07/10 Consumer Credit
07/11 Wholesale Inventories
07/13 Initial Claims
07/13 Export Prices ex-ag.
07/13 Import Prices ex-oil
07/14 Retail Sales
07/14 Retail Sales ex-auto
07/14 PPI
07/14 Core PPI
07/14 Industrial Production
07/14 Capacity Utilization
07/14 Michigan Sentiment



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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
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The newsletter staff makes every effort to provide timely
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The Option Investor Newsletter                    Sunday 7-02-2000
Sunday                                                      2 of 5

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

Liquidity Trends And Straddling The Dow
By Mary Redmond

In recent years, some bearish market analysts have stated
that the bull market of the 1990s may be responsible for a
"wealth effect" which could potentially lead to inflation, and
that Americans may have become overexposed to equities, which
may be contributing to market volatility.  However, a study
of some of the liquidity trends may indicate otherwise.

For example, in 1999 investors deposited a total of $193,854
billion to money market funds and $187,530 billion to equity
mutual funds according to the investment company institute's
web site.  The year to date flows to money market funds for
2000 are $34,748.8 billion, and this includes a large net
redemption of over $50 billion in April of this year, which
was most likely attributed to margin calls.

Statistics have shown that the vast majority of the total
market capitalization of stocks in the US is owned by a small
percentage of the population.  However, a study of the very
long term trends of fund investing by the investment company
institute show that the vast majority of equity funds in the
US are owned by people with an annual income in the five
figure range who do not redeem in either bull or bear markets.

Once again, during the months of May and June the pattern of
cash flows to equity funds showed a strong correlation to the
pattern of the market, and a similarity to the pattern seen
during the first quarter of this year.  According to the
investment company institute, during May equity funds received
$16.94 billion in new cash.  Aggressive growth funds received
$5.7 billion, and growth funds took in $7.76 billion.  Growth
and income funds experienced an outflow of $1.03 billion.

AMG Data Services reported that US equity funds experienced
a net redemption of $427 million last week, with the flows
to aggressive growth decelerating.  The majority of the
outflows came from international funds.  However, the net
total for the four weeks in June is a positive flow of over
$8.5 billion to equity funds, with over $7.6 billion going
into growth funds, and a net outflow from both international
funds and growth and income funds.  This may be part of the
reason the Nasdaq rallied from 3100 to over 3900 over the last
8 weeks while the Dow stayed relatively flat.

The ICI reported another large outflow from money market
funds of over $7.9 billion last week.  While there has not
been a clear correlation between the market and outflows from
money market funds, it seems likely that this money may be
going into the market.  For the last five years the equity fund
inflows have been slowest during the months from June to October.
Also, the ipo schedule is picking up, with several high profile
ipos which had strong gains of the first trading day this week.

It is also important to note flows in the bond sector.  For
example, US bond funds showed a net outflow of cash every
month for the last twelve months.  In 1999, a net total of
$5.46 billion was redeemed from bond funds, and in 2000 over
$50 billion has been redeemed from bond funds.  At the same
time, the US Treasury Dept redeemed over $50 billion in
US treasuries in the first quarter of this year.  This adds
needed liquidity to the system.

We know that the Dow cannot stay in the same trading range
forever.  At some point it is going to break out.  The question
is when, and in what direction.  Fewer people trade options on
the Dow than on the OEX, but if you are anticipating a possible
breakout you might be able to profit from a Dow straddle or
strangle.

A straddle is a simple concept to understand.  It is a call
and a put with the same strike price and expiration date.
The key to profiting on a straddle is usually timing.

For example, at 10,423 the Dec 104 DJX calls were 7.75.  The
Dec 104 DJX puts were 4.87.  If you bought the call alone you
are betting that the Dow will be above 11,198 by December.  If
you bought the put alone you think the Dow will be below 9936
by December.  If you are unsure of the direction the Dow will
move you could buy the call and the put, which would be a
straddle.

The total cost of this straddle would be $12.62.  If you held
the straddle to expiration you would need the Dow to be above
11,685 or below 9,161 for this position to be profitable.  The
stock or index generally has to move by more than the price of
both options by the date of expiration in order for the straddle
to be profitable.

This may be a realistic bet.  For example, for the last year
the Dow has struggled to break out above 11,700 without any
success.  It has also shown strong support at 9,700.  Some
influential analysts have given the Dow a year end target price
of 12,500 which would give the call a profit of 13.02 points and
the straddle a profit of 8.06 points.

The best time to buy a straddle is when a stock or index has
been relatively flat.  If we do have an explosive move in
either direction, a Dow straddle might be profitable.

Contact Support


******

Where Did They Put Old Jesse and Does Anyone Care?
By Lynda Schuepp

Most of the time I have CNBC on mute, but Thursday and Friday
were so boring that I actually had the volume turned up and was
alerted to an important market sentiment indicator.  A grave in
Texas was dug up, believed to contain the body of Jesse James.
Oops, it wasn't Jesse; this body only had one arm and was buried
in 1927.  It doesn't get better than this does it, or does it?
Now we have two of the talking heads doing movie reviews about
chickens!  Well that says it folks, we are in a sideways market.

So what can we do in a sideways, range-bound market?  One option
is to sit on the sidelines, go camping, boating or enjoy the
summer with your kids, friends, or significant other.  The other
option if you are hell-bent on trading is to employ some sideways
trading strategies, using options.  In a sideways market, the
trading range is typically support and resistance.  Covered Calls
are usually a good bet; unfortunately, volatility is currently so
low that it probably isn't worth selling the call.  Any increase
in volatility will offset theta decay.  Most of you know that I
am partial to spreads, so I'll tell you a spread strategy that
works best in a sideways market.  Probably the simplest, is a long
butterfly, which consists of a bull and bear spread, using all
calls or all puts.

The structure of a butterfly spread consists of a body made up of
2 short options and one long option for each wing, using all calls
or all puts, all expiring in the same month.  Using calls to
construct this spread, you would sell 2 calls at a strike price
in the middle of the stocks trading range and buy one call at
support and buy one call at resistance.  The bottom half is a bull
call spread and the top half is a bear call spread.  The maximum
profit is when the stock closes in the middle of the range (your
short calls).  Since time decays fastest in the last 30 days, you
would ideally like to use 30 days or less to expiration.  However,
if the underlying has been trading in a sideways range for 2 or
more months you may find that you have to go out a month because
volatility is so low.

Let's quantify the Risk/Reward scenario:
Maximum risk:  cost of the spread
Maximum reward: strike range from body to wing less spread cost
Downside Breakeven:  lower strike plus spread cost
Upside Breakeven:  higher strike less spread cost
Risk/Reward:  Only do if 150% - 200% is possible
Exit:  if gain is 100% or at expiration (less commissions)

Now lets look at a specific example to see how this would work.
See Chart for GE:




Looking at GE, we can see it has been in a trading range since
the third week in March.  Support is at 48 and resistance is at
about 55.  We would look at the July 45, 50 and 55 calls or the
July 50, 55, and 60 calls to see if the risk/reward scenario
meets our criteria of 150 to 200%.  The July 45, 50, and 60 calls
do not meet out criteria but the July 50, 55, 60 calls do.  For
the sake of brevity, trust me on the calculations on these. By
taking the higher range of strikes, we are making a more bullish
call.  The reason is this--to make the maximum amount of money
you want GE to close at the middle strike at expiration.  You do
not want it to close at the upper or lower strikes.  So if you
did not think GE would close at 55 by July expiration, you could
go out to August and check those premiums.  For the sake of this
example we will use the July 50, 55, and 60 calls.

The July 50 calls (1 contract) would cost about 2-1/2; the July 55
calls (2 contracts) could be sold for about 1/2 each; and the
August 60 calls (1 contract) would cost about 1/8.  Total cost
for the spread would be about 1-5/8.  Maximum reward is about
3-3/8 or 200%, which is the difference in strikes (5) less the
cost (1-5/8) divided by the cost or risk (1-5/8).

Now lets look at a couple of scenarios for this spread.  Downside
Break-even is 51-5/8 (50 plus the cost of 1-5/8), and the upside
breakeven is 58-3/8 (60 less the cost of 1-5/8).  Therefore, you
will make money if GE closes above 51-5/8 but less than 58-3/8 by
July expiration, with the maximum gain at a close of 55 at
expiration (the middle strike you are short).

Had you used the August 50, 55, and 60 call options, your cost
would have been 1-13/16 with a downside breakeven at 51-13/16
and an upside breakeven of 58-3/16.  As long as GE closes above
51-13/16 and lower than 58-3/16 you would make money, but you make
the most money if GE closes at the middle strike of 55.  If GE
closes at 55 at expiration, your 50 call would be worth 5, the 55
short calls would expire worthless and the 60 call would be worth
nothing.  Therefore your gain would be 3-3/16 or 175%.  However,
in this case, it is riskier to go out to August, because you have
to wait longer for the middle strike to erode in time value and
you have a greater chance of GE breaking through its channel.
Stocks don't stay range-bound forever.

So when CNBC starts talking about Jesse James and reviewing movies
like Chicken Run, it's time to consider Butterfly spreads.   A
butterfly spread is similar to a short strangle without the big
risk, or margin.  This strategy is not a get rich quick scheme,
simply an appropriate strategy to use in a sideways market with
minimal risk.  If the butterfly strategy sounds good, then read up
on condors and iron butterflies, they get even better, but quite
frankly are complicated to manage.  Happy Fourth of July to
everybody.

P.S. If you want the spreadsheet I constructed of the various
scenarios I looked at, please email and I'd be happy to send it
to you.  The email version doesn't do well with charts so it is
not included in the article.

Contact Support


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******

Fishing For Profits
By Jim Brown

This article was first published in Nov-1999. The charts
and plays are for that period but as an educational piece
they are still appropriate. The concept is still the same
and the point is easily discernable. "Give a man a fish
and you feed him for a day, teach him to fish and your
feed him for a lifetime." (Chinese proverb) I hope this
helps you learn how to fish.  -- Jim


Picture yourself fishing. Maybe you are on the bank of a
lake, leaning back against a shade tree. You are thinking
about when you went fishing with your dad as a kid. Or
maybe you are the dad and your kids are with you. You have
several lines in the water angling out in different directions
and maybe each has different bait. If you are as successful
as my fishing trips then you spend many more hours fishing
than catching. In an eight hour fishing day you may spend
only 10-15 min catching fish. To some the best part about
fishing is the trip itself, not the catching. Sure catching
is more fun and it makes it worthwhile. If you are a dad, to
pass the time, you might be fishing with your kids for perch
in the shallows while back in your mind you are watching that
pole that is baited heavy and cast way out from the bank in
hopes of catching one of those lunkers you know are out there.

Why should trading be any different? Fishing is fun but you
can't do it every day. Trading should be fun also. If it is
too stressful then you are over trading and probably not
very successful. The key to profitable trading is entry points.
Exit points are much easier when you have a great entry.

See if this sounds like more fun than fishing. You get out
of bed loaded with optimism and ready to see what the market
has for you today. You gather and prepare all your fishing
equipment. (PC, quote servers, optionsnewsletter, option
montages, news reports, CNBC/Bloomberg, coffee, etc.) You
check the weather forecast (pre-open market news). You find
a nice comfortable shade tree. (a recliner in front of your
PC) Now the hard part. You have to decide what to fish for
today. BVSN-walleyes, QCOM-sharks, DELL-trout or the generic
"winner" fish, etc. But just because you want to fish for
them today does not mean they are worth catching. Have you
ever been fishing and caught something you wish you hadn't
and had to cut the line to get rid of it? Sure, any serious
fisherman has. Turtles, snakes and any number of ocean
dwellers. The trick is to only catch the ones worth catching.
Did you know that the biggest fish don't live near the top?
They live in underwater creeks, canyons, trenches and potholes.

Lets go fishing in the market.

Every week almost every stock falls into a pothole, trench
or canyon. The size of this fall and the damage done is
directly related to the speed at which they were going when
they hit it. Our task is to predict where these potholes
are going to be and throw out our lines before the fish/stock
arrives. Normally we can see the accident before it happens
and prepare for it.

How should we go about fishing in the market. The best
method I know we call "target shooting". For the rest of this
analogy I am going to refer to it as "fishing for winners".


Broadvison had been on a feeding frenzy for several weeks. In order
to fish for BVSN we need to know where the next pothole will occur.
Using the regression channel I taught about last week we can
see here that BVSN started heading for the bottom of the channel
on Wednesday. That was our clue that we should prepare the bait.




The bait in this case is limit buy on the $80 call option (BDVKP).
This can be accomplished in two ways. You can place a limit order
to BUY OPEN at a specific price. You can also place a BUY OPEN
based on the stock hitting a specific price. (see my stop loss
article tonight) Either way works. I like the stop on the stock
method better because I can chart the stock more reliably than
the option to determine the entry point I am looking for. I do
not have to guess what the option price might be if the stock
does what I expect.




Looking at the option chart. On Wednesday when BVSN started to
correct the option was trading for $11-12. Looking at the previous
range between the 2nd-8th you could guess that a correction might
bring the price back down to the $6 level. You could put in a
bottom fishing limit BUY OPEN order at $6.00 on the option itself
or a BUY OPEN stop order on the stock at $82. Either way the
order gets executed and you are starting out at 40% less basis
than the investors that bought the day before. In the example
above you would have been filled and have a 66% profit the very
next day. Had you not waited for the pull back and bought on
the 8th or 9th, because you were afraid it was going to run away
from you, the option would still not have returned to the price
you paid. If you were trading correctly you would actually have
been stopped out on Thursday with a loss. ENTRY POINT, ENTRY POINT,
ENTRY POINT. In the example above buying on five of the ten days
would have produced a profit. Had you bought on the other five
days you would have produced a loss. On which five days do you
want to buy? Bottom fishing would have paid off in this instance.

JDSU - An example not so clear.



I apologize for the busy chart. The concept here is the retracement
theory. When a stock has had a strong extended run there is a good
possibility of a 50% retracement of the gains on profit taking. It
is not always 50%, sometimes 40%, sometimes 60% but you understand
the concept. If you had started fishing when if fell out of the
channel on the 9th you could have bought and sold for a profit but
the more likely event would have been a buy that kept going down.




Had you gotten a bite on your limit order on the next drop after
it fell out of the channel then you probably would have filled
in the $7-8.50 range. In hindsight this would not have been a
bad trade but you would probably have sold when it dropped
under $6 and lost money. This is a tricky one since we did have
a head fake on the 11th that made it look like a rebound although
there was no follow through. The correct entry point would have
been the rebound after the strong drop took out all the sellers
on Friday the 12th. Only a psychic would have known in advance
but I really like to confirm the rebound on strong volume before
making a buy. If you do catch one that you find out later you
didn't want then cut the line fast and cut your losses.

The roadmap to the perfect fishing hole.

AOL



This one had buy written all over it. AOL had consolidated for
several days after a strong run and a $25 gain. The closer we
got to the -50% retracement, the closer we got to the bottom
of the channel. This is one instance where the itchy trigger
fingers just would not wait for the bottom. Still an astute
fisherman would have seen the bottom of the channel approaching
and baited his hook.




The bottom was clearly visible on an intraday chart and a
limit order at $6.00 or a BUY OPEN stop at $142 for AOL would
have been a winner. The option price at $6.00 would have been
a 50% retracement from the high and a good place to start
bottom fishing.





The concept please !

As I am sure you see by now the concept of bottom fishing,
waiting for the big ones, is simply another way to attack
the entry point problem. I always have two or three BUY OPEN
orders outstanding just in case the market give me a gift.
Why would anyone want to buy at market and after two or three
up days is beyond me. I guess somebody has to pay too much
so someone else can make a profit.

Put it in Practice

So when you are busy chasing some of the little momentum trades,
(perch fishing) always leave a couple lines out for the big ones.
If you get a bite it could be a big win. If you don't get a bite
then it did not cost you anything. If you only practice the methods
above and don't get caught up in the flurry of "trading just for
the sake of trading" then you will trade less but be more profitable
in the long run. You can still have the excitement of fishing with
out all the hassle of throwing back the small ones. If you will
go back and look at the option charts you will see that the movement
of the option price on the rebound is very strong. Much stronger
than the normal day to day movement. Isn't that what we are looking
for? Could you use less stress in your trading?

Catch a few big ones for me and send me an email with the
descriptions.


Jim Brown



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

Index      Last    Week
Dow    10447.89   43.14
Nasdaq  3966.09  120.75
$OEX     790.25    9.18
$SPX    1454.60   13.12
$RUT     517.23    6.82
$TRAN   2645.37   14.66
$VIX      22.26   -3.63

Calls

BRCM     218.94   53.88  Dropped, short but oh how sweet!
RBAK     178.00   42.50  Up, up and away!  We love this stock!
GLW      269.44   32.22  Bulls have been winning the war
GSPN     122.06   29.06  New, breaking out to a new range
BRCD     183.47   27.47  It keeps going and going and going
JNPR     145.56   22.75  New, all systems go for liftoff
CIEN     166.69   21.25  New, awarded Best NASDAQ 100 performer
ENTU      82.75   18.31  On an upswing and we want a piece
TIBX     107.22   17.71  Becoming a Wall Street favorite
PRSF      63.88   15.31  Time to hand out report cards
MRVC      67.25   12.25  Well-positioned in the fiber industry
ARBA      98.03    9.47  Whew!  It has been a busy week for ARBA!
AGIL      70.69    9.00  Recovery potential looks real
KANA      61.88    8.38  New, slew of analyst say "buy KANA"
RSAS      69.25    6.75  An internet company that is a good value?
NT        68.50    2.84  An "Uncommon Value" in Lehman's eyes
MSFT      80.00    2.31  A small feather in its cap for its close
QLGC      66.06   -1.50  Dropped, likely out of steam
LNUX      43.00   -4.13  Dropped, tradable range but no gusto
PDLI     164.94   -7.69  Dropped, biotechs sold but for how long?
HGSI     133.38  -12.00  Dropped, post-announcement profit-taking
INKT     118.25  -22.13  Dropped, dead cat bounce that never was

Puts

PHCM      65.13   -9.50  Can't keep its head above water
ICIX      29.75   -4.13  Mired in losses and little Street support
DD        43.94   -1.69  New, trading near a four year low
IMNX      49.44   -0.94  New, this one has seen better days
F         43.00   -0.03  Macro factors have management scrambling
DCLK      38.13    0.50  Tug of war continues


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

Calls

GSPN - Globespan Inc.
KANA - Kana Communications
JNPR - Juniper Networks
CIEN - Ciena Corp

Puts

IMNX - Immunex Corp
DD   - Du Pont De Nemours


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

LNUX $43.00 (-4.13)  With various box makers beginning to look at
the Linux Operating System as a viable alternative to Windows, we
thought that LNUX would see a renewed interest and a boost in the
stock price.  The trading range for the week we covered this play
was very conducive to quick intraday trades off support and
resistance.  While long-term prospects seem very good for the
company, LNUX may be in a holding pattern with this new short-term
range.  The concern we have going forward is LNUX's inability
to hold the $44 level late in Friday's trading session as the rest
of market rallied on huge volume.  With this support broken, and
the lack of buying interest, we are dropping LNUX from the call
list.

HGSI $133.31 (-12.06)  In the aftermath of the human genome
announcement on Monday, biotechs did sell-off but not horribly.
Our intent on holding this stock through Friday's was due to
thought that we could get that euphoric, last-day-of-the-quarter
pop that so many stocks had with huge volume at the end of the
session.  Although the volume increased into Friday's close,
HGSI did not get a price spike to go with it.  In retrospect, we
probably should have dropped this play in Thursday's newsletter,
but we took the gamble.  Looking forward, we may very well see
this and other biotechs back on the play list, as they don't
stay out of favor too long.  For now, we will drop this call play
and go along with the profit-takers.

QLGC $66.06 (-1.50) It's time to close up shop on this momentum
play.  Today's action signaled that QLGC is likely out of steam.
While it tried to rebound during the last hour of trading, it
just wasn't enough.  The 10- and 50-dma violations can't be thrown
aside either.  We were looking for the momentum to renew and carry
into an earnings' run next month, but unfortunately we can't wait
around.  Time is money in option trading.  Qlogic is confirmed to
report on July 17th, after the market, so keep your eyes open for
future trading opportunities closer to the announcement.

PDLI $164.94 (-7.69) After holding up well on Wednesday and
Thursday, we were looking for a nice pop in Friday's action.
Unfortunately, the biotechs weren't at their best and PDLI turned
on us.  Not only did it fall back into its consolidation range,
but PDLI took a dive under the firm support at $160!  The share
price lingered in the vicinity of $155 before finally bouncing
back on a late afternoon spike.  In hindsight, the day wasn't
disastrous, but we could have let this one go on Thursday.  The
stock's inability to hold the $160 mark, coupled with the
deteriorating technicals, force us to exit this momentum play.
PDLI is a tough one to retire.  We've watched it advance its
share price by over 100% since it began its climb at the end of
May.  A multitude of trading opportunities were abundant, but now
it's time to move on to other lucrative plays.  Next month's
earnings may generate an upswing so we'll be watching this
high-flyer.  Protein Design Labs are expected to report around
July 17th.

INKT $118.25 (-22.13) The thrill is gone.  Ever since Monday's
large sell-down, the stock has consolidated in a tight range.
With support holding at the $113 level, the stock spent the rest
of the week attempting to break through $126 but to no avail.  Not
only that, the stock has had trouble breaking through its 5-dma,
which INKT closed at on Friday.  The $126-127 level also happens
to be the 20-dma and 50-dma which will provide heavy resistance.
There is also strong overhead resistance at $130.  The stock may
have temporarily found a bottom but with volume drying up, strong
overhead resistance and its inability to finish decisively above
its 5-dma, we choose to move on to more exciting and profitable
plays.  For those who have the patience, support can be found at
$113 and its 200-dma, currently $109.61.

BRCM $218.94 (+53.88) Our BRCM play was short, but oh how sweet
it was.  In case you missed the pre-holiday fireworks show Friday
afternoon, BRCM blasted $15 higher in the final fifteen minutes
of trading.  An amazing 4 mln shares traded in the last five
minutes of trading!  BRCM actually drifted lower for a better
part of the day, but the index fund buyers we mentioned last
Thursday showed up right on cue to take our play higher.  The
stock traced an inverted head-and-shoulders pattern in the latter
half of the day.  Once BRCM lifted from its right shoulder the
stock didn't look back.  We decided to sell too soon, and take
the quick profits and run.


PUTS

No dropped puts today.



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

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

TIBX - TIBCO Software $107.25 (+18.19 last week)

See details in sector list

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


Put Play of the Day:
********************

ICIX - Intermedia Communications $29.75 (-4.13 last week)

See details in sector list

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


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***********
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

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 $178.00 (+42.50 last week)

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.

Up, up and away! On Thursday night, we called the stock a
superhero, after posting a strong up day on heavy volume with
a weak Nasdaq.  True to form, our hero came through again, posting
a $11.31 or 6.79% gain to end the week up over 30%.  Resistance
levels were broken easily all week.  What was thought to be
formidable resistance at $145 was broken on Monday.  From there
$155 was a little more difficult but fell after the second
attempt.  What was a technically important resistance level at
$160 was next to go, and from there the buyers piled in driving
the stock higher on strong volume.   All week long bounces off the
5-dma line, currently at $160.58, has been the target to shoot for
as an entry point.  There is support at $160 which was tested
successfully on Friday.  Below that, each previous resistance
level now represents support.  Overhead, there is resistance at
$180, which RBAK encountered on Friday.  Breaking through that
level will find RBAK ready to challenge its all-time high and then
the psychological $200.

On the news front, there was no news all week long, just pure
sweet momentum, with RBAK posting gains 4 out of the last 5 days.
With earnings less than two weeks away, a history of surprising
to the positive side, and trading volume continuing to increase,
this stock looks poised to move onward and upward.

BUY CALL JUL-170 BKK-GN OI= 351 at $22.38 SL=18.25
BUY CALL JUL-175 BKK-GO OI=  99 at $18.63 SL=13.75
BUY CALL JUL-180*BKK-GP OI= 294 at $16.25 SL=12.25
BUY CALL JUL-185 BKK-GQ OI= 176 at $13.50 SL=10.25
BUY CALL AUG-180 BKK-HP OI=  75 at $26.63 SL=20.75

SELL PUT JUL-170 BKK-SE OI=  34 at $10.75 SL=14.00
(See risks of selling puts in play legend)

Picked on May 28th at    $72.06     P/E = N/A
Change since picked     +105.94     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 = 3.20 mln
/charts/charts.asp?symbol=RBAK


GLW - Corning Inc. $264.00 (+24.31 last week)

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.

The bulls and bears duked it out over GLW Friday.  The result was
a tie.  But, the bulls have definitely been winning the war.  And
no wonder, considering GLW is the leading provider of optical
cable in the blistering hot fiber optic area.  GLW has made quite
a run so far this year, in fact, the stock is one of the best
performing names on the NYSE year-to-date.  Analysts feel that
the stock has at least $100 more upside potential this year.
Which doesn't sound too bad for those of us on the long side of
things.  Furthermore, with GLW trading at such high levels, many
are expecting a split announcement from the fiber optic giant,
including us at OIN.  Given its high-profile status on Wall
Street, a split announcement may have a significant impact on our
play.  What has attracted investors to GLW so far this year is
the company's explosive earnings growth.  What's more, GLW's
fundamentals rival those of any other company operating in the
fiber optic business.  The stock trades at a healthy multiple,
but relative to the likes of JDSU and SDLI, GLW is fairly cheap.
GLW's relatively low P/E explains why analysts expect the stock
to continue to climb this year and expand its multiple.  There
are little, if any, signs of demand slowing for GLW's fiber optic
cable.  And the robust business GLW is enjoying is the catalyst
that can take our play higher.  With GLW trading at such high
levels the stock is volatile, to say the least.  An aggressive
trader might look to the intra-day dips for entry points.  GLW
has support at the $260 level, which may provide an entry if the
stock bounces from that level.  For our more conservative
readers, look for an entry if GLW can clear resistance near its
52-week high at $270.

Further proof that business is booming in the fiber optic market
came last week when GLW announced a host of new contracts it had
won.  The company said it would provide optical cable to the new
venture that is building an undersea network that will connect
15 countries.  Also, GLW said it had signed a $1 bln contract to
supply cable to Aerie Networks to build a nationwide broadband
network.

BUY CALL JUL-260 GRJ-GZ OI=1019 at $18.00 SL=13.00
BUY CALL JUL-270*GWD-GN OI=1380 at $12.63 SL= 9.50
BUY CALL JUL-280 GWD-GP OI= 731 at $ 8.38 SL= 6.00
BUY CALL AUG-270 GWD-HN OI= 319 at $25.38 SL=18.50
BUY CALL NOV-280 GWD-KP OI=  64 at $40.00 SL=29.00

Picked on June 6th at   $217.25    P/E = 141
Change since picked      +46.75    52-week high=$271.00
Analysts Ratings      8-5-0-0-0    52-week low =$ 60.00
Last earnings 04/00   est= 0.55    actual= 0.64
Next earnings 07-24   est= 0.67    versus= 0.49
Average Daily Volume = 2.89 mln
/charts/charts.asp?symbol=GLW


BRCD - Brocade Communications $183.47 (+27.47 last week)

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.

Like the Energizer Bunny, BRCD keeps going and going.
Seemingly oblivious to the largely-sideways action on the
NASDAQ, BRCD has broken out of its consolidation pattern and
is knocking on the door of new all-time highs.  Strong volume
continues to increase, allowing the stock to set a new closing
high on Friday of $183.47.  It isn't hard to see the reason for
the recent move, as the news is full of positive stories and
analyst comments (see below).  After re-testing support at $155
early in the week, BRCD acted like it got a shot of adrenaline.
Blasting through resistance near $165 on Wednesday and
continuing with the strong momentum all week, the stock is now
being supported by the 5-dma ($170.83) and then the 10-dma
($165.06).  After almost a $30 move this past week, be on the
lookout for profit taking.  A drop to intraday support at $170
looks buyable, but we could get really lucky and see a retest
of the $165 level before the stock heads higher again.  Of
course, with the strong momentum seen last week, the move could
just as easily continue higher from here.  Consider new entries
on a bounce from support or a strong break through the $185
resistance level.  Watch the volume, as it will continue to
telegraph the strength of the move.  With the large gains from
last week, tighten up your stops to make sure you keep your
profits when the sellers appear.

Good news about BRCD continued to flow last week.  After
announcing several product enhancements on Monday, the company
released an end-to-end interoperability program for SANS,
called Fabric Aware, which was immediately endorsed by 25
industry partners including EMC, Hewlett Packard, Sun
Microsystems, and VERITAS Software.  On Tuesday, Chase H&Q
initiated coverage of the stock with a Buy Rating and then
on Wednesday the company announced an expansion of their OEM
partnership with Hewlett Packard.  HP is now shipping the
BROCADE SilkWorm® eight-port 2400 Fibre Channel fabric switch
as part of the networking foundation for HP SAN solutions for
the Windows NT® departmental and workgroup markets, thereby
expanding the range of BROCADE products available through HP

BUY CALL JUL-180*GUF-GP OI=3271 at $11.00 SL= 8.25
BUY CALL JUL-185 GUF-GQ OI= 199 at $ 8.75 SL= 6.00
BUY CALL JUL-190 GUF-GR OI=1147 at $ 6.38 SL= 4.25
BUY CALL AUG-185 GUF-HQ OI=  55 at $17.13 SL=12.25
BUY CALL AUG-190 GUF-HR OI= 461 at $12.13 SL= 9.00
BUY CALL OCT-190 GUF-JR OI=  32 at $25.25 SL=19.00

SELL PUT JUL-175 GUF-SO OI=  30 at $ 5.25 SL= 7.50
(See risks of selling puts in play legend)

Picked on June 6th at   $138.88     P/E = 809
Change since picked      +44.59     52-week high=$185.00
Analysts Ratings      9-4-2-0-0     52-week low =$ 21.75
Last earnings 05/00   est= 0.08     actual= 0.11
Next earnings 08-14   est= 0.13     versus= 0.01
Average Daily Volume = 3.30 mln
/charts/charts.asp?symbol=BRCD


MRVC - MRV Communications $67.25 (+12.25 last week)

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 the benefit of hindsight, we can say that the profit
taking on Friday, June 23rd was nothing more than profit taking.
The selling dropped MRVC back to its 10-dma (then at $55.38),
and the recovery this past week had a very nice feel to it.  All
week, the 10-dma continued to support the move higher, and has
now moved up to $62.63.  Support by volume 50% over the ADV
all week long made investors happy and they continued to buy the
stock, bringing MRVC right up to the $68 resistance level.  This
level was created in early March as the NASDAQ began its
historic slide.  Moving above it could give the stock a
launching pad for an assault on the almighty $100 level as
earnings approach on July 27th.  There really is no confirmation
of any spinoff plans (remember our comments last week about
chatroom conversations on the possibility of the company
spinning off its Luminent division), and we really don't want
to use anything like that as a basis for trading anyway.
Let's go with what we know.  Buying volume was strong all week,
allowing the stock to move back up to its nearest resistance
level.  Another rebound from the 10-dma is buyable, but we would
prefer to see buyers push the price through resistance before
opening new positions.  If volume stays strong and the price
traces above $70, that will be your cue for entering this play
on convincing strength.

Other than speculation of a spin-off, news has been light on
MRVC.  The company is well positioned in the fiber industry and
has benefited recently from its strength relative to the broad
markets.  Continued momentum in the industry could also help our
play continue to surge higher.

BUY CALL JUL-65*RVY-GM OI=1090 at $ 7.75 SL= 5.50
BUY CALL JUL-70 RVY-GN OI=1416 at $ 5.88 SL= 4.00
BUY CALL JUL-75 RVY-GO OI= 843 at $ 3.75 SL= 2.00
BUY CALL AUG-70 RVY-HN OI= 113 at $ 9.88 SL= 7.00
BUY CALL AUG-75 RVY-HO OI=  92 at $ 8.13 SL= 5.75
BUY CALL OCT-70 RVY-JN OI= 244 at $15.13 SL=11.00

SELL PUT JUL-60 RVY-SL OI= 202 at $ 2.94 SL= 5.00
(See risks of selling puts in play legend)

Picked on Jun 11th at    $46.00    PE = N/A
Change since picked      +21.25    52 week high=$97.44
Analysts Ratings      1-1-0-0-0    52 week low =$ 6.19
Last earnings 04/00   est=-0.01    actual= 0.03
Next earnings 07-27   est= 0.03    versus= 0.01
Average daily volume = 2.12 mln
/charts/charts.asp?symbol=MRVC


NT - Nortel Networks $68.88 (+3.69 last week)

Nortel Networks is a leading global supplier of data and
telephony network solutions and services.  Covering all the
bases, its business consists of the design, development,
manufacture, marketing, sale, financing, installation,
servicing and support of networks for both carrier and
enterprise customers.  With a presence in over 150 countries,
NT serves local, long-distance, personal communications
services and cellular mobile communications companies as well
as cable television companies, Internet service providers and
utilities.

The pressure seems to be building for a break to new highs, but
there are nagging doubts.  After recovering from the $64 level
a week ago, NT has been gradually moving higher.  Volume has
been strengthening, with over 11.4 mln shares changing hands
on Friday.  The buyers are trying to push the price through
resistance at $72, but have so far been turned away at every
attempt.  Over the past few days, the stock has found support
near $68, which is just above the 10-dma ($67.56).  Friday was
actually looking to be a good day, as the stock was trading near
$71 with only 30 minutes to go until the weekend.  Then a rash
of selling took place, primarily in the final 5 minutes,
dropping the price below $69 at the close.  We would like to see
the 10-dma hold as support, but market weakness early next week
could be just the catalyst for a retest of support at $66.  We
would consider a bounce at either of these levels as an
attractive entry point, but keep an eye on the broad market and
on NT's volume.  If strong volume comes in to propel the price
through resistance, consider it a good opportunity to enter the
play on strength.

NT's popularity continues unabated as it showed up Wednesday
on the Lehman Brothers' "10 Uncommon Values" list.  Tim Luke
at Lehman says Nortel is "one of the best-positioned global
players in communications equipment." Its lead position in
optical equipment is one of the factors that should propel it
forward.  On Thursday, NT formed an alliance with Juniper
Networks to provide a compelling combination of advanced
optical and core routing solutions to help service providers
and carriers build powerful Internet infrastructures.

BUY CALL JUL-65*NTV-GM OI= 9287 at $5.13 SL=3.00
BUY CALL JUL-70 NTV-GN OI=10167 at $2.13 SL=1.00
BUY CALL AUG-70 NTV-HN OI= 1169 at $4.63 SL=2.75
BUY CALL AUG-75 NTV-HO OI= 1323 at $2.75 SL=1.50
BUY CALL SEP-70 NTV-IN OI= 4588 at $6.13 SL=4.00

Picked on June 15th at    $67.00     P/E = N/A
Change since picked        +1.88     52-week high=$72.09
Analysts Ratings     19-11-3-1-0     52-week low =$19.91
Last earnings 04/00    est= 0.19     actual= 0.23
Next earnings 07-25    est= 0.14     versus= 0.14
Average Daily Volume = 10.10 mln
/charts/charts.asp?symbol=NT


CIEN - Ciena Corp $166.69 (+21.25 last week)

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.

We're bringing back an old favorite.  With the end of the second
quarter last Friday, CIEN earned the award for best individual
performer in the NASDAQ 100 for the first half of 2000, rising
183%.  CIEN's P/E is approaching four digits, again.  But, it
seems investors don't mind forking over the big bucks as long as
they receive earnings growth in return.  And, there is no area of
the U.S. economy that is growing faster than the fiber optical
networking arena.  CIEN, of course, supplies optical networking
equipment to telecom carriers.  The pace at which CIEN receives
orders from its customers is stunning.  The company recently told
analysts that it expects demand for its products to continue to
double every six months.  And, that's just in the U.S.!  The demand
for optical equipment in international markets is picking up as
countries scramble to upgrade their ailing telecom networks in
order to tap into the power of the Internet.  CIEN is positioned
to be one of the premier providers of optical equipment to
foreign countries.  With the second quarter coming to an end, we
might see some of the sidelined cash move into leading stocks
like our CIEN play.  Wit Soundview got a jump on the ratings game
last week when they reiterated their Strong Buy rating on CIEN.
CIEN is coming off five winning days in a row using its 10-dma as
support along the way.  CIEN edged past a key resistance level
last Friday, prices not seen since early March.  Consider entry
at current levels if institutions put money to work in CIEN next
week.  A more conservative entry may be found if CIEN moves above
the $170 level.  Make sure to confirm a CIEN rally with healthy
volume.  The stock has major support at $160 and again at its
10-dma, currently at $157.75.

We are gradually starting to see a few more companies announce
stock splits.  With its recent resurgence, CIEN is trading well
into split territory.  The company has plenty of shares to
authorize a split.  We'll listen for an announcement in the
coming weeks which would add even more momentum to our play.

BUY CALL JUL-160*UEE-GL OI=1947 at $15.38 SL=11.25
BUY CALL JUL-165 UEE-GM OI=3766 at $12.63 SL= 9.50
BUY CALL JUL-170 UEE-GN OI=2962 at $ 9.88 SL= 7.00
BUY CALL AUG-170 UEE-HN OI= 114 at $20.00 SL=14.50
BUY CALL OCT-175 UEE-JO OI=5498 at $28.13 SL=20.50

Picked on July 2nd at   $166.69    P/E = 958
Change since picked        0.00    52-week high=$189.00
Analysts Ratings     12-9-2-0-0    52-week low =$ 29.06
Last earnings 04/00   est= 0.10    actual= 0.12
Next earnings 08-17   est= 0.17    versus= 0.01
Average Daily Volume = 6.45 mln
/charts/charts.asp?symbol=CIEN


JNPR - Juniper Networks Inc $145.56 (+22.75 last week)

Juniper Networks develops and provides next-generation Internet
infrastructure systems that are designed to meet the
scalability, performance, density, and compatibility
requirements of IP networking systems.  The company's M40 and
M20 Internet backbone router use JUNOS network traffic
management software, ASICs.  Its clients include some of the
world's leading service providers such as Ericsson and
MCIWorldCom.

All systems are go for JNPR to fly high and break through the
clouds.  On Wednesday, JNPR was one of the technologies stocks
that shot upwards after being included on the Lehman Brothers'
list of "10 Uncommon Values".  Shares of JNRP rose $10 to
$136.44 on nearly double the average volume.  The break out
extended into Thursday despite the earnings woes of the broader
markets.  The acceleration in gains was a direct reaction to
the Nortel marketing pact announcement.  Nortel Networks, North
America's No. 2 phone-equipment maker, agreed to market and sell
Juniper's Internet backbone routers.  JNPR rose another $11.50,
or 8.4% for the highest close it's seen in nearly three months.
The resale deal is important because it gives Juniper access to
Nortel's customer base, which includes big boys like British
Telecommunications, Sprint, and WorldCom.  Bottom line - more
revenue.  There's also an earnings report just around the
corner.  Juniper is confirmed to announce on July 13th, after
market, and so far all looks good for a solid report.  Near-term
support is relatively firm at $138 and $140, with a stronger
base near the 10-dma ($132.23) level.  If you're partial to
using DMA technicals as guideline, then the 5-dma (currently at
$137.14) should serve as decent gauge for entry points on the
climb.  For the moment, keep in mind that JNPR is a simple
momentum play powered by news and a technical breakout.  It
needs your undivided attention.  In other words, playing the
Internet stocks can be the ultimate adrenaline rush as long as
you have a parachute packed for an unexpected downdraft.

On Friday, Mark Sue of Lehman Brothers reiterated a Buy rating and
issued a hefty target price for JNPR at $180 per share.

BUY CALL JUL-140 JUY-GH OI=1008 at $13.00 SL= 9.75
BUY CALL JUL-145 JUY-GI OI= 663 at $10.50 SL= 7.50
BUY CALL JUL-150*JUY-GJ OI=2517 at $ 8.13 SL= 5.75
BUY CALL JUL-155 JUY-GK OI=1162 at $ 6.25 SL= 4.25
BUY CALL AUG-150 JUY-HJ OI= 251 at $14.38 SL=10.75
BUY CALL AUG-155 JUY-HK OI= 203 at $12.25 SL= 9.00

Picked on July 2nd at   $145.56    P/E = N/A
Change since picked       +0.00    52-week high=$156.47
Analysts Ratings     12-4-1-0-0    52-week low =$ 20.33
Last earnings 03/00   est= 0.03    actual= 0.06
Next earnings 07-13   est= 0.04    versus=-0.02
Average Daily Volume = 4.84 mln
/charts/charts.asp?symbol=JNPR


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


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

The Option Investor Newsletter                    Sunday 7-02-2000
Sunday                                                      3 of 5

To view this email newsletter in HTML format with imbedded
charts and graphs, click here:
http://www.OptionInvestor.com/htmlemail/070200_3.html


***************
CALLS CONTINUED
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********
INTERNET
********

ENTU - Entrust Technologies Inc $82.75 (+18.31 last week)

Entrust Technologies' security software ensures the privacy of
electronic communications and transactions across corporate
intranets and the Internet. The Entrust solution automates the
management of digital certificates through public key
infrastructure (PKI) technology designed to assure the privacy
and authenticity of internal and external electronic
communications.  Customers include Customers include Citibank,
JP Morgan, NASA, and the Royal Bank of Scotland.  Nortel
Networks (NT) has a 32% stake in the company.

ENTU is on the upswing and we want a piece of the action.  On
Wednesday, Greenspan sputtered "no rate hike" and warned of his
watchful eye.  A rally ensued which was enough to propel ENTU
out of its trading range ($65-$70).  Even though the post-FOMC
party waned towards the end of the session, ENTU still managed
to close a fraction over the $70 mark on moderate volume.  The
following two sessions most certainly confirmed a developing
momentum run.  ENTU advanced 5.6% on Thursday, and Friday's
session was excellent too with a $8.63, or 11.6% gain.  The
NASDAQ explosion during that last hour of trading launched
ENTU through intraday resistance of $75 and propelled it to
$83.50.  The strong close, just a fraction from this high, further
establishes a bullish sentiment.  Additionally, ENTU received a
Strong Buy reiteration from analyst David Zale at Sands Brothers
& Co.  He also upped his price target to $100 from $75.  The
company's earnings date is also on the horizon, which may
further fuel the momentum in the near-term.  ENTU is confirmed
to report in just a few weeks on July 18th, after the bell.
Currently, we have a short-term support level at $73 and $75.
Be aware that additional support is found lower in the $65 to $70
range.  And take note too that the 5-dma ($72.73) and 10-dma
($70.01) haven't caught up with ENTU's swift upward moves.
However, these technicals should act as entry gauges if there's a
pullback.  If you choose to be aggressive and enter on the
climb, be prepared for a quick in-and-out.  Otherwise, play more
conservatively and be patient for your entry.

On Tuesday, Entrust Technologies completed the acquisition of
closely held enCommerce, Inc. for $703.4 mln in stock.  The
acquisition expands the company's product line, thus attracting
a larger corporate audience to pump up the revenues.  Earlier in
June, analyst Christopher Russ at First Union Securities
initiated a Buy rating for ENTU and issued a $80 price target,
which ENTU easily overcame in Friday's trading.

BUY CALL JUL-75 QYE-GO OI=449 at $10.13 SL= 7.00
BUY CALL JUL-80*QYE-GP OI=353 at $ 7.13 SL= 5.00
BUY CALL JUL-85 QYE-GQ OI=208 at $ 4.75 SL= 2.75
BUY CALL JUL-90 QYE-GR OI=173 at $ 2.94 SL= 1.50
BUY CALL AUG-75 QYE-HO OI=277 at $14.13 SL=10.50

Picked on June 29th at   $74.13    P/E = 524
Change since picked       +8.63    52-week high=$150.00
Analysts Ratings      9-3-1-0-0    52-week low =$ 18.31
Last earnings 03/00   est= 0.06    actual= 0.06
Next earnings 07-18   est= 0.08    versus= 0.02
Average Daily Volume = 1.30 mln
/charts/charts.asp?symbol=ENTU


ARBA - Ariba Inc. $98.03 (+9.47 this week)

As a leading provider of B2B solutions and services to leading
companies around the world, including more than 20 of the FORTUNE
100, Ariba helps companies cut through the complexity of
opportunities presented by the new economy.  Ariba provides the
most comprehensive and open commerce platform to build B2B
marketplaces, manage corporate purchasing, and electronically
enable suppliers and commerce service providers on the Internet.
Made up of a complete set of integrated commerce solutions and
open network-based commerce services, the Ariba B2B Commerce
Platform offers a single system for managing buying, selling,
and marketplace eCommerce processes.  Whether automating
enterprise-wide procurement processes, building state-of-the-art
B2B exchanges, or bringing new commerce services online, the
Ariba B2B Commerce Platform delivers the fastest time to market,
the most comprehensive solution, and the greatest long-term
flexibility and scalability.

Whew! This has been a busy week for the company, and for the
stock as well.  Ariba rallied over 10% this week on steadily
increasing volume.  From Monday to Thursday, $97 was an obstacle
that was tested but to no avail.  On Friday, however, the stock
broke through that elusive mark.  Though the volume was light (a
little over 70% of the average daily volume), it is still
stronger than most of the week when it consolidated in a range of
about 8 to 10 points.  Aggressive traders were able to play this
by range buying just above $87 and selling in the $95 area all
week long.  With the break above the $97 resistance level, ARBA
should find support there.  Bounces off the 5-dma, currently at
$94, and the 10-dma at $91.63 can also serve as entry points.
The next level of resistance now stands exactly at $100. A break
through this level of strong volume will find the next resistance
levels at $105 and $110.

As mentioned earlier, there was much news for ARBA this week.
Monday was the announcement of the acquisition of
Suppliermarket.com.  Tuesday saw ARBA forming a partnership with
B2B infrastructure startup EC Company.  On Wednesday, an alliance
with Inforte to help companies quickly and smoothly implement a
variety of eCommerce solutions.  As well, Ariba introduced the
Ariba Content Delivery and Discovery Services, a comprehensive
set of solutions enabling buyers, suppliers and marketplaces to
be implemented on the Ariba B2B Commerce Platform.

BUY CALL JUL-95  IUR-GS OI=2574 at $ 8.63 SL=6.00
BUY CALL JUL-100*IUR-GT OI=2976 at $ 6.38 SL=4.50
BUY CALL JUL-105 IUR-GA OI= 829 at $ 4.50 SL=2.75
BUY CALL AUG-100 IUR-HT OI=1830 at $11.50 SL=8.25

SELL PUT JUL-90  IUR-SR OI= 680 at $ 2.88 SL=4.50
(See risks of selling puts in play legend)

Picked on Jun 25th at    $88.56      PE = N/A
Change since picked       +9.47      52-week high=$183.31
Analysts Rating     13-12-1-0-0      52-week low =$ 15.25
Last earnings 3/00    est=-0.08      actual=-0.06
Next earnings 7-12    est=-0.09      versus=-0.12
Average Daily Volume = 7.05 mln
/charts/charts.asp?symbol=ARBA


RSAS - RSA Security $69.25 (+6.75 last week)

RSA Security Inc. is a trusted name in e-security, helping
organizations build secure, trusted foundations for e-business
through its two-factor authentication, encryption and public
key management systems.  As the global integration of Security
Dynamics and RSA Data Security, RSA Security has the market
reach, proven leadership and unrivaled technical and systems
experience to address the changing security needs of e-business
and bring trust to the new, online economy.  A global company
with more than 5,000 customers, RSA Security is renowned for
providing technologies that help organizations conduct e-business
with confidence.

We don't know whether it is the approach of July earnings
(scheduled for July 13th), or all the positive press, but
clearly shares of RSAS have gotten investors' attention again
in the last week.  After consolidating near $61, RSAS got a
nice jump early last week when it inked a licensing deal with
E.piphany.  On the heels of the announcement, buyers were
lining up to buy shares of the Internet security company.  At
current price levels, RSAS just looks like a good value (can
you believe I just said that about an Internet company?), and
a relatively cheap way to participate in the increasing demand
for security on the Internet.  The broad markets were mixed
for the bulk of the week, and it was encouraging to see how
well RSAS held up.  After its strong move on Monday, support
has continued to build near $68, which is just below the 5-dma
of $68.63.  Current levels look attractive for new entries,
although weakness early in the week could provide an intraday
dip to the 10-dma, currently at $65.75.  The daily chart on
RSAS shows a pattern of higher highs and lows, and as long as
volume remains strong, RSAS looks like it will continue its
winning ways.

The newswires were busy keeping up with all of RSAS' activity
this week.  In the space of only one week, the company has
inked deals with the likes of Firstar, WM-data, Baltimore
Technologies, E.piphany, and GE Global exchange Services.  All
of the above have selected RSAS to help them keep their websites
and online transactions secure.

BUY CALL JUL-65*QSD-GM OI=522 at $7.88 SL=5.75
BUY CALL JUL-70 QSD-GN OI=520 at $4.88 SL=3.00
BUY CALL JUL-75 QSD-GO OI=239 at $2.88 SL=1.50
BUY CALL AUG-70 QSD-HN OI=  0 at $7.00 SL=5.00
BUY CALL OCT-75 QSD-JO OI=151 at $9.63 SL=6.75

SELL PUT JUL-65 QSD-SM OI=283 at $2.38 SL=4.00
(See risks of selling puts in play legend)

Picked on June 27th at $68.38    P/E = 17
Change since picked     +0.88    52-week high=$93.06
Analysts Ratings    4-6-3-0-0    52-week low =$15.88
Last earnings 04/00  est=0.19    actual=0.20
Next earnings 07-13  est=0.21    versus=0.15
Average Daily Volume =  520 K
/charts/charts.asp?symbol=RSAS


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

AGIL - Agile Software Co. $70.69 (+9.00 last week)

Agile develops and markets product content management software,
which is software that enables companies to collaborate over the
Internet by interactively exchanging information about the
manufacture and supply of products and components.  Agile's
collaborative suite of software products is designed to improve
the ability of all members of the manufacturing supply chain.
Since their start in 1996, they have licensed their products to
approximately 300 customers including Gateway, Texas
Instruments, Philips Mobile Computing, Lucent Technologies,
Solectron, GE Marquette Medical Systems and FSI International.
About 40% of sales come from additional material procurement
applications, consulting, implementation, support, and training
services.

On June 22nd, OIN initiated coverage on AGIL for its recovery
potential and the positive sentiment surrounding the company.
The technical breakout above the nearly invincible 200-dma (then
at $61) was also was a key factor.  Attractive comments from
analysts and the company's announcement of its partnership with
Symix Systems ignited the stock's leap out of its narrow channel
between $56 and $59.  Investors really liked the news concerning
Symix Systems.  The partnership was formed in order to provide
mid-market manufacturing customers with extended supply chain
collaboration capabilities.  The companies' combined technologies
will work in conjunction to deliver comprehensive
e-business-driven supply chain and collaboration solutions,
which should increase revenues for all concerned.  The
anticipation of the FOMC strained the markets and AGIL laid
trapped between $60 and $64.  Although once the Fed Meeting became
a cast shadow, the stock came off the support at the 200-dma line
and sprung back to life.  By Friday AGIL tacked on an impressive
17.9% in active trading.  The momentum is intact.  Short-term
support is at $68-$69, but the 5-dma at $66.04 offers a firmer
platform, especially if you're considering an entry.  New readers,
AGIL is a pure momentum run.  Play it for what it is and don't
anticipate an earnings announcement to generate any excitement.
The company isn't expected to report until late August.

In the news this week, Amkor Technology, the world's largest
provider of contract microelectronics manufacturing solutions,
announced that it will be using the Agile Anywhere product
content management software solution as the backbone of its
Module Business Unit.  In the analyst arena, Michael Micciche at
DLJ came forward twice in June to reiterate his Buy recommendation
and $100 price target on AGIL.  And on the 21st, Southwest
Securities stepped in with a new Buy rating and an $86 price
target.

BUY CALL JUL-65*AUG-GM OI=175 at $ 9.75 SL=6.75
BUY CALL JUL-70 AUG-GN OI= 89 at $ 6.88 SL=5.00
BUY CALL JUL-75 AUG-GO OI= 79 at $ 4.50 SL=2.75
BUY CALL AUG-70 AUG-HN OI=  1 at $10.88 SL=8.25
BUY CALL AUG-75 AUG-HM OI=  9 at $ 8.25 SL=5.75

Picked on June 22nd at  $63.63    P/E = N/A
Change since picked      +7.06    52-week high=$112.50
Analysts Ratings     2-7-0-0-0    52-week low =$ 17.13
Last earnings 03/00  est=-0.06    actual=-0.02
Next earnings 08-26  est=-0.04    versus=-0.09
Average Daily Volume =   711 K
/charts/charts.asp?symbol=AGIL


PRSF - Portal Software, Inc. $63.88 (+15.31 last week)

Portal is building the business infrastructure for the Internet.
As the leading provider of customer management and billing
software for Internet and emerging, next-generation
communications services, their real-time solutions enable service
providers to manage customers, support services and collect
money.  Portal has an unsurpassed track record of helping
Internet and next-generation communications service providers
around the world to generate more revenue and be more competitive
by enabling them to bring new services to market quicker than
ever before and by establishing innovative ways of supporting
customers' needs.

Now that the month of June and the first half of the year 2000
is over for traders, we can look back and hand out the report
cards.  While PRSF for the year is up just over 24%, this month
has been nothing short of stellar for the stock, gaining almost
59% in a market which for the most part, has traded sideways.
Starting out strong for the month, the stock rocketed from $40.25
only to find strong resistance at $57 last week and selling off.
Since then, the stock has rallied all this week gaining over 30%
in the last 5 trading sessions on increasingly strong volume,
easily steamrolling past the $57 mark.  During this time, entry
points have been found at the 5-dma, currently at $58.50.
Pullbacks to this level can provide reliable entry points.  Use
patience in doing so.  Support from 10-dma is at $55.64.  You can
more aggressively shoot for entries on bounces from here.  The
next point of resistance is at $65 and then at $70.  The trend is
strong, so look for pullbacks to jump on board.

The only news this week was on Monday when the company announced
that it signed contracts with three industry leading Chinese
companies: China Railway Communications Company and Ji Tong
Communications Co. Ltd., which are two of China's largest
communication service providers, and Xinhua News Agency, a
national Chinese news agency.  The market has rewarded positive
news for any company that can successfully deal with China and
for the week, PRSF was handsomely rewarded.  With volume
increasing on the rise, momentum is clearly behind PRSF.

BUY CALL JUL-55 PUS-GK OI= 243 at $10.50 SL= 7.50
BUY CALL JUL-60*PUS-GL OI=1447 at $ 7.25 SL= 5.00
BUY CALL JUL-65 PUS-GM OI= 971 at $ 4.63 SL= 2.75
BUY CALL AUG-65 PUS-HM OI=   0 at $ 8.38 SL= 6.25

SELL PUT JUL-55 PUS-SK OI=  94 at $ 2.63 SL= 4.25
(See risks of selling puts in play legend)

Picked on June 29th at $61.00    P/E = 5788
Change since picked     +2.88    52-week high= $86.00
Analysts Ratings    7-5-0-0-0    52-week low = $17.13
Last earnings 05/00 est=-0.01    actual= 0.02
Next earnings 08-17 est= 0.01    versus= 0.00
Average Daily Volume =  1.88M
/charts/charts.asp?symbol=PRSF


TIBX - TIBCO Software $107.25 (+18.19 last week)

TIBCO's ActiveEnterprise enables businesses to connect resources
with customers and automatically deliver event-driven information
across networks and the Web in real-time.  The company also
offers e-commerce, consulting, and support services.  Customers
license the software to integrate, personalize, and distribute
content.  TIBCO is enhancing its business-to-business trading
capabilities.  Reuters owns more than 60% of the company, and
Cisco holds a minority stake of 7%.

TIBX was one of the many stocks last Friday that benefited from
end-of-the-quarter window dressing.  You know, the old technique
that money managers use to make their portfolios look better at
the midway point of the year.  But, we can't blame them for
buying TIBX, and we certainly wouldn't mind if they continued to
do so.  TIBX is one of the few companies operating in the
e-business services arena that is actually making money.  Imagine
that, a B-2-B that is profitable.  The company has an all-star
list of customers, and one of the biggest Internet names as an
investor, Cisco.  In fact, TIBX and CSCO are developing an open
source protocol together that they are working on to address
further scalability of its software.  TIBX investors like the
idea of CSCO teaming with the company.  TIBX's software is widely
used by companies running Web sites of a wide variety.  In fact,
you may have noticed TIBX's name at the bottom of Yahoo Finance
after pulling up a stock quote on that Web page.  TIBX provides
Yahoo with that quote technology.  And, Yahoo extended its
alliance with TIBX last week when the Web portal said it would
use TIBX's software and services to build a new corporate portal.
The stock has been on essentially an uninterrupted climb since
hitting bottom in late May.  TIBX faces congestion directly above
current levels, although it has been taking out resistance
levels with ease recently.  You might consider an entry at
current levels if momentum continues next week.  An aggressive
trader might look for intra-day pullbacks and target shoot for
entry points.  Pay close attention to volume to decipher if the
institutions are accumulating TIBX which will aid the stock in
clearing its overhead resistance area.  Also of note, TIBX
charged past its highest front-month contract last Friday, look
for the new OTM options, and wait for OI!

While TIBX's institutional sponsorship is relatively low, that
number has been climbing recently.  TIBX's name is getting tossed
around more and more on money shows such as CNBC and CNNfn by
prominent money managers.  The company's further push into
profitability is certainly helping its cause on Wall Street and
will help our cause if professionals continue buying.

BUY CALL JUL- 95 PIW-GS OI=168 at $17.00 SL=12.25
BUY CALL JUL-100*PIW-GT OI=574 at $13.50 SL=10.00
BUY CALL JUL-105 PIW-GA OI= 14 at $10.75 SL= 8.00
BUY CALL AUG-110 PIW-HB OI=468 at $15.00 SL=11.00
BUY CALL NOV-115 PIW-KC OI= 92 at $24.63 SL=18.00

SELL PUT JUL- 95 PIW-SS OI= 15 at $ 4.13 SL= 6.00
(See risks of selling puts in play legend)

Picked on June 27th at   $98.94    P/E = 2680
Change since picked       +8.31    52-week high=$147.00
Analysts Ratings      4-0-1-0-0    52-week low =$  6.56
Last earnings 05/00   est= 0.01    actual=  0.04
Next earnings 09-21   est= 0.05    versus= -0.01
Average Daily Volume = 1.74 mln
/charts/charts.asp?symbol=TIBX


MSFT - Microsoft Corp $80.00 (+2.31 last week)

Microsoft is the #1 software company in the world.  They
develop, manufacture, license, and support a broad range of
software products including Windows operating systems, server
applications, the popular MS Office suite, and a Web Browser.
As most of you know, the company is presently involved in anti-
trust issues with the government.  CEO and co-founder, Bill
Gates still owns 15% of Microsoft.

Let's give our new readers a little background on why we added
MSFT as a call in mid-June.  Amid all the hubbub of the anti-
trust issues surrounding MSFT, the share price was showing signs
of recovery.  It rose above $70, then exuberantly jumped over
the $75 mark on news of the surprise Restrictions Stay issued by
Judge Jackson on Tuesday, June 20th.  The court, however, did send
the anti-trust case directly to the Supreme court, bypassing a
federal appeals court where Microsoft preferred to go next.  The
days that followed offered an unveiling of the company's future
business model - a blueprint of plans to develop software to
connect PCs, the Internet and smaller devices such as cell
phones and handheld computers.  Put another way, Microsoft would
be able to procure revenues from the subscription of software
services as well as stand-alone products.  While all this was
"fine & dandy" and MSFT peaked at $82.19 that week, the stock is
currently range bound.  Therefore, we've put Mr. Softee on a very
short leash and recommend a "wait and see" policy.  The concern
is whether or not MSFT is consolidating at these higher levels
or finding a permanent resting place while the Supreme Court
contemplates the software giant's anti-trust case.  The return
of trading volume in Friday's session and somewhat of a response
to the upsurge in the late afternoon prompted us to keep MSFT
over the weekend.  We gave MSFT a small feather for its cap
because it closed smack on its intraday high at $80.  But again,
wait for further confirmation.  Look for definitive moves off
this $80 mark plus a break through the above-mentioned $82.19
before opening new positions.  The goal is for MSFT to make a
charge for the 200-dma, currently at $90.38, on respectable
volume.

One of this week's news highlights was the joint announcement by
AT&T's Liberty Media Group and Microsoft that they would merge
their respective Japanese cable interests, Tokyo-based Jupiter
Telecommunications and Titus Communications to provide broadband
services throughout the country.  The stock-for-stock deal is
expected to be completed by September 1st.  Under the terms,
Titus (60% owned by MSFT) would become a wholly owned subsidiary
of Jupiter and retain a 24% stake.  Liberty's John Malone and
Jupiter's Sumitomo would each own 35% of the new company.  The
combined company, with an estimated worth of about $5 bln, would
likely initiate an IPO in the near future.

BUY CALL JUL-70 MSQ-GN OI=30219 at $10.38 SL=7.50
BUY CALL JUL-75*MSQ-GO OI=32508 at $ 6.13 SL=4.00
BUY CALL JUL-80 MSQ-GP OI=51013 at $ 2.81 SL=1.50
BUY CALL JUL-85 MSQ-GQ OI=51398 at $ 1.13 SL=0.50
BUY CALL AUG-80 MSQ-HP OI= 5460 at $ 5.00 SL=3.00
BUY CALL AUG-85 MSQ-HQ OI= 3846 at $ 2.88 SL=1.50

Picked on June 15th at   $72.38    P/E = 48
Change since picked       +7.62    52-week high=$119.94
Analysts Ratings     9-16-2-0-0    52-week low =$ 60.38
Last earnings 03/00   est= 0.41    actual= 0.43
Next earnings 07-19   est= 0.42    versus= 0.40
Average Daily Volume = 36.7 mln
/charts/charts.asp?symbol=MSFT


GSPN - GlobeSpan, Inc. $122.06 (+11.06 last week)

GlobeSpan, Inc. is a leading provider of integrated circuit,
software, and system designs for digital subscriber line (DSL)
applications which enable high-speed data transmission over
existing copper wire telephone lines at rates over 100 times
faster than today's 56 Kilobit modems.  Globespan's business is
accelerating communications through high-speed solutions based on
DSL technologies.  The company's innovations make it possible to
do the things that technology companies have been promising for
years - real-time video conferencing, telecommuting, high-speed
Internet surfing, and video-on-demand.  Unlike cable, wireless,
and direct broadcast satellite transmission services, DSL
operates over the "local loop", the vast network of over 800
million copper telephone lines that connect end users to central
office switching centers.

Connecting the higher lows since finding bottom in late April, we
find a nice uptrend line showing us that while the market has
been moving sideways, GlobeSpan has been on the move up.
Breaking through much overhead resistance at $105 at $113, the
stock has paid its dues and rewarded investors who were patient
with a break through a key resistance level at $120 on Friday on
strong volume to close up $4.06 or 3.46%.  This past week saw the
stock rallying over 30% on increasing volume.  Using the 5-dma as
a support, the stock has moved up strongly while the NASDAQ has
been trading sideways.  There is support for the stock at $120,
$113, its 5-dma which is currently at $110, and its 10-dma which
is currently at $105.  Overhead, the next level of resistance is
at $128, $130 and then $135.  Short term GSPN has moved up this
week on a steeper channel.  Trading on this short-term channel
this past week allowed for swings of 7 to 10 points intra-day.
Bounces off the lower part of the channel, currently at $113,
which is also a horizontal support level, is an ideal entry point.
A bounce from support at $120 could lead to a tradable range up
to resistance at $128.  However, with break below $120, look to
support at $113.  This allows for a 7 point trading range between
those two levels.  The run up this week by GSPN has been
accompanied by increasing volume.  As long as the volume remains
strong, we expect the stock price to continue its trend.

This week saw little news for GSPN but the news it did receive
was good.  Monday started off with Putnam OTC & Emerging Company
Fund Co-Manager Steve Kirson giving GSPN the thumbs-up to GSPN as
well as the DSL market.  On Wednesday, GSPN announced that it is
the first chipset manufacturer to offer an ISDN-based DSL (IDSL)
software upgrade that will deliver DSL service to end-users
previously denied DSL service.  According to GSPN, this new chip
set leaps over deployment hurdles and enables equipment
manufacturers to cost-effectively provide DSL service to all
customers on a single, manageable platform.

BUY CALL JUL-115 GHY-GC OI= 639 at $15.63 SL=11.25
BUY CALL AUG-120*GHY-HD OI=  94 at $20.63 SL=14.50
BUY CALL AUG-125 GHY-HE OI=  45 at $18.50 SL=13.25
BUY CALL NOV-130 GHY-KF OI=  41 at $30.13 SL=25.00

SELL PUT JUL-110 GHY-SB OI=   0 at $ 5.50 SL= 7.50
(See risks of selling puts in play legend)

Picked on July 2nd at   $122.06     P/E = N/A
Change since picked        0.00     52-week high=$167.00
Analysts Ratings      2-4-0-0-0     52-week low =$ 11.25
Last earnings 03/00   est= 0.01     actual= 0.03 surprise=200%
Next earnings 08-14   est= 0.04     versus=-0.14
Average Daily Volume = 1.17 mln
/charts/charts.asp?symbol=GSPN


*******
TELECOM
*******

KANA - Kana Communications $61.88 (+8.38 last week)

Kana Communications is a leading provider of comprehensive
online customer communications solutions for marketing, sales
and service. These mission critical applications support
multiple channels of online contact including inbound and
outbound e-mail, web based customer self-service, web forms,
real-time messaging and voice over the Internet.  The company
offers a comprehensive suite of online customer communication
products for managing the entire customer lifecycle.

This specialist in management of online communications is
finally attracting the investors once again.  And what did it
need to spark a bit of excitement?  How about a slew of analysts
clamoring round the table exclaiming "Buy KANA!"  The first
enticement came on June 22nd from analyst Greg P. Vogel at Banc
of America Securities who started coverage with a Buy
recommendation and a $77 price target.  He commented "the market
for Internet-based customer relationship software continues to
rapidly expand as adoption of e-commerce proliferates" and that
he expects the company to be profitable in the fourth quarter of
2001.  The analyst spoke and the interest built.  Transactions
that day alone topped 5.13 mln, which is quite convincing in
comparison to the ADV of 1.84 mln.  Although KANA was unable to
maintain the intraday high of $62.69 due to the weak overall
markets, it did maintain levels within $53 and $57.  The close
above the resistance at $58 on Thursday coupled with Friday's
breakout through $60 finally convinced us to add KANA as a
momentum play.  In a positive market, KANA is now poised to test
the $70 target area.  Out of the 7 analysts following this
stock, all have Buy or Strong Recommendations and recently ING
Barings issued a $100 price target.  The likely reason for the
positive sentiment is obviously the attractive share price.  And
let's face it, as online e-mail and communications volume
increases, KANA will reap the benefits of profitability.  Traders
should look for confirmation of support at the intraday level of
$58, letting KANA rebound off this mark and push through
overhead resistance at $62.68 before entering.  If you're
looking for a more assertive route, then target shoot the dips
near the 10-dam ($55.98) and 5-dma ($57.58).  No matter what
your strategy, only enter the play when it's profitable to do
so.  This means a rising market, a positive series of ticks,
advancers outnumbering decliners, and of course, a conclusive
uptrend in the stock.

Analyst Ben Rose at Adams, Harkness, & Hill started the week off
with a new Accumulate rating for KANA.  And in other news,
Chumb.com, who some call "the ultimate source in software",
chose Kana Communications to provide complete customer service
solutions for its online software store.

BUY CALL JUL-55 URW-GK OI=189 at $ 9.75 SL=6.75
BUY CALL JUL-60*URW-GL OI=658 at $ 6.88 SL=5.00
BUY CALL JUL-65 URW-GM OI=123 at $ 4.38 SL=2.75
BUY CALL AUG-60 URW-HL OI= 33 at $10.00 SL=7.00
BUY CALL AUG-65 URW-HM OI=512 at $ 7.50 SL=5.25

Picked on July 2nd  at   $61.88    P/E = N/A
Change since picked       +0.00    52-week high=$175.50
Analysts Ratings      4-3-0-0-0    52-week low =$ 22.78
Last earnings 03/00   est=-0.23    actual=-0.19
Next earnings 07-19   est=-0.27    versus=-0.18
Average Daily Volume = 1.84 mln
/charts/charts.asp?symbol=KANA



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*****************************
SEE DISCLAIMER IN SECTION ONE
*****************************
The Option Investor Newsletter                    Sunday 7-02-2000
Sunday                                                      4 of 5

To view this email newsletter in HTML format with imbedded
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PUT PLAYS
*********

F - Ford Motor Company $43.00 (-1.44 last week)

Ford is the world's largest truck maker and the #2 maker of cars,
behind General Motors.  It makes vehicles under the Aston Martin,
Ford, Jaguar, Lincoln, Mercury, and Volvo brands.  Two of its
biggest successes are the Ford Taurus and the F-Series pickup.
The company also has a controlling stake in Mazda, and recently
acquired BMW's Land Rover operations.  Its finance subsidiary,
Ford Motor Credit, is the US's #1 auto finance company.

F completed the spin-off of its parts unit known as Visteon (VC)
last Friday.  The spin-off of VC is part of a value enhancement
plan that F has set forth to boost its ailing stock price.  As
part of the plan, F will use up to $10 bln to buyback stock from
shareholders.  The real objective of the value enhancement plan
is to distribute the $10 bln in cash among shareholders in a tax
efficient manner.  The plan also calls for a complex transfer of
shares in VC to F common stock holders.  The plan did little to
enhance F's stock Friday as it fell in the wake of the spin-off.
Management at F is scrambling to boost its sagging stock price.
The company has been on a acquisition binge recently in hopes to
stimulate its business, especially in international markets.
F recently acquired the ailing Land Rover unit from BMW, in which
it received regulatory approval just last week.  And, the company
is aggressively pursuing the insolvent South Korea auto
manufacturer known as Daewoo Motor.  Last week, F offered about
7.7 trln won, or about $6.9 bln for Daewoo.  But, there is little
that F's management team can do to combat the macro factors that
are affecting their stock.  Namely, rising interest rates and a
slowing U.S. economy.  Those two factors have wreaked havoc on F's
stock over the past three months.  F did stabilize a bit last
week by staying above support at $42.50.  But, the stock is
precariously hovering above that level.  Look for an entry if F
falls below $42.50, while an aggressive trader might look for an
entry if F bumps into resistance at its 10-dma, currently at
$43.75.

BUY PUT JUL-50*FOD-SJ OI=1103 at $5.63 SL=3.50
BUY PUT JUL-45 FOD-SI OI=1605 at $1.56 SL=0.75

Average Daily Volume = 3.80 mln
/charts/charts.asp?symbol=F


ICIX - Intermedia Communications $29.75 (-4.13 last week)

Intermedia is an integrated communications provider to high
volume business and government customers.  It offers local access
and private line phones, high-speed data transmission, Internet
access, and Web hosting.  The company is developing an Internet
protocol based backbone to allow data and voice applications to
be carried over a single network.  It has fiber optic networks in
14 southeastern US cities.

ICIX is one of the few technology related issues that didn't
benefit from window dressing last Friday.  Which comes with no
surprise considering the company is mired in losses and has
little support from the Wall Street crowd.  ICIX is viewed by
analysts as a company that has spread its operations too widely.
The company has delved into a wide range of business services
including Web hosting and Internet access, among others.  But,
ICIX's main business is providing local phone and data
transmission services.  The company is known as a CLEC
(competitive local exchange carrier).  Like the name might
suggest, the business is highly competitive.  The Telecom Act of
1996 opened the gates for local phone companies to compete with
the Baby Bells in local phone markets.  Companies such as SBC,
BEL, and USW are seen as the main players in the local phone
markets, and have proved to be formidable competitors to the
likes of ICIX.  What was once thought to be a windfall for
smaller telecom providers has turned out to be a struggle to
survive.  ICIX's losses could widen further with the announcement
from the FCC last week.  The FCC granted SBC Communications (SBC)
the right to offer local service in Texas.  ICIX offers service
to a little over 1 mln customers in Texas, and the entrance of
SBC means more competition for the ailing telecom concern.
Needless to say, the announcement didn't go over well with
investors.  ICIX fell below major support at $30 on the heels of
the news.  Consider entry at current levels as ICIX's future
darkens.  An aggressive trader might look for an entry on an
intra-day rally up to resistance at $30, or at the 5-dma,
currently around $32.

BUY PUT JUL-35*QIX-SG OI= 152 at $6.50 SL=4.50
BUY PUT JUL-30 QIX-SF OI=1263 at $2.88 SL=1.50
BUY PUT JUL-25 QIX-SE OI=  28 at $0.88 SL=0.00

Average Daily Volume = 1.63 mln
/charts/charts.asp?symbol=ICIX


DCLK - DoubleClick, Inc. $38.13 (+0.50 last week)

Providing comprehensive Internet advertising solutions for
advertisers and Web publishers, DoubleClick wants to double
how many times you click on online banner ads.  The company has
two principal service offerings, the DoubleClick Network and
DART Service.  The DoubleClick Network consists of highly
trafficked Web sites grouped together by DCLK in defined
categories of interest.  The DART Service provides Web
publishers, advertisers, and ad agencies with the ability to
control the targeting, delivery, measurement and analysis of
their online marketing campaigns.  This is all done in real-time
by dynamically targeting and delivering ads to Web users based
on pre-selected criteria.

The tug of war continues, as buyers show up for bottom-fishing
duty whenever the share price declines to support near $35-36.
Then the bears come out of hibernation and scare away the
buyers each time the price rallies near the $40 level.  It is a
tight range, but still tradable.  On Thursday, DCLK announced a
joint global ad sales partnership with Real Networks where DCLK
will sell advertising, sponsorships and e-commerce solutions
across the international Real.com(TM) network in 16 countries
outside the United States.  As has been the pattern lately,
investors yawned at the news.  The storm clouds created by the
Justice Department's probe into the company's privacy-related
practices have still not cleared up sufficiently to motivate
buyers.  Each successive run at resistance is being driven by
less force, as is seen by the pattern of lower highs.  Each
time the price gets driven down to support, volume tails off,
indicating that the selling pressure is diminishing.  As the
range between the highs and lows diminishes, trading the range
is getting more difficult, but indicates pressure is building
for a break either higher or lower.  Given the current
environment, we think the break will come to the downside.
Consider new positions as DCLK rolls over near the $40 level.
The highs are being further pressured by the 5-dma at $38 and
the 10-dma at $39.  More conservative players may want to wait
for the price to break down through the $35 support level
before jumping in to the play.

BUY PUT JUL-40*QWE-SH OI=1584 at $5.00 SL=3.00
BUY PUT JUL-35 QWE-SG OI=4051 at $2.50 SL=1.25

Average Daily Volume = 4.13 mln
/charts/charts.asp?symbol=DCLK


PHCM - Phone.com $65.13 (-9.50 last week)

Phone.com develops and markets software that enables wireless
operators to access the Internet and corporate Intranets.  In
other words, no matter where you are, Phone.com can help you
access the Internet and obtain information on everything from
the weather to your favorite sports team via your mobile phone.
The company developed much of the technology behind the wireless
application protocol (WAP) standard and has quite an impressive
list of blue-chip clients.  The vast majority PHCM's sales
(about 60%) come from maintenance and support.  Customers that
are licensing its technology include Matsushita, Ericsson,
Alcatel, Motorola, Samsung and Siemans.

While many wireless stocks are known for their fluctuations
with the broader markets, PHCM just can't seem to keep
its head above water.  PHCM's share price suffered a major blow
during the March/April correction and has since been left in the
lurch.  Initially, it was primarily channeling between $75 and
$85.  Then, it dove below the bottom support at $75 a week ago
last Friday.  The downtrend further perpetuated this week.  On
Tuesday, the trading volume was at nearly double the ADV.  PHCM
sunk under the $70 and didn't come up for air.  It was
surprising to see such a strong downward move amidst the
positive coverage the stock was receiving.  To that date, three
separate analyst voted PHCM a Buy or Strong Buy.  Analyst Peter
Friedland at WR Hambrecht even commented about the company's
dominant position licensing QAP gateways to wireless carriers.
But nada, traders weren't taking the bait.  Even the Fed's
decision of no rate hike and two more analysts shouting "Strong
Buy" didn't prompt PHCM to rally with the other techs.  Instead
PHCM's share price edged lower and lower on respectable volume.
The near-term bottom is now at Friday's intraday low of
$64.25.  The closest DMA is at the five-day line, which is 4+
points higher at $68.41.  If the momentum-driven downtrend is
going to continue in the short-term, PHCM should make subsequent
moves off its current position.  Take a look at a three-month
chart and you'll notice the strong bottom $60 - expect
opposition at this level.  Keep stops tight to protect profits
and capital.

BUY PUT JUL-70*UGE-SN OI=353 at $9.75 SL=6.75
BUY PUT JUL-65 UGE-SM OI=225 at $7.00 SL=5.00
BUY PUT JUL-60 UGE-SL OI=402 at $4.13 SL=2.50

Average Daily Volume = 2.65 mln
/charts/charts.asp?symbol=PHCM


IMNX - Immunex Corporation $49.44 (-0.94 last week)

Founded in July of 1981, Immunex Corporation is a leading
biopharmaceutical company that applies immune system science to
protect human health.  Products under development include new
treatments for cancer, asthma, rheumatoid arthritis,
inflammatory, infectious and cardiovascular diseases.  The
Company's major product lines are Enbrel, Leukine, Novantrone and
Thioplex. Enbrel is a soluble tumor necrosis factor receptor used
to reduce inflammatory activity in patients with moderate to
severe rheumatoid arthritis.  Leukine is a yeast-derived
granulocyte-macrophage colony-stimulating factor that is used to
stimulate infection-fighting white blood cells.  Novantrone and
Thioplex are chemotherapy drugs that are used to treat pain in
cancer patients.

Once known as the Qualcomm of the biotechs, based on its meteoric
rise and overwhelming relative strength in 1999, the name is now
just as appropriate as it was then.  Like its wireless friend,
Immunex has seen better days (though it has fared somewhat better
than its CDMA counterpart). Since its climactic high of $83.56 in
early March, the stock has sold off sharply, finding a bottom in
late May at $24.19.  From there, the stock has moved up strongly
on the anticipated announcement of the completed map of the human
genome.  On Monday, the announcement from Celera Genomics and
scientists from the government-funded Human Genome Project
unveiled a rough draft of the genetic code for human life.  While
this may sound like a monumental achievement (which it is), there
is still much to be done.  It's been said that the equivalent to
this event is like discovering all the words in the dictionary.
Now the job is to put them all into order so that it reads like
"War and Peace."  A Herculean task indeed, and one that could
take a long time.  So the question now is, when and how long will
it take biotech companies to use this information to create new
drugs which will pass Phase III trials and become blockbuster
drugs.  As a result, it could be argued that despite this
announcement very little has changed.  With the excitement of
anticipated news gone, it could be another ride down for the
biotechs.  On Thursday, IMNX closed below the 5-dma and the
10-dma.  The break through the 10-dma was especially important
because this level has served as support for the stock all month
long.  On Friday, the stock found resistance at the 5-dma,
currently at $51.57, with the 10-dma just above it at $52.26.  A
continuing downtrend should see the 5-dma as a target for entry
points.  Look for $48 and $45 to be a support for the stock which
is also where it's 50-dma currently resides.  A break through that
area on strong volume will find the next support level at $40.
Looking above, there is resistance at $53.80 and $55.50, where
put positions would ideally be opened.

BUY PUT JUL-55*QUV-SK OI= 363 at $7.63 SL=5.25
BUY PUT JUL-50 QUV-SJ OI= 813 at $4.50 SL=2.75

Average Daily Volume = 6.13 mln
/charts/charts.asp?symbol=IMNX


DD - DuPont E.I. De Nemours & Co. $43.75 (-1.88 last week)

DuPont is the largest chemical company in the US.  Developer of
Lycra, Dacron, and Teflon.  DuPont has operations in about 65
countries.  Its eight business units make products including
coatings, nylon, specialty polymers, and pigments and chemicals.
Other units produce specialty fibers, herbicides, pesticides, and
biotechnology products such as food ingredients and seeds.

After Friday's wild trading it appears investors are easing back
into the Tech sector.  That spells trouble for the old names like
DD.  To prove investor's distaste for DD, the company's biotech
unit announced Friday that it had signed an agreement to develop
and market an oral formulation of heparin with Emisphere (EMIS).
DD's stock didn't budge, it sank $0.75.  The current U.S. economy
and stock market are a bit of a conundrum to investors.  Rising
interest rates are proving detrimental to company's like DD, as
we see old-line names warn of lower profits due to a slowing
economy and a rising cost of money.  Yet, many companies are
flourishing in the high-growth Tech sector, with investors' money
chasing stocks that are not affected by rising interest rates.
As money flows to tech stocks, it leaves the sectors that are
struggling.  That ebb and flow of capital has DD trading near a
4-year low.  DD not only faces macro issues, but it has company
specific problems also.  DD's last earnings report was in late
April, when the company told analysts that earnings would weaken
due to problems with operations.  The company tarnished its
reputation on Wall Street and has yet to restore its credibility.
Just last week, Warburg Dillon Reed reiterated its Hold rating on
DD, saying the company needs to prove itself.  The stock has been
on a downward slope since reporting last April, and shows few
signs of strength.  Look for entry at current levels, or wait for
DD to slip past its only support at $43.  On a intra-day basis,
consider looking for entry if DD bumps into resistance at its
descending 10-dma, currently at $45.50.

BUY PUT JUL-50*DD-SJ OI=3115 at $6.38 SL=4.25
BUY PUT JUL-45 DD-SI OI=4998 at $2.31 SL=1.25
BUY PUT JUL-40 DD-SH OI=1346 at $0.50 SL=0.00

Average Daily Volume = 3.08 mln
/charts/charts.asp?symbol=DD


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*****
LEAPS
*****

Beware the VIX as We Wait (and Hope) for the Summer Rally
By Mark Phillips
Contact Support

Buying LEAPS is, by definition, a Bullish posture in the
markets.  If you are buying LEAPS, you are doing so because you
think the markets are going to go up.  The timeframe is the
critical issue here.  Each trader has a different definition of
short-term and long-term.  To a day trader, 3 hours may be
long-term while 3 months is short term to a long-term LEAPS
investor.  As you are contemplating your open positions and
considering new positions, make sure that you match the
investments to your time horizon.  This weekend we dropped IBM
and CMGI; not because they fell out of bed, but because we don't
think they will deliver the kinds of returns over the next few
months that we expect from our LEAP plays.

Evidence of a slowing economy continues to trickle in, and with
the normal summer doldrums just around the corner, we need to be
very careful in opening new positions.  Recall that this market
is not floating all boats.  We have become accustomed to stocks
like YHOO having a strong earnings run, but we are running out
of time for this earnings cycle.  If you can see that old
standbys like YHOO are not necessarily a slamdunk, you can
understand why picking the right plays is so important.

The good old VIX is making us a little nervous lately as well.
As the markets meander in fairly tight trading ranges, the VIX
has been dropping.  It moved down all week, ending at 22.26, a
level many of you should recognize is very close to the bottom
of its historical range.  Recall that a VIX reading in the
19-21 range very often signals a near-term top in the broader
markets.

If the pattern of declining stock prices from August-October
remains intact, you will want to think very carefully about any
open LEAP positions (especially those expiring in 2001).  While
LEAPS are relatively immune to time decay, they will still be
affected.  You don't want to enter new positions and then watch
the premiums melt away for the next 3 months.

Now don't get me wrong.  I am not bearish and I am not
advocating selling all your open positions on Monday morning.
Just make sure you know what you expect to happen before
entering new plays and if it doesn't happen, consider getting
out.  Cash is always a safe place to be and at least for this
weekend, I am siding with Jim in saying "Don't buy too soon."


Current Plays

SYMBOL  SINCE     LEAPS         SYMBOL   PICKED   CURRENT  RETURN

EMC    11/07/99  JAN-2001 $ 40  EMB-AH   $ 7.69   $37.88   392.59%
                 JAN-2002 $ 45  WUE-AI   $ 9.50   $38.13   301.37%
IBM    11/07/99  JAN-2001 $100  IBM-AT   $13.63   $20.25    48.57%
                 JAN-2002 $110  WIB-AB   $16.50   $26.38    59.88%
CSCO   11/14/99  JAN-2001 $ 40  CYQ-AH   $ 9.56   $26.75   179.81%
                 JAN-2002 $ 45  WIV-AI   $11.00   $29.13   164.82%
NT     11/28/99  JAN-2001 $37.5 ZOO-AU   $11.13   $34.38   208.89%
                 JAN-2002 $37.5 WNT-AU   $15.13   $38.13   152.02%
TXN    12/12/99  JAN-2001 $ 55  TNZ-AK   $11.13   $20.63    85.35%
                 JAN-2002 $ 60  WGZ-AL   $14.25   $25.38    78.11%
SUNW   12/19/99  JAN-2001 $ 80  SUX-AP   $17.63   $22.88    29.78%
                 JAN-2002 $ 90  WJX-AR   $22.00   $29.38    33.55%
CY     01/16/00  JAN-2001 $ 40  ZSY-AH   $ 9.13   $11.50    25.96%
                 JAN-2002 $ 40  WSY-AH   $12.63   $17.75    40.54%
ERICY  01/30/00  JAN-2001 $16.3 RQC-AO   $ 4.94   $ 5.88    19.03%
                 JAN-2002 $16.3 WRY-AO   $ 6.75   $ 8.25    22.22%
NSM    02/27/00  JAN-2001 $ 70  NSM-AN   $18.50   $10.13   -45.24%
                 JAN-2002 $ 70  WUN-AN   $24.25   $23.13   - 4.62%
AOL    03/12/00  JAN-2001 $ 60  AOO-AL   $14.00   $ 6.13   -56.21%
                 JAN-2002 $ 65  WAN-AM   $18.63   $11.38   -38.92%
AXP    03/12/00  JAN-2001 $43.3 AXP-AP   $ 7.25   $13.63    88.00%
                 JAN-2002 $46.6 WXP-AQ   $ 9.33   $16.50    76.85%
WM     03/19/00  JAN-2001 $ 25  WM -AE   $ 5.00   $ 6.00    20.00%
                 JAN-2002 $ 30  WWI-AF   $ 5.38   $ 5.88     9.29%
AMD    04/16/00  JAN-2001 $ 70  AMD-AN   $17.50   $22.25    17.14%
                 JAN-2002 $ 70  WVV-AN   $26.00   $33.38    28.38%
CMGI   04/16/00  JAN-2001 $ 50  ZB -AJ   $21.50   $12.38   -42.42%
                 JAN-2002 $ 55  WCK-AK   $27.75   $19.25   -30.63%
JDSU   04/16/00  JAN-2001 $ 80  XJU-AP   $27.50   $50.75    84.55%
                 JAN-2002 $ 80  YJU-AP   $39.63   $66.13    66.87%
VSTR   04/16/00  JAN-2001 $ 90  UVT-AR   $23.88   $42.63    78.52%
                 JAN-2002 $ 90  WWP-AR   $35.00   $58.50    67.14%
YHOO   4/30/00   JAN-2001 $140  YMM-AH   $32.13   $22.00   -31.53%
                 JAN-2002 $140  WYZ-AH   $46.38   $39.63   -14.55%
MOT    5/14/00   JAN-2001 $33.3 MOT-AY   $ 6.58   $ 4.13   -37.23%
                 JAN-2002 $36.6 WMA-AZ   $ 9.54   $ 7.88   - 1.82%
NOK    5/21/00   JAN-2001 $ 50  NZY-AJ   $10.25   $10.38     1.27%
                 JAN-2002 $ 50  IWX-AJ   $17.25   $17.13   - 0.70%
HD     5/28/00   JAN-2001 $ 50  HD -AJ   $ 6.25   $ 7.50    20.00%
                 JAN-2002 $ 50  WHD-AJ   $11.38   $13.13    15.38%
XLNX   5/28/00   JAN-2001 $ 70  ZIZ-AN   $14.63   $22.13    51.27%
                 JAN-2002 $ 70  WXJ-AN   $23.38   $35.38    51.33%
NXTL   6/11/00   JAN-2001 $ 60  FZC-AL   $12.25   $13.75    12.24%
                 JAN-2002 $ 60  YFG-AL   $19.25   $21.50    11.69%
C      6/18/00   JAN-2001 $ 65  ZRV-AM   $ 7.63   $ 6.13   -19.66%
                 JAN-2002 $ 65  WRV-AM   $13.75   $12.50   - 9.09%


Spotlight Play

AOL - America Online $52.63

After the merger announcement with Time Warner (TWX), shares
of AOL headed lower in advance of the broad market weakness
that began in March.  Coming down several times to test support
at $48-50, it has been encouraging to see the refusal of
investors to part with their shares below this level.  This
lends credence to the idea that the merger will likely be good
long term for shareholders of both companies.  With solid
support near $50, current levels look like a good point to enter
new positions in advance of the completion of the merger.
Shareholders of both companies overwhelmingly approved the
merger, which is expected to close this fall.  Since the stock
has not had the wild swings of many other Internet stocks over
the past 2 months, the subdued trading has served to reduce the
stock's volatility, reducing the option premiums and making
this an ideal LEAP play.  The 2003 LEAPS are now available and
considering the long time horizon provided, very cheap.  Current
levels look like a good entry, as the stock is very close to
major support.  This one is unlikely to run away from us in the
next couple of weeks, so we have time to wait another dip to the
support so that we can profit as the markets realize how good
the merger will be for both AOL and TWX.

BUY CALL JAN-2001 $55.00 AOO-AK at $ 8.00
BUY LEAP JAN-2002 $55.00 WAN-AK at $14.50
BUY LEAP JAN-2003 $60.00 VAN-AL at $17.75


New Plays

VRSN - VeriSign $176.50

Internet security is vital to the growth of e-commerce, and
even the government is coming to realize that fact.  As digital
signatures and documents receive the same legal status as
handwritten signatures and documents, companies like VRSN that
secure the integrity of these documents will see their business
grow at a continued brisk rate.  After the stock's strong move
a month ago, normal consolidation brought it back to bounce at
the 30-dma (then at $153.81) last week.  Since then, VRSN has
headed higher and by midweek it was back above the 100-dma at
$169.  The LEAPS on VRSN are not cheap, but given the potential
growth in the Internet security arena, one could almost argue
that they are a bargain at current levels.  Near-term support
sits at $170-172, but it would not be unreasonable to wait for
a pullback to the 10-dma ($167) before jumping into the play.
If the move continues, breaking through resistance at $180, it
could be a quick trip to the magical $200 level.  Remember that
this is a volatile Internet issue and it is not uncommon for the
stock to see daily swings in excess of $15, meaning that
intraday target shooting may provide an even better entry point.

BUY CALL JAN-2001 $180.00 JSV-AP at $56.88
BUY LEAP JAN-2002 $190.00 YVS-AR at $66.25


AMGN - Amgen $70.25

Looking for a way to participate in the Biotech sector without
the volatility of daily $20 price fluctuations?  AMGN might be
just the ticket.  Although it won't have the rapid appreciation
of some of the companies involved in genomics research, it also
won't fall out of bed on a single negative news announcement.
The difference is that AMGN is profitable now, making the stock
price more dependent on revenue than hype.  The company has a
strong repertoire of drugs in production and development and of
the 23 analysts that follow AMGN, 21 rate the company either a
Buy or a Strong Buy.  After tagging the 200-dma (then at $50)
in mid-April, AMGN has been on a steady climb, posting higher
highs and higher lows.  The stock is finding support at $67,
with stronger support at $65.  Any weakness in the market or
Biotech sector in the week ahead could be just what the doctor
ordered to bring the price down to one of these support levels,
giving us an attractive entry point.

BUY CALL JAN-2001 $75.00 YAA-AO at $10.75
BUY LEAP JAN-2002 $75.00 WQY-AF at $20.75
BUY LEAP JAN-2002 $70.00 VAM-AN at $28.75


Drops

IBM $109.56 Unable to sustain any move higher, IBM seems to be
trying to climb the down escalator.  Each time the stock gets
up into the low $120's, the buyers get tired and the price
declines back to support between $100-105.  Concerns about the
slowing economy and declining profits along with the usual
pattern of sideways to down markets in the summer are taking
their toll and it looks unlikely that IBM will be able to move
sharply higher in the coming weeks or months.  Rather than wait
for our profits in the play to melt away, we will let it go
this weekend as we pursue other plays with more potential in
the near term.

CMGI $45.81 The original Internet incubator firm is suffering
along with the sector and can't seem to break out of the
continuing downtrend.  With all of the shorter moving averages
pointing down, and the Internet sector struggling to hold its
ground, the near-term prospects do not look promising.  Even
the anticipation of earnings were only good for a trip up to
the declining 50-dma 2 weeks ago, and the downtrend has resumed,
dragging the price back below long-term support at $48-50.
With the normal summer slowdown nearing and the next earnings
over 2 months away, we feel our money can be better put to use
in other plays.  Accordingly we will let CMGI go until it can
demonstrate its intention to behave like a winner.



***********
SPLIT PLAYS
***********

A Surge Of Splits Due This Month
By Ryan Nelson

With the earnings season upon us, I expect many companies to
announce splits along with earnings.  In fact, narrowing down
the candidates is tough work with so many to choose from.  Most
companies have already held shareholder meetings (typical in
the Spring time) and have newly authorized shares to be able
to enact splits right away.  It wouldn't surprise me at all to
see as many as 30 announcements from major companies.  I will
add them up when the month is over to see how accurate that
number is.  Just don't be surprised when we encounter a heavy
split announcement month.


Current Split Run Plays

None


Current Split Candidate Plays

RBAK
CIEN
GLW
BRCD
GSPN
TIBX
RSAS


Candidates That Are Not Current Plays

DNA
SDLI
SEBL
VRSN
PDLI
BRCM


Recent Announcements We Predicted

TXN (most recent announcement)
CHINA
CMVT
NT
VRTS
SEPR
YHOO
TMPW
HGSI
SNE
NSOL
DCLK

For our complete stock split calendar, click here...
http://members.OptionInvestor.com/splits/index.asp



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

The Option Investor Newsletter                    Sunday 7-02-2000
Sunday                                                      5 of 5

To view this email newsletter in HTML format with imbedded
charts and graphs, click here:
http://www.OptionInvestor.com/htmlemail/070200_5.html


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

Market Mechanics: Trading Curbs...
By Mark Wnetrzak

One of our readers requested an explanation of the "collars" and
"circuit breakers" that are used to limit volatility in the stock
market.  The New York Stock Exchange, the most well known trading
venue in the world, has a complex series of rules that can limit
trading, or close down the market, when the activity becomes too
volatile.  The goal of these restrictions is to manage the flow of
trading and establish price stability when a particular demand
(generally selling) reaches irregular levels or the potential for
arbitrage becomes excessive.  In simple terms, these limits and
restrictions are used to maintain a relative balance in the market
and prevent a widespread collapse of equity prices.

The necessity for market curbs comes from the basic law of supply
and demand.  The concept is fundamental; when more people want to
sell a stock than buy, the share value will drop.  When a great
number of sellers are present, the decline can be severe.  If the
majority of market participants try to exit positions at the same
time, the outcome can be catastrophic.  The main idea behind the
use of trading limits is to prevent the human emotions of fear and
despair from causing a market crash.  The mere existence of these
restrictions seems to assure public investors they will have the
opportunity to participate in the market in a fair and equitable
manner.  In reality, trading collars have little or no effect on
the majority of retail traders.

Another reason for trading collars is to limit index arbitrage at
times when it could have a negative impact on the overall market.
Index arbitrage is based on small differences between futures and
stock prices.  Using sophisticated programs, arbitrageurs exploit
these discrepancies by simultaneously purchasing lower-priced
(near-term) instruments and selling higher-priced (deferred) ones.
They finance these futures contract positions by borrowing at
favorable interest rates.  When the percentage difference between
the long position's purchase price and the short position's sale
price is greater than the financing rate, a profit is guaranteed
without assuming any risk.  Since index arbitrage is based on the
difference in price between a specific issue and its derivatives,
the activity can increase substantially when the market becomes
volatile.  This practice drives the market to further extremes,
exacerbating the original condition, as institutional investors
reap the profits of premium disparities.

The New York Stock Exchange implements limits on index arbitrage
(program trading involving a group of stocks with $1 million or
more in total value) when the market becomes extremely volatile.
The collars are initiated when the Dow Jones Industrial Average
declines (or advances) 200 points in a single session to prevent
institutional traders from provoking further losses (or gains).
The collars prevent index arbitrage for the remainder of the day,
unless the Dow moves back to within 100 points of the previous
session's close.  Additional curbs or "circuit breakers" are
substantially more rigid.  The exchange has the power to place a
temporary halt on trades or terminate market activity, including
the Nasdaq and other U.S. exchanges, to limit the effects of the
volatile activity.

The current NYSE circuit breaker is the lower of a 10%, or 1,050
point decline, in the DJIA.  If the Dow reaches the limit before
2 p.m. in a trading day, the markets will be closed for an hour.
When the breaker is triggered between 2 p.m. and 2:30 p.m., the
markets are stopped for a half-hour.  If the limit is exceeded
after 2:30 p.m., the markets continue without restriction.  There
are other, more severe (although seldom used) circuit breakers.
In the event of a either a 2,100 point or 20% decline, the markets
would halt for a minimum of one-hour and they would close for the
day if the event occurred after 2 p.m.  As strange as it may seem,
the circuit breakers have been used only once, in 1987, and they
were much more restrictive at the time.  The first trigger was a
350-point drop and the second trigger, that canceled trading, was
at 550 points.  Based on that experience, the previous limits were
revised, and to this day, they have yet to be exceeded.

Opinions vary as to whether trading curbs or limits are a benefit
or a disadvantage.  The negative aspect is they decrease liquidity
by restricting the free flow of trades.  The upside of course, is
they reduce the unwanted effects of program trading and prevent
the widespread failure of equity markets.  If nothing else, they
provide investors time to examine the situation and make decisions
based on sound reasoning instead of "heat of the moment" emotions.

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

CYTO    9.69  10.13   JUL   7.50  2.94  *$  0.75  12.1%
FSII   18.25  21.69   JUL  17.50  2.63  *$  1.88  10.5%
ARQL   13.88  19.38   JUL  12.50  2.44  *$  1.06  10.1%
TGEN   12.25  14.88   JUL  10.00  3.00  *$  0.75   8.8%
FHS    13.13  13.94   JUL  12.50  1.63  *$  1.00   7.6%
MED     9.44   8.00   JUL   7.50  2.69  *$  0.75   6.9%
LYNX   32.63  47.56   JUL  25.00  9.75  *$  2.12   6.7%
CYTO    7.97  10.13   JUL   5.00  3.38  *$  0.41   6.5%
RHAT   25.00  27.06   JUL  20.00  6.38  *$  1.38   6.4%
CEGE   25.56  28.00   JUL  20.00  6.88  *$  1.32   6.1%
BCGI   14.56  14.00   JUL  12.50  2.88  *$  0.82   6.1%
GENE   27.75  30.44   JUL  20.00  9.25  *$  1.50   5.9%
BCRX   27.00  28.69   JUL  22.50  5.63  *$  1.13   5.7%
CAIR   25.50  28.75   JUL  20.00  6.63  *$  1.13   5.2%
TGEN   12.25  14.88   JUL   7.50  5.25  *$  0.50   5.2%
IBC    14.94  14.00   JUL  12.50  3.25  *$  0.81   5.0%
IFCI   23.13  25.50   JUL  20.00  4.00  *$  0.87   4.9%
GLGC   38.75  35.69   JUL  30.00 10.00  *$  1.25   4.7%
ALSC   26.88  24.56   JUL  22.50  5.88  *$  1.50   4.4%
TSEM   30.69  32.63   JUL  25.00  6.50  *$  0.81   3.6%
PGO    19.00  17.06   JUL  17.50  2.25   $  0.31   1.6%
ZD     11.38   9.00   JUL  10.00  2.25   $ -0.13   0.0%

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

Comments:

Fsi International (FSII) just filled the gap and has resumed its
uptrend.  E-Med Soft.Com (MED) made a horrid move on Friday and
is threatening to break to a new low on heavy volume.  Interstate
Bakeries (IBC) also had a strong reversal on Friday?  Stand by
your exit points!  Alliance Semiconductor (ALSC) is testing its
50 dma and becoming oversold in the short-term.  Petroleum Geo
(PGO) is testing its 150 dma and is nearing the bottom of its
price channel.  Ziff-Davis (ZD) appears to be holding support.
The end of the quarter is difficult time to evaluate stocks as
fund managers adjust their portfolios for appearance with issues
they have no intention of holding for the long-term.


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

BWEB   22.88  JUL  17.50  UBW GW  5.88  61   17.00   21    4.3%
CCUR   13.13  JUL  12.50  URC GV  1.38  784  11.75   21    9.2%
CLTR   20.50  JUL  17.50  QCE GW  3.63  28   16.87   21    5.4%
LCCI   27.31  JUL  22.50  QXC GX  5.50  71   21.81   21    4.6%
LYNX   47.56  JUL  40.00  ULX GH  9.63  32   37.93   21    7.9%
NERX   18.88  JUL  15.00  XUO GC  4.38  75   14.50   21    5.0%
SCUR   18.81  JUL  17.50  UQU GW  2.19  1229 16.62   21    7.7%

Sequenced by Return
*****

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

CCUR   13.13  JUL  12.50  URC GV  1.38  784  11.75   21    9.2%
LYNX   47.56  JUL  40.00  ULX GH  9.63  32   37.93   21    7.9%
SCUR   18.81  JUL  17.50  UQU GW  2.19  1229 16.62   21    7.7%
CLTR   20.50  JUL  17.50  QCE GW  3.63  28   16.87   21    5.4%
NERX   18.88  JUL  15.00  XUO GC  4.38  75   14.50   21    5.0%
LCCI   27.31  JUL  22.50  QXC GX  5.50  71   21.81   21    4.6%
BWEB   22.88  JUL  17.50  UBW GW  5.88  61   17.00   21    4.3%

Company Descriptions

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

*****
BWEB - BackWeb Technologies  $22.88  *** Stage I Entry ***

BackWeb Technologies is a provider of Internet communication
infrastructure software and application-specific software that
enables companies to communicate time-sensitive information
to their customers, partners, and employees. Their products
provide a reliable solution for communicating large amounts of
data through a customer-controlled system of automated data
gathering dissemination.  BackWeb's push solutions are growing
increasingly popular among Global 2000 companies as an integral
component of their standard e-business communications infra-
structure for internal, business-to-business, and "customer
facing" communications.  Last quarter, BackWeb reported revenue
growth of 117% over prior year and 13% growth over last quarter.
Recent strategic alliances and new contracts bode well for the
next quarter.  BackWeb is nearing the top of its stage I base
and its 150 dma, which is why we favor a conservative entry
point that still offers a reasonable reward.

JUL 17.50 UBW GW LB=5.88 OI=61 CB=17.00 DE=21 MR=4.3%

Chart =
 /charts/charts.asp?symbol=BWEB
*****
CCUR - Concurrent Computer  $13.13  *** The Trend is Up! ***

Concurrent Computer is a provider of high-performance, real-time
computer systems and software for commercial and government
markets.  Their Real-Time Division focuses on market areas that
include data acquisition, industrial systems, and software
applications.  Concurrent is also a supplier of digital video
server systems to a wide range of industries.  Concurrent's
growth in Video-On-Demand revenue from its XSTREME Division, a
leading supplier in the emerging digital video server marketplace,
has been increasing for six quarters.  Concurrent has continued
to forge new alliances enhancing their product development and
resulting in several new contracts.  With the future becoming
fundamentally brighter, Concurrent has moved above its 150 dma
and out of a recent consolidation phase.

JUL 12.50 URC GV LB=1.38 OI=784 CB=11.75 DE=21 MR=9.2%

Chart =
 /charts/charts.asp?symbol=CCUR
*****
CLTR - Coulter Pharmaceutical  $20.50  *** Stage I ***

Coulter Pharmaceutical is engaged in the development of novel
drugs and therapies for the treatment  cancer and autoimmune
diseases.  They are currently developing a family of potential
therapeutics based upon two drug discovery programs: therapeutic
antibodies and targeted oncologics.  Coulter is also developing a
line of proprietary ultra potent compounds, which generally are
at least 1,000 times more potent than standard chemotherapy
drugs.  The company's most advanced product candidate, Bexxar,
consists of a monoclonal antibody conjugated with a radioisotope.
The company intends to seek initial approval of Bexxar for the
treatment of low-grade and transformed low-grade non-Hodgkin's
lymphoma ("NHL") in patients who have relapsed after, or are
refractory to, chemotherapy.  Coulter intends to seek expedited
Biologics License Application ("BLA") review and marketing
approval for Bexxar while simultaneously pursuing clinical trials
to expand the potential use of Bexxar to other indications.  The
biotech sector continues to entice investors and Coulter is no
exception.  The stock entered a stage I base after the company
reacquired the  rights to Bexxar(TM) outside of the U.S. from
SmithKline Beecham.  The current technicals suggest a positive
resolution to this consolidation phase and we prefer an entry
point at (previously) tested support.

JUL 17.50 QCE GW LB=3.63 OI=28 CB=16.87 DE=21 MR=5.4%

Chart =
 /charts/charts.asp?symbol=CLTR
*****
LCCI - LCC International  $27.31  *** Up, Up, and Away! ***

LCC International is one of the world's largest independent
providers of Radio Frequency engineering and program management
services to the wireless telecommunications industry.  They
provide solutions to clients for all phases of wireless system
development, from initial planning and deployment, to enhancing
system efficiencies and thereby competitiveness in areas where
there are multiple system operators.  In early May, LCC reported
record revenues for the first quarter of $30.1 million, a 71%
increase over the same period in 1999.  Several new contracts
and strategic alliances suggest LCC is reestablishing itself as
the premier provider of wireless design and deployment services.
Investors appear to be cheering this effort as they have driven
the stock off its May lows on increasing volume.  With the issue
moving so quickly, we favor a more reasonable entry point near
technical support.

JUL 22.50 QXC GX LB=5.50 OI=71 CB=21.81 DE=21 MR=4.6%

Chart =
 /charts/charts.asp?symbol=LCCI
*****
LYNX - Lynx Therapeutics  $47.56  *** Human Genome Mapping! ***

Lynx Therapeutics is engaged in the development and application
of novel technologies in the discovery of gene expression patterns
and genomic variations important to the pharmaceutical, biotech.,
and agricultural industries.  These technologies are based on
Megaclone, a 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 offer disease or trait association information.  Lynx
stands to benefit immediately from the mapping of the human genome
because its bead-based technology provides an easy, inexpensive way
to analyze DNA.  Lynx's technicals remain bullish as its stage II
rally continues and is supported by heavy volume.  A reasonable
cost basis on a potentially volatile issue with a favorable long
term outlook.

JUL 40.00 ULX GH LB=9.63 OI=32 CB=37.93 DE=21 MR=7.9%

Chart =
 /charts/charts.asp?symbol=LYNX
*****
NERX -  NeoRx  $18.88  *** More Drug Speculation ***

NeoRx develops innovative therapeutic biopharmaceuticals
primarily for the treatment of cardiovascular and inflammatory
diseases, as well as cancer.  Their scientists have developed
expertise and technologies that permit radiation, and other
toxins, to be targeted preferentially to tumor cells.  The
stock exploded in March when a peer-reviewed manuscript in the
Proceedings of the National Academy of Sciences, reported that
a single dose of NeoRx's proprietary Pretarget® technology cured
established human lung (10/10 animals), colon (10/10 animals)
and breast cancers (8/10 animals) implanted in mice.  NeoRx has
also started clinical trials for Skeletal Targeted Radiotherapy.
In May, Stephens Inc. and Adams Harkness initiated coverage with
a "buy" and a "strong buy" rating, respectively.  We simply favor
the technical stage I base.  Although this is a short-term play,
due diligence is required.

JUL 15.00 XUO GC LB=4.38 OI=75 CB=14.50 DE=21 MR=5.0%

Chart =
 /charts/charts.asp?symbol=NERX
*****
SCUR - Secure Computing  $18.81  *** Technical Breakout! ***

Secure Computing develops and sells computer software products
and services designed to provide secure extranets for business
organizations engaged in electronic business.  Their extranet
solutions combine impenetrable perimeter defense for business
networks with scalable, authenticated Web and application access
control so that an organization may conduct business safely with
growing numbers of customers, employees, partners and suppliers.
The company's main security products are Sidewinder, SafeWorld
and SmartFilter.  The upcoming earnings report is generating
speculation on this issue and based on consensus estimates, the
results should be favorable.  Institutions have also began to
participate in the stock with a number of block "buy" orders
occurring during last Friday's rally.  The technical momentum
continued this week with heavy volume supporting the rise in
price, and the issue is poised for further gains.

JUL 17.50 UQU GW LB=2.19 OI=1229 CB=16.62 DE=21 MR=7.7%

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


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

Naked Put Percentage List
By Ryan Nelson

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

AETH   205.00  200   HEX-ST  20.00   5125   39%    190
AKAM   118.25  110   RWU-SB   5.00   2956   17%    110
BRCD   183.47  175   GUF-SO   5.25   4587   11%    168
CHKP   212.25  210   YKE-SB  15.50   5306   29%    210
CIEN   166.69  160   UEE-SH   7.00   4167   17%    160
DNA    171.88  160   DNA-SL   5.38   4297   13%    160
EXTR   105.50  100   EUT-ST   6.00   2638   23%    102
GLW    264.00  260   GRJ-SZ   7.13   6600   11%    259
GSPN   122.06  115   GHY-SC   7.50   3052   25%    110
IDPH   117.25  110   IDK-SB   5.50   2931   19%    110
ITWO   104.25  100   QYJ-ST   7.00   2606   27%     95
JNPR   145.38  150   JUY-SJ  11.63   3635   32%    140
MERQ    96.75   90   RQB-SR   3.88   2419   16%     88
NEWP   107.38  105   NOQ-SA  10.63   2685   40%    100
PWER   113.94  105   OGU-SA   5.75   2849   20%    100
RBAK   178.00  160   BKK-SL   6.88   4450   15%    160
RFMD    87.50   85   RFZ-SQ   6.50   2188   30%     85
RMBS   103.00  100   BWR-ST   7.63   2575   30%    100
SDLI   285.19  280   QJV-SP  19.63   7130   28%    273
SEBL   163.63  160   SGW-SL   7.38   4091   18%    155
SEPR   120.63  120   ERU-SD   7.25   3016   24%    120
TIBX   107.09  100   PIW-ST   4.88   2677   18%     97
TLGD   132.50  130   TQK-SF  10.00   3313   30%    130
TQNT    95.69   95   TNN-SS   9.38   2392   39%     92
VRSN   176.31  170   QVZ-SN   9.25   4408   21%    170
VRTS   113.03  105   VUQ-SA   4.25   2826   15%    105
VRTX   105.38  100   VQR-ST   6.00   2635   23%    105



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

Market Mechanics: Bond Basics...
By Ray Cummins

In any discussion about conservative investing techniques, the
subject of bonds is sure to arise.  The majority of investors
regard bonds as long-term, income producing instruments or a
hedge in volatile markets.  In reality, some types of bonds can
be more productive than blue-chip stocks, depending on the
quality of the issue and the interest rate environment.

In simple terms, a bond is a pledge made to an investor by an
institution.  The issuing entity promises to make scheduled
interest payments on the money it borrows from the investor.
When the bond matures, the institution is charged with repaying
the principal (the face value of the bond) in full.  In theory,
an investor receives interest income during the term of the bond
and a total repayment of the initial loan amount when the bond
matures.

Bonds represent one of the safest ways to store excess capital
and there are only two forms of risk with an investment of this
type.  The primary risk in bond ownership is the timely payment
of principle.  The quality of the issuing institution determines
the potential for loss and in the corporate bond market, there
are several grades of bonds.  The best private bonds are rated
AAA and as you might expect, they offer the lowest interest rates
because repayment is virtually guaranteed.  The system of grading
begins with AAA and continues through AA, AA-, A, A-, BAA, BBB,
BB, B, B-, CCC, and finally down to D with small differences for
each category.  The lower grades provide higher interest payments
in conjunction with poor credit ratings.  The BBB category is
considered the lowest group of "investment grade" bonds and below
that range, defaults are more prevalent.  The Federal Government
is the most credible issuer and their bonds are generally known as
treasuries.  The categories of treasuries include: Bills, which
mature in one year or less; Notes, which mature after one year but
less than ten years; and Bonds, which mature after ten years.  The
U.S. treasury market is considered the benchmark for bond ratings.

The second form of risk with bonds is the loss of potential
associated with rising interest rates.  As the cost of borrowing
increases, prices for bonds go down.  This inverse effect is the
primary concern for all bond investors, especially those who buy
long-term instruments, because the negative consequences are most
pronounced in the 10- and 30-year instruments.  One way to avoid
interest rate risk is to purchase short-term bills (or notes) and
retain them until they mature.  The downside of course, is the
rates for these investments are relatively low.

A decline in interest rates will boost the value of bonds but this
can create a new set of problems.  A most unpleasant event occurs
when a bond trades at 100% (par) of its face value.  At that point,
the instrument becomes "callable," meaning the borrower can buy
it back early, reducing the amount of interest paid and the return
on investment.  In layman's terms, if a bond is trading above 100%
of the face value and is called, the owner will lose the current
market premium for the issue; the difference between par value and
the trading price of the bond.  Another dilemma arises when the
bond approaches maturity.  At the end of the term, the issuer pays
only the face value to redeem the instrument.  Obviously the value
of the bond will return to par (no excess premium) because traders
know the instrument will be repurchased in a short time.

As you can see, bonds and treasuries fulfill a useful role in the
financial markets but they are not necessarily the best way to
achieve portfolio growth.  There are however, a number of other
unique vehicles that offer worthwhile opportunities for investors
who need current income, yet want to invest in companies that will
benefit from the bullish market trends.  Although this category of
investing is not well known, it can offer favorable annual returns
along with potentially high rewards for those that choose to learn
the fundamentals of the strategy.  More on that subject next week.

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

FSII   18.25  21.69   JUL  15.00  0.75  *$  0.75  13.6%
IMG    18.31  18.94   JUL  15.00  0.56  *$  0.56  13.3%
EFCX   10.56  15.31   JUL   7.50  0.44  *$  0.44  12.5%
SCUR   15.88  18.81   JUL  12.50  0.38  *$  0.38  11.6%
MRVT   19.50  22.31   JUL  15.00  0.44  *$  0.44  11.0%
CAMP   29.00  45.75   JUL  22.50  0.81  *$  0.81  10.6%
TSEM   30.69  32.63   JUL  25.00  0.69  *$  0.69  10.3%
GENE   26.13  30.44   JUL  17.50  0.63  *$  0.63   9.3%
OAKT   20.94  21.56   JUL  17.50  0.44  *$  0.44   8.9%
NSS    20.13  20.94   JUL  15.00  0.44  *$  0.44   8.6%
FSII   16.00  21.69   JUL  12.50  0.50  *$  0.50   8.4%
PILT   15.31  14.88   JUL  10.00  0.38  *$  0.38   8.0%
CREAF  28.00  23.88   JUL  22.50  0.69  *$  0.69   7.8%
CAIR   25.50  28.75   JUL  17.50  0.44  *$  0.44   6.9%
OMKT   19.00  13.81   JUL  12.50  0.38  *$  0.38   6.6%
MPPP   19.19  13.56   JUL  10.00  0.38  *$  0.38   6.5%
SYMM   20.00  25.25   JUL  15.00  0.38  *$  0.38   6.3%
VITR   48.13  61.13   JUL  30.00  0.56  *$  0.56   6.0%
SIPX   27.25  27.69   JUL  20.00  0.31  *$  0.31   5.8%
CEGE   27.25  28.00   JUL  17.50  0.44  *$  0.44   5.4%
IMNX   44.69  49.44   JUL  30.00  0.56  *$  0.56   5.1%
CLEC   28.13  17.00   JUL  20.00  0.44   $ -2.56   0.0%

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

Comments:

Fsi International (FSII) just filled the gap and has resumed its
uptrend.  Ns Group (NSS) appears to have ended its consolidation
and resumed its uptrend.  Creative Technology (CREAF) continues
to act worrisome as it nears its 150 dma.  Open Market (OMKT) had
a nice move on Friday and it appears to have successfully tested
the May high.  Us Lec Corp (CLEC) did the unthinkable, pre-warning
that second-quarter core revenues would be lower than expected -
a day after it sold off heavily.  It looks suspicious when the
sell-off happens before the news.  If you are still in the play,
exiting the position on any rally (if not sooner) appears prudent.



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

CBST   49.25  JUL  35.00  UTU SG  0.50  31   34.50   21     7.0%
CLRS   38.88  JUL  40.00  RPU SF  0.69  136  39.31   21     5.8%
GENE   30.44  JUL  22.50  GUG SX  0.50  169  22.00   21    11.0%
LBRT   29.31  JUL  20.00  IEY SD  0.38  297  19.62   21     8.8%
SIRI   44.31  JUL  35.00  QXO SG  1.88  291  33.12   21    25.3%
TGEN   14.88  JUL  12.50  GNU SV  0.38  105  12.12   21    13.9%
TLCM   40.06  JUL  30.00  TMU SF  0.56  168  29.44   21     9.5%

Sequenced by Return
******

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

SIRI   44.31  JUL  35.00  QXO SG  1.88  291  33.12   21    25.3%
TGEN   14.88  JUL  12.50  GNU SV  0.38  105  12.12   21    13.9%
GENE   30.44  JUL  22.50  GUG SX  0.50  169  22.00   21    11.0%
TLCM   40.06  JUL  30.00  TMU SF  0.56  168  29.44   21     9.5%
LBRT   29.31  JUL  20.00  IEY SD  0.38  297  19.62   21     8.8%
CBST   49.25  JUL  35.00  UTU SG  0.50  31   34.50   21     7.0%
CLRS   38.88  JUL  40.00  RPU SF  0.69  136  39.31   21     5.8%


Company Descriptions

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

*****
CBST - Cubist Pharma  $49.25  *** On The Move! ***

Cubist Pharmaceuticals focuses on the discovery, development and
commercialization of new drugs to treat infections.  It's lead
product is Daptomycin, which is undergoing Phase III clinical
trials as a new antibiotic for skin and soft tissue infections.
Cubist has partnerships with Bristol-Myers Squibb and Merck to
accelerate the discovery and development of anti-infective agents.
In early June Cubist received a new "buy" recommendation based on
progress in its current clinical programs.  Investors took notice
and now the issue is trading at a new 3-month high.  Technically
the stock has further upside potential but we will attempt to
initiate a conservative position, below the recent consolidation
area.

JUL 35.00 UTU SG LB=0.50 OI=31 CB=34.50 DE=21 MR=7.0%

Chart =
 /charts/charts.asp?symbol=CBST
*****
CLRS - Clarus  $38.88  *** Own This One! ***

Clarus is a leader in business-to-business e-commerce, providing
Web-based procurement software and services to manage corporate
purchasing and create digital marketplaces.  Their ClarusDirect
architecture directly connects buyers and suppliers to maximize
cost savings and improve procurement efficiencies.  Their clients
include AirTouch, MasterCard International, MetLife, and others.
Clarus recently announced the first commercially available
application built on Microsoft's Commerce Server platform.
Clarus eMarket, enables net market makers to employ either a
brokered exchange or a virtual distributor model based upon
their individual business needs.  Rather than having to
develop the underlying B2B e-commerce technology platform for
each solution, Clarus designed a broad application to solve
the business issues that digital marketplaces require.  The
outlook for the company is positive and at this price level,
the shares appear very attractive.

JUL 40.00 RPU SF LB=0.69 OI=136 CB=39.31 DE=21 MR=5.8%

Chart =
 /charts/charts.asp?symbol=CLRS
*****
GENE - Genome Therapeutics  $30.44  *** Biotechs Are Hot! ***

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 also posses related proprietary
technologies, which they intend to use to identify and validate
gene targets.  Together with their partners (Schering-Plough,
bioMérieux 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 again and a technical breakout from a stage I base,
supported by heavy volume suggests this issue is ready to rally.
We prefer to speculate near technical support and our cost basis
offers a conservative entry into this volatile issue.

JUL 22.50 GUG SX LB=0.50 OI=169 CB=22.00 DE=21 MR=11.0%

Chart =
 /charts/charts.asp?symbol=GENE
*****
LBRT - Liberate Technologies  $29.31  *** Big Earnings! ***

Liberate Technologies provides a comprehensive software platform
which delivers Internet-based applications to a broad range of
information appliances.  Using Liberate's platform, network
operators offer interactive applications to subscribers.
Manufacturers of information appliances use Liberate software to
add Internet capability to their products.  The Liberate open
platform is used cooperatively to create a uniform applications
environment for developers.  Liberate topped analyst's estimates
in its fourth quarter report last week when it posted a loss of
$11 million, or $0.13 a share, on sales of $9.1 million.  The
consensus was a loss of $0.20 a share for the quarter.  The $9.1
million in sales marks a 78% improvement from a year-ago.  The
issue rallied $5 on the news and is certainly due for a brief
consolidation.  We will target shoot the position at $0.50 credit
to open the play.

JUL 20.00 IEY SD LB=0.38 OI=297 CB=19.62 DE=21 MR=8.8%

Chart =
 /charts/charts.asp?symbol=LBRT
*****
SIRI - Sirius Satellite  $44.31  *** Sector Rally! ***

Sirius Satellite Radio is building a subscription radio service
that will broadcast up to 100 channels of audio entertainment
directly from satellites to vehicles throughout the continental
United States.  Sirius Radio will offer a wide selection of music
formats and program types, with commercial-free digital quality
music and other programming.  Sirius holds one of only two
licenses for this field issued by the FCC, and expects to start
broadcasting at the end of the fourth quarter of 2000.  Public
investor sentiment has been positive in the radio group since
earlier this week when Robert Coen, director of forecasting for
Universal McCann, raised his future estimates for advertising
growth in the U.S.  His new domestic forecast is that ad demand
will climb almost 10% from year-ago levels and he also predicted
that advertising will outpace the nation's GDP by 6.5% in 2001.
On Saturday, the company announced the successful launch of the
first of three satellites; the other two satellites in Sirius'
constellation will be launched by November, and service will be
available by the end of the year.  A SPECULATIVE PLAY!

JUL 35.00 QXO SG LB=1.88 OI=291 CB=33.12 DE=21 MR=25.3%

Chart =
 /charts/charts.asp?symbol=SIRI
*****
TGEN - Targeted Genetics  $14.88  *** More Biotechs! ***

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.
TGEN is in a HOT sector and recently reported favorable Phase I
clinical trial results on tgAAV-CF, the company's gene therapy
product for the treatment of cystic fibrosis.  As for technicals,
TGEN is now comfortably above a recent consolidation area after
breaking out of a stage I base on heavy volume.  This position
offers another favorable Biotech to add to our current selection.

JUL 12.50 GNU SV LB=0.38 OI=105 CB=12.12 DE=21 MR=13.9%

Chart =
 /charts/charts.asp?symbol=TGEN
*****
TLCM - TelCom Semiconductor  $40.06  *** Chip Sector Upgrade! ***

TelCom Semiconductor designs, develops and markets a diversified
portfolio of high-performance analog and mixed-signal integrated
circuits for a wide variety of applications in the wireless
communications, networking, computer, and industrial markets.
Analog integrated circuits are used to measure variables that have
an infinite number of values and are required to interface between
digital electronics systems and a variety of other applications.
Telcom offers a diversified portfolio of analog and mixed-signal
integrated circuit products for a range of market applications.
The Semiconductor Industry Association Friday reported worldwide
chip sales surged to an all-time high last month.  May, 2000 chip
sales hit $15.8 billion, up from $11.3 billion a year earlier and
the strong results are in line with a recently released forecast
that predicts a 31% growth rate for the year.  That's great news
for companies in the sector and TLCM should benefit from the
announcement.

JUL 30.00 TMU SF LB=0.56 OI=168 CB=29.44 DE=21 MR=9.5%

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


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

A great way to end the week!

Friday, June 30

Stocks finished higher today as fund managers adjusted their
portfolios to include the market leaders for the quarter.  The
Dow closed 49 points higher at 10,447 and the Nasdaq rallied 88
points to end at 3966.  The S&P 500 Index was up 12 points at
1454.  Trading volume on the Nasdaq reached 1.81 billion shares,
with advances beating declines 2,230 to 1,820.  Activity on the
NYSE was heavy at 1.41 billion shares.  Broad market advances
beat declines 1,514 to 1,512.  In the bond market, the 30-year
Treasury fell 10/32, pushing its yield up to 5.89%.


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

Applied Graph.  AGTX    DEC5C/JUL5C    $0.00    debit   calendar
Knight Trading  NITE    OCT30C/OC30P  $10.12    debit   straddle
Noven Pharma    NOVN    AUG30C/AU30P   $5.25    debit   straddle
Natural Micro   NMSS    JUL80P/JU85P   $0.31    credit  bull-put

Our new debit straddles were the only positions that offered
favorable entry opportunities during the session.  The NITE
straddle traded as low as $10 and the NOVN debit was based on
prices observed near 10:00 a.m.  The NMSS credit spread did not
provide the target credit and with the early slump in AGTX, the
suggested (calendar spread) cost basis was unavailable.


Portfolio plays:

The market rallied today as institutional "window dressing"
boosted market-leading shares.  Technology and telecom stocks
were among the biggest gainers, helping the Nasdaq recover
from Thursday's sell-off.  Blue-chip industrial stocks were
slow to react, trading in negative territory for most of the
day, but the Dow enjoyed a healthy rebound in the final hour
of the session.  In the broad market, waste management, media
and personal care issues advanced, while jewelry, textiles and
trucking stocks consolidated.  The surprising bullish activity
was attributed to end of quarter additions to mutual funds.
Institutional buyers purchase popular stocks near the end of
each quarter in an attempt to make their portfolios appear
attractive before disclosing an updated list of holdings to
investors.  Beyond the large mutual fund expenditures, most
traders continued to exhibit concerns over the Fed's next move
with interest rates and future corporate earnings.

Our portfolio benefited from Friday's cash infusion and a number
of issues rallied during the session.  AM/FM (AFM) finished up
$3.25 at $68.62 amid strength in media issues.  Public sentiment
has been positive in the radio group since earlier this week,
when Robert Coen, director of forecasting for Universal McCann,
raised his future estimates for advertising growth in the U.S.
His new domestic forecast is that ad demand will climb almost
10% from year-ago levels and he also predicted that advertising
will outpace the nation's GDP by 6.5% in 2001.  The bullish move
boosted our troubled credit spread into positive territory and
we expect it will finish the expiration period profitable.  The
Major Drug sector performed well with Johnson & Johnson (JNJ)
closing above the $100 mark at a new, 6-month high.  Our recent
upside adjustment (JAN85C/AUG95C) may be prove to be fortuitous.
Sepracor (SEPR) rebounded almost $4 from a recent downgrade and
Medtronics (MDT) rallied on the heels of new coverage from USB
Piper Jaffray.  Analyst Thomas Gunderson placed a "buy" rating
on the stock based on forecasts of increasing revenues for the
medical devices group.  Both of the long-term positions on these
issues are trading near maximum profit.

Small-cap stocks performed well in Friday's session and the big
surprise continues to be Conseco (CNC).  The issue has rallied
over 50% in just 3 days and our bullish diagonal spread is at
maximum profit.  Integrated Silicon Solutions (ISSI) rebounded
$4 after an upgrade from Wit Soundview and the current spread;
OCT25C/JUL35C, offered another profitable exit opportunity.
Cytogen (CYTO) climbed above $10 amid strength in the biotech
group and that spread; AUG7C/JUL10C, is also at maximum profit.
General Magic (GMGC) has recovered from the recent sell-off and
appears poised to attempt a new 3-month high.  Our aggressive
calendar spread will need to be adjusted if the issue continues
through the recent area near $8.50.  On the downside, Paine
Webber (PWJ) broke below the upper levels of a previous trading
range top and it appears the issue is gearing for lower prices.
Our bullish debit spread at $40-$45 is profitable but we will
need to protect the position against further bearish movement.

Questions & comments on spreads/combos to Contact Support
******************************************************************
                         - NEW PLAYS -
******************************************************************
TMX - Telephono De Mexico  $57.19  *** Options Activity! ***

Telefonos de Mexico, S.A. de C.V. owns and operates the primary
telecommunications system in Mexico through which it provides
local, long-distance and cellular telephone services throughout
the country.  Telmex also provides other telecommunications and
telecommunications-related services such as directory services,
data transmission, Internet access, paging service and basic
interconnection services to other carriers.  Telmex's telephone
network includes installed telephones and switchboards, a network
of access lines connecting customers to exchanges, trunk lines
connecting exchanges, long-distance transmission equipment and
cellular base stations.

Shares of Mexican stocks were higher this week ahead of the
country's presidential elections.  Some 59 million registered
Mexican voters will select a president and elect representatives
to both houses of Congress.  Voters in two states will also pick
governors, while residents of Mexico City's Federal District will
choose a new mayor.  The activity produced a rally in Telmex and
implied volatility in options of the Mexican telephone giant rose
as U.S. traders joined in the speculation.  One analyst said that
whatever the outcome of the vote, the results will be good.  With
the recent bullish technicals, we agree with that assessment and
this play offers a conservative manner in which to participate
in the future movement of the issue.


PLAY (conservative - bullish/diagonal spread):

BUY  CALL  AUG-45  TMX-HI  OI=617   A=$13.25
SELL CALL  JUL-55  TMX-GK  OI=8859  B=$4.25
INITIAL NET DEBIT TARGET=$8.75-$8.88  INITIAL TARGET ROI(max)=14%


This position is based on recent increased activity in the stock
and underlying options.  With the extreme disparities in option
pricing, the play offers favorable risk/reward potential however,
it must be evaluated for portfolio suitability and reviewed with
regard to your strategic approach and trading style.


Chart =
/charts/charts.asp?symbol=TMX
******************************************************************
PLT - Plantronics  $115.50  *** Split Rally! ***

Plantronics is a leading designer, manufacturer and marketer of
lightweight communications headsets and headset accessories and
services.  In addition, Plantronics manufactures and markets
specialty telephone products; amplified telephone handsets and
telephones for hearing-impaired users and unique noise-canceling
handsets for use in high-noise environments.  Their headsets,
which can be worn over the head, in the ear or on either ear,
are recognized in the industry for their safety, quality and
reliability.  The company's headset products are used worldwide
by call centers, telemarketing personnel, reservation agents,
telephone operators and the nation's air traffic controllers,
whose occupations involve the constant use of a telephone or
communications console.

The recent Plantronics rally began early last week and on
Wednesday, the issue jumped $10 in anticipation of a big
announcement.  The news came in the form of a stock split and
investors couldn't be more excited.  The company said its board
of directors has approved a 3-for-1 split of their common stock,
payable August 8 to shareholders of record on July 18.  The
issue followed the news with another $10 rally on Friday and now
it appears there is no turning back.  The bullish technicals and
a favorable fundamental outlook are excellent reasons for the
stock to continue higher.  Our position is conservative with a
reasonable margin for downside consolidation.


PLAY (conservative - bullish/credit spread):

BUY  PUT  JUL-90  PLT-SR  OI=9   A=$0.62
SELL PUT  JUL-95  PLT-SS  OI=30  B=$1.12
INITIAL NET CREDIT TARGET=$0.62  ROI(max)=14% B/E=$94.38

Chart =
/charts/charts.asp?symbol=PLT
******************************************************************
SCUR - Secure Computing  $18.80  *** Earnings Rally! ***

Secure Computing develops and sells computer software products
and services designed to provide secure extranets for businesses
an organizations engaged in electronic commerce.  The company's
secure extranet solutions combine impenetrable perimeter defense
for business networks with scalable, authenticated Internet and
application access control so that an organization may conduct
business safely with growing numbers of customers, employees,
partners and suppliers.  Secure's primary products are Sidewinder,
SafeWorld and SmartFilter.

We have been tracking this position for the covered-calls section
and this week we noticed a favorable premium disparity in the
August call options.  The reason for the rally is obviously the
upcoming earnings report and based on consensus estimates, the
results should be favorable.  Institutions have also began to
participate in the bullish trend with a number of block "buy"
orders in recent sessions.  The upward momentum has continued
this week with heavy volume supporting the rise in price, and the
issue is poised for further gains.  We simply favor the positive
technical outlook and this conservative position offers a way to
participate in the current rally with relatively low risk.


PLAY (conservative - bullish/debit spread):

BUY  CALL  AUG-15.00  UQU-HC  OI=10  A=$4.75
SELL CALL  AUG-20.00  UQU-HD  OI=5   B=$1.88
INITIAL NET DEBIT TARGET=$2.75  ROI(max)=81% B/E=$17.75

Chart =
/charts/charts.asp?symbol=SCUR
******************************************************************
     - TECHNICALS ONLY -

This play is based on the current price or trading range of
the underlying issue and the recent technical history or trend.
The probability of profit from this position is higher than
other plays in the same strategy based on disparities in option
pricing.  Current news and market sentiment will have an effect
on the issue.  Please review the play thoroughly and make your
own decision about the future outcome of the position.
******************************************************************
IBM - Int. Business Machines  $109.56  *** Rangebound? ***

International Business Machines uses advanced information
technology to provide customer solutions.  IBM operates mainly
in a single industry using several segments that create value
by offering a variety of technology solutions that include,
either singularly or in some combination, systems, products,
services, software and financing.  Organizationally, their
major operations comprise three hardware product segments,
Technology, Personal Systems and Server; a Global Services
segment; a Software segment; a Global Financing segment and an
Enterprise Investment segment.

Big blue was in the news this week after reporting it has built
the world's fastest supercomputer.  Labeled the ASCI White, the
$110 million computer is to be used by scientists at Lawrence
Livermore National Laboratories to simulate nuclear weapon
detonations, the first step in the elimination of U.S. tests of
the weapon of mass destruction.  The ASCI White is capable of
over 10 trillion operations a second.  That's almost 30,000 times
more powerful than a desktop PC and 1,000 times quicker than the
IBM computer that defeated world chess champion Garry Kasparov.
Using a hand calculator to do the math that ASCI White can do in
one second would take a human 10 million years.  When assembled,
the computer will take up a space the size of two basketball
courts and the electricity needed to run it could power more than
10,000 homes.

Obviously that's not the reason we are offering this position
but it is an interesting technological development.  This play
is based simply on the recent technical pattern of the issue and
favorable option premiums.  IBM's earnings and conference call
are expected near the middle of July but the company's outlook
and future revenue prospects are fairly well known.  Without any
major changes in the broad market outlook, IBM should continue to
trade in a relatively small range.


PLAY (conservative - neutral/credit spread strangle):

PLAY (Bearish):
BUY  CALL  JUL-125  IBM-GE  OI=15326  A=$0.50
SELL CALL  JUL-120  IBM-GD  OI=18244  B=$1.06
NET CREDIT TARGET=$0.62-$0.68 ROI=14%

PLAY (Bullish):
BUY  PUT   JUL-95   IBM-SS  OI=5929  A=$0.56
SELL PUT   JUL-100  IBM-ST  OI=9147  B=$1.06
NET CREDIT TARGET=$0.56-$0.62 ROI=12%

COMBINED ROI=26% UPSIDE B/E=$121.25 DOWNSIDE B/E=$98.75

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=IBM
******************************************************************
                   - 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  $790.25     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.

PLAY (very conservative - neutral/credit spread strangle):

PLAY (Bearish):
BUY  CALL  JUL-840  OEX-GH  OI=3037  A=$1.00
SELL CALL  JUL-835  OEX-GG  OI=1406  B=$1.25
NET CREDIT TARGET=$0.31 ROI=7%

PLAY (Bullish):
BUY  PUT   JUL-730  OEZ-SF  OI=1714  A=$1.56
SELL PUT   JUL-735  OEZ-SG  OI=1859  B=$1.88
NET CREDIT TARGET=$0.38 ROI=8%

COMBINED ROI=15% UPSIDE B/E=$835.68 DOWNSIDE B/E=$734.31

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


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*****************************
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Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

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