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Daily Newsletter, Wednesday, 11/01/2000

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The Option Investor Newsletter                Wednesday 11-01-2000
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MARKET WRAP  (view in courier font for table alignment)
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        11-01-2000        High      Low     Volume Advance/Decline
DJIA    10899.50 - 71.60 10993.50 10838.00 1.20 bln   1411/1466
NASDAQ   3333.39 - 36.24  3396.72  3289.46 2.02 bln   1829/2115
S&P 100   748.39 -  2.54   753.46   741.91   totals   3240/3581
S&P 500  1421.22 -  8.18  1429.60  1410.45           47.5%/52.5%
RUS 2000  495.18 -  2.50   497.68   493.20
DJ TRANS 2752.77 +  8.15  2787.73  2727.22
VIX        26.56 +  0.57    27.09    25.89
Put/Call Ratio      0.50
******************************************************************

Profit Taking Today Normal and Expected

With all things considered, today wasn't that bad at all.  In fact,
it was another encouraging day for both the major indices.  After
such huge gains on Monday, profit taking was bound to happen.
Considering today's minimal losses in the INDU versus the previous
four days' gains, its chart looks technically sound.  Over at the
NASDAQ, bad news out of the Telecom and the Semi sector was
potentially disastrous but the bleeding was minimal and contained.
Today's action, although red, is most encouraging.

The tech index has been the source of pain for most traders and
investors, myself included.  With the INDU holding its own lately,
the concerns are on the NASDAQ's technical health.  Is it a bottom?
Is it the bottom?  Is there a difference?  Who knows, but one thing
is apparent:  today's 36 points of profit taking on lower volume is
just another step in the bottoming process, and honestly it is
starting to feel like the real deal.  For the NASDAQ to shake off
a major telecom player's profit warning and Semi downgrades, it
makes even a skeptic like myself feel more comfortable with its
prospects.  My thinking after yesterday's 5.5% rally was that the
NASDAQ needs to show that it can take the heat of profit takers by
maintaining 3300 and not giving up the ground that it gained.  And
in doing so on slightly lighter volume, it gives much more merit
to yesterday's rally.



In the chart above, you can see that bottoming process continues
on.  It is likely that the NASDAQ remains somewhat range bound
during this process as it builds to break the triple top near
3520.  This breakout would effectively take the NASDAQ to a new
range.  The end all be all pivot point of this recent trendline
is 3081.  A NASDAQ recovery, which is already underway, is hinged
up on this October 26th low, a relatively higher low from the
October 18th low at 3026.  The next level that the NASDAQ will
encounter resistance is 3400, as sellers stepped in at 3396 today.

Yet, this is just the technical aspect of the NASDAQ's recovery.
To strengthen these technical developments is the fact that the
NASDAQ was able to contain and digest the two following pieces of
bad news:  WCOM's profit warning and ALTR's lowered revenue
guidance.  WCOM came out today and warned investors that their 4th
quarter earnings would be in the range of 34 to 37 cents versus
previous estimates of $0.49.  They cited intense pricing pressure,
(sound familiar? AT&T), and also an unfavorable exchange rate, in
secret analyst code:  the Euro.  But somewhat surprisingly, WCOM
also unveiled a restructuring plan, a la AT&T, in which it would
split into two publicly traded tracking stocks, WCOM and MCIT.
The latter would reflect the MCI arm of the behemoth.  By further
separating the two, it is evident that the MCI acquisition of 1998
hasn't been integrated like it was probably envisioned.  WCOM lost
20% today, falling to $19 as the Telecom sector continues to slide
into the abyss.

The second piece of bad news that the NASDAQ shook off was the
profit warning of ALTR.  With the Semi sector plagued with
earnings and revenue slowdowns recently, it isn't extremely
surprising that ALTR sees 4th quarter sequential revenue growth
at the low end of its previous guidance.  As a result, WR
Hambrecht & Co. lowered the stock to a Neutral from a Strong
Buy on the grounds that it sees a potential inventory correction
for ALTR taking place in the March 2001 quarter.  Merrill Lynch
decreased its 2000 EPS estimates as they feel ALTR is losing
market share to XLNX.  The only brokerage firm to defend ALTR
was Bear Stearns.  The SOX.X index lost almost 4% but it closely
mirrors the NASDAQ and looks to be processing a bottom as well.
With the worst of the bad news already priced into the market,
it is that much more likely that downside is limited in the Semi
sector.  ALTR fell 20%, or $8.38 to $32.56.  The loss for XLNX
was less damaging at -7% to $67.44.

In the rocky Fiber Optic sector, NT again played the spoiler less
than a week after it was hammered for revenue concerns.  Today,
the company north of the border said that although it will match
expectations in the 4th quarter, its EPS for the 1st quarter 2001
will fall short by a penny.  NT was only down $1.50, but that
represents over 3%, closing at $44.  The company has seen its
share price drop 30% in the last week.  Fiber Optic stocks, which
have been some of the last to fetch sky-high valuations, like
JDSU(-2.94), SDLI(-12.75), GLW(-2.88), have all felt NT's pain.
But once again, the NASDAQ was able to localize the damage and
hang onto the majority of yesterday's gains.

For the INDU, it has remained technically sound and the V bottom
since dipping below 10000 is firmly in place.  It has been quite
impressive.  Although its four consecutive days of rallying was
broken today, the profit taking was very minimal and expected.
The INDU was down 71 points, not even one percent!  Consider this:
those four days to the upside accounted for 645 points, over 6%!
It really looks great.   You don't hear anyone questioning that
bottom now, do you?  With the previous downtrend on broken, the
INDU is technically poised to continue higher into the end of the
year.  The 11000 area will be tough resistance but if the INDU
backfills and consolidates these four day gains, it's new trend
will be that much stronger.



Looking forward, we can be encouraged by the past two days of
trading for both indices.  As for the NASDAQ, today was the most
convincing day that we are strengthening this base at 3000.
Instead of simple profit taking, the NASDAQ very well could have
fallen hard and fast today, wiping out yesterday's 178 point gain.
Especially given the slew of bad news that the tech index had to
digest today.  On the brighter side, after the bell, a senior
executive at CSCO said that he sees no decrease in demand of
Internet products by its Latin American customers.  CSCO was up
slightly in after hours, and this may be a positive precursor to
their earnings due out on Monday, November 6th.  There's no doubt
that this will set the tone for year-end trading.  Tomorrow we
have Initial Jobless Claims(expected 305K) and Productivity
(expected 3.5%).  Ralph Acampora of Prudential Securities said
today he believes that the INDU has a rally coming into year-end
and that the NASDAQ will likely remain rangebound.  He also stated
some interesting facts about the markets and elections.  I will
leave you with them as we quickly approach Election Day.  In 23 of
the last 33 elections, stocks rallied about 9% prior to the vote,
and afterwards, they typically have a honeymoon rally of up to 20%.
Take it for what it's worth but things are beginning to feel
better everyday as the markets continue their turnarounds.
Good luck.

Matt Russ
Editor

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

If You Survived This Year, You Deserve Some Credit
By Mary Redmond

If you survived this year, congratulate yourself.  It has not been
easy.  In fact, we had the worst market in many years.  However,
it is very reasonable to predict that next year will be better.
History has shown that the worst environment for the stock market
is one of rising interest rates.  In fact, during each rate hike
cycle of the last twenty years, the market has been flat to down.
All interest rates rose this year except the 30 year bond yield,
which was kept down by the Treasury's buy back program.

In addition, there is not always a direct correlation between
the earnings growth of the S&P 500 companies and overall stock
market performance.  In fact, over the last 50 years, the S&P 500
has rallied on average in double digits when we had earnings
growth rates of under 5% or less.

For example, in 1991, the earnings growth rate of the stocks
of the S&P 500 declined over 8%, and the market rallied over
19%.  1996, 1997, and 1998 were years in which the S&P 500 had
single digit earnings growth and double digit market growth.

No one knows why this is true.  It may be correlated to low or
decreasing interest rates, which can stimulate economic expansion,
and low inflation.  High inflation decreases the value of a
dollar, since each dollar gives less purchasing power.  The stock
market usually rallies or declines on the expectation of
future earnings growth rather than present earnings growth.
If XYZ stock reported that their earnings increased 5% last
quarter, but would probably increase 10% next quarter the
stock would most likely take off.  If the opposite happened,
it would probably tank.

We also need to consider that the Dow was 4000 in 1995.  It has
increased 150% since then, and it is possible that the index just
needed a long period of consolidation before moving higher.

Over the past several years, there has been a correlation between
the market performance and the cash flows to equity funds minus
initial public offerings.

For example, in 1994, the cash flows to funds were approximately
equal to the amount of money raised in IPOs, and the markets
stayed flat.  In 1995, the amount of money raised in IPOs
equaled about 75% of the cash which was deposited into equity
funds, and the market rallied over 35%.  In 1996, 1997, and 1998
the amount of cash which was deposited to equity funds exceeded
the dollar amount of money raised in IPOs by between 30 to 50%
each year, and the markets experienced double digit gains.
However, from June of 1999 to June of 2000, the amount of money
raised in IPOs dwarfed the amount of money which went into
equity funds.

Last week AMG Data reported that equity funds took in over $6
billion, and the Investment Company Institute reported that
money market funds experienced a net outflow of over $10 bln.
In addition, the IPO schedule has been light, and will probably
continue to stay light for the foreseeable future.  Profitable
companies are able to raise money, but technology companies
with no earnings are in the dog house.  It is difficult to
estimate the impact the tight corporate finance markets have
had on the GDP, but it seems unlikely the situation will change
in the immediate future.

Despite the fact that we have not been in a bull market for over
a year, we have had a plethora of trading opportunities.
Intra day volatility is higher than it ever has been, and day
traders have had an appetizing menu of stocks which moved up and
down in double digits almost every day.

It is important to fine tune your trading skills for better
periods.  One of the best ways to do this is determine the best
time frame for each trade.  Before you enter a trade, consider
if you want to exit the trade in a few minutes, a few hours,
or several months.  We are fortunate enough to have many highly
accurate technical indicators as well as liquid short term
options, and LEAPs with time frames as long as three years.

For example, the week before last I bought Jan 03 GE 50 LEAPs
when GE dropped below the 200 DMA for the first time in years.
This trade has been profitable.




However, I have held onto the LEAPs.  The time decay is almost
negligible for the next couple of months.  In addition, GE has
shown such a consistent pattern for many years that it is
realistic to think it can continue along the same trend line for
the next year.

In contrast, I have found Ciena to be an excellent day trading
stock with liquid short term options which have small spreads.
This stock also responds well to the stochastic indicator, as
well as the MACD indicator.  I have found it is best for me to
use 10-3 settings on the stochastic and a 5 minute time chart
for tight analysis.  Ciena has presented many day trading
opportunities for 10 - 20% profit in less than an hour.  If you
day trade, you avoid the risk of some analyst downgrading a
stock and destroying the entire sector, or some company reporting
earnings one tenth of one percent lower than expected and
tanking the entire market.




It is entirely possible that daylight savings affects the market.
This year, daylight savings occurred on April 2.  The Nasdaq was
over 4200, and dropped to 3300 by April 15.  The Dow was 11,221
on March 31, and dropped to 10,305 by April 15.  The S&P 500
was 1505 on April 3, and dropped to 1356 on April 15.

This spring may have been difficult because we were in the midst
of a cycle of rate hikes, but the pattern of rallying from
November through April has held for 50 years.   People feel
uncomfortable and anxious when their body rhythms are thrown out
of whack, and this can show up in the market's nervousness.


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

CMVT - Comverse Technology $117.13 +5.50 (+7.44 this week)

Comverse Technology Inc. is the world leader in multimedia
telecommunications applications. Founded in 1984 and
publicly-traded since 1986, Comverse Technology Inc. is based in
Woodbury, Long Island, New York and is a NASDAQ-100 Index
company.  Through its Comverse Network Systems division, the
market leader, the Company markets its Access NP and TRILOGUE
Infinity Enhanced Services Platforms, which enable wireless,
wireline, and internet companies to offer, to their residential
and business customers, a growing range of revenue-generating
enhanced services.

Most Recent Write-Up

Pundits are still debating about whether or not the NASDAQ
has found its bottom.  Investors in CMVT are already wondering
when the stock will take out its all-time highs.  Having found
its bottom in mid-October at the $85 level and successfully
testing its 200-dma (now at $90), the stock has since moved
higher.  With today's close, CMVT is one of the few Tech stocks
to end the dreaded month of October in the positive.  One of the
factors contributing to CMVT's performance is the appreciation of
its holdings in wireless networking software maker Ulticom Inc.
(ULCM).  Since going public in April at $20 a share, ULCM has
gone up over 150%.  As a majority shareholder of ULCM, this is
good news indeed for CMVT.  Most recently, CMVT has been in a
trading range, between $100 and $115.  Connecting the lows since
mid-October however, reveals that the stock has been making
higher lows, and having conquered resistance at $110, appears
poised to take out even stronger resistance at $115.  A break
above $115 will set CMVT up for its next hurdle, at $120.  From
there, the stock would be poised to challenge its all-time highs.
For aggressive traders, an ideal entry point can be found on a
bounce off $107, where the 5 and 10-dmas are currently converged.
Support can also be found in increments of $5 at $110 and $105.
In managing this play, consider using a stop around the $105
level.  A break below this point would end CMVT's string of
higher lows and signal a possible break of its current up-trend.
For conservative traders who want to enter on strength, a break
above resistance at $115, back by high volume would be the ideal
entry point.

Comments

On a profit taking day for the NASDAQ, CMVT bucked the trend and
added almost 5% to its price.  Volume was stronger than the
previous three days to back up the move.  There certainly is
momentum in this play.  Big buyers stepped in about 10:30am EDT
this morning bidding up CMVT.  To play this tomorrow, first, be
watchful of profit takers.  The NASDAQ feels positive, so look
for buyers to support CMVT at $115.  Bounces from there would be
nice entries.  Below, look at $114.  If profit takers reign
tomorrow, the 10-dma has provided support at $109.35, but we
wouldn't expect such dramatic selling.  Resistance lies at $119.

BUY CALL NOV-110*CQZ-KB OI=1076 at $12.38 SL=10.00
BUY CALL NOV-115 CQZ-KC OI= 994 at $ 9.38 SL= 7.00
BUY CALL NOV-120 CQZ-KD OI= 436 at $ 7.00 SL= 5.25
BUY CALL DEC-110 CQZ-LB OI=  23 at $17.50 SL=13.50
BUY CALL DEC-115 CQZ-LC OI=  82 at $14.88 SL=11.75

SELL PUT NOV-100 CQZ-WT OI=1249 at $ 1.75 SL= 3.50
(See risks of selling puts in play legend)

Picked on Oct 31st at   $111.75    P/E = 90
Change since picked       +5.50    52-week high=$123.88
Analysts Ratings     12-4-0-0-0    52-week low =$ 54.56
Last earnings 08/00   est= 0.34    actual= 0.36
Next earnings 11-28   est= 0.36    versus= 0.28
Average Daily Volume = 2.43 mln



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

Profit-taking and an earnings warning make for a jittery market...

The stock market retreated today, as investors took profits after
a four-day rally in blue-chip issues.  The industrial group fell
back on selling in financial stocks, with brokerage shares leading
the way after Goldman Sachs cut its profit estimates for a number
of companies in the sector.  In technology issues, an unexpected
profit warning from WorldCom (WCOM) battered the telecom industry
and a slew of bearish analyst comments hammered the semiconductor
group.  Altera (ALTR) was the big loser, falling $8 to $32.69 on
news that fourth-quarter revenue growth will be at the low end of
previous estimates.  Amid the turmoil, Morgan Stanley Dean Witter
downgraded its ratings on almost every major company in the chip
equipment sector including, Applied Materials (AMAT), Lam Research
(LRCX), Advanced Energy (AEIS) and KLA-Tencor (KLAC).  Adding to
the fray, J.P. Morgan lowered its opinion of the semiconductor
industry overall.  The beleaguered networking group ended mixed
after Nortel Networks (NT), a recent catalyst for selling, said
it'll match Wall Street's earnings-per-share expectations in the
fourth quarter but will miss first-quarter estimates by a penny.
The only upside activity in technology shares came in Internet
issues as bellwether stocks Yahoo! (YHOO), CMG Inc. (CMGI) and
EBay (EBAY), enjoyed excellent gains.  In the broader market,
biotechnology and utility shares edged higher, and oil service
issues rallied in the wake of an American Petroleum Institute
report that showed crude inventories fell more than expected in
the last week of October.


Summary of Previous Picks:

Covered Calls: (Margin would double the listed Monthly Return)

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

None - Waiting for favorable premiums...

Naked Puts:

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

PCYC    NOV    45    43.62  55.38    $1.38  14.2%
APWR    NOV    40    38.56  46.88    $1.44  10.8%
AVCT    NOV    60    58.50  69.63    $1.50   9.6%
DCTM    NOV    50    48.44  84.25    $1.56   9.0%
VRTX    NOV    70    68.81  94.81    $1.19   7.7%
HAND    NOV    50    48.75  71.81    $1.25   6.5%
KREM    NOV    65    64.06 102.56    $0.94   6.4%
VRTS    NOV   110   108.13 143.13    $1.88   5.9%
HGSI    NOV    70    68.94  96.00    $1.06   5.1%

Sell Straddles:

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

EXAR    NOV    42.5  40.50  44.00    $2.00  15.4% Adj 2-1 Split
EXAR    NOV    63    65.19  44.00    $2.69  20.5% Adj 2-1 Split

Naked Calls:

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

NEWP    NOV   190   191.69 106.06    $1.69   8.9%
BRCM    NOV   280   282.19 215.31    $2.19   6.3%
JNPR    NOV   280   281.56 183.38    $1.56   5.1%


New Candidates:

This following group of plays is simply a list of candidates to
supplement your search for profitable trading positions.  As
with any investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
are suitable for your skill level, risk-reward tolerance and
portfolio outlook.  In addition, we recommend that you avoid any
strategy or technique in which you are not completely comfortable
with the potential loss, the necessary adjustments and the common
entry-exit strategies.  (We monitor the positions marked with ***).

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

BULLISH PLAYS - Covered Calls & Naked Puts

***************
ELNT - Elantec Semiconductor  $105.25  *** Sector Leader! ***

Elantec Semiconductor designs, manufactures and markets high
performance analog integrated circuits primarily for the video,
optical storage, integrated DC:DC, and xDSL markets.  The offer
around 150 items, including amplifiers, drivers, faders,
transceivers and multiplexers, most of which are available in
multiple packaging configurations.  Elantec targets high growth
commercial markets in which advances in digital technology are
driving increasing demand for high speed, high precision and low
power consumption analog circuits.

Elantec is an industry leader in the design of high performance
analog integrated circuits and today they debuted a number of new
products for video signal processing.  These unique high-speed
amplifiers complete the company's new current feedback families.
With high bandwidths and slew rates, modest power consumption and
competitive prices, the products are ideal for next-generation
video designs as well as other high-bandwidth applications.
Another recently offered product is their new DSL line driver for
high-density, low power, central office line card designs.  The
unique miniature design is a testament to the company's focus to
provide a wide range of innovative products with high capacity
manufacturing for the line driver needs of the xDSL technologies.

In other news, Elantec soared past analysts' estimates in its
fourth quarter results released earlier this month.  ELNT earned
$8.1 million, or $0.33 a share, on sales of $36.9 million.  First
Call expected the chipmaker to earn $0.27 a share in the quarter.
The $36 million in sales is a 158% improvement from the year-ago
quarter and the company's CEO said he expects ELNT to experience
significant revenue and profit growth in the coming year.

Traders who favor the bullish fundamental outlook for Elantec can
use this position to establish an acceptable cost basis in the
underlying issue.

ELNT - Elantec Semiconductor  $105.25

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

Sell Put  NOV 75   UET WO  16        0.75    74.25     6.5% ***
Sell Put  NOV 80   UET WP  43        1.13    78.87     9.7%
Sell Put  NOV 85   UET WQ  14        1.81    83.19    14.5%



******

EPNY - E.piphany  $96.31  *** Split Rally! ***

E.piphany is a provider of unique analytic campaign management
personalization software solutions.  E.piphany's E.4 system
creates a single, view of each customer, enabling insight and
personalized action across all points of interaction.  The E.4
system combines data extraction, data warehousing, reporting, data
mining, campaign management and personalization into an integrated,
Web-based platform that eliminates the need to maintain multiple
software tools from various vendors.  Using the system, companies
can analyze customer characteristics and preferences, generate
marketing campaigns and improve each customer interaction with
personalization and product recommendations.

The rally in EPNY shares began earlier this month when analysts
upgraded the stock after the company posted smaller-than-expected
losses in the quarterly report.  E.piphany said it lost $0.17 per
share in the third quarter, substantially less than the consensus
analyst forecast for a $0.32 loss.  After the announcement, both
US Bancorp Piper Jaffray and Banc of America Securities upgraded
the stock to a "strong buy."  In its report, Banc of America said
the company's third quarter results were outstanding and promptly
lowered its forecast operating loss for the fiscal year 2000.

The company also announced a three-for-two stock split, payable on
November 13, to shareholders of record on October 30.  The split
will be effected in the form of a stock dividend.  Investors who
favor the outlook for the company can speculate on the outcome of
the pre-split rally with these relatively low risk positions.

EPNY - E.piphany  $96.31

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

Sell Put  NOV 60   PEY WL  101       0.69    59.31     6.6% ***
Sell Put  NOV 65   PEY WM  23        1.25    63.75    11.6%
Sell Put  NOV 70   PEY WN  75        2.13    67.87    18.9%



******

HGSI - Human Genome Sciences  $96.00  *** On The Move! ***

Human Genome Sciences researches and develops novel compounds
for treating and diagnosing human diseases based on the discovery
and understanding of the medical usefulness of genes.  The unique
company has used automated, high speed technology to discover the
sequences of chemicals in genes and generate a large collection
of partial human gene sequences.  The company believes that its
collection includes most of the genes responsible for producing
proteins in the human body. Human Genome possesses one of the
largest databases of the genes of humans and microbes, which the
company refers to as its genomic database.  It has created a base
of product opportunities based on its genomic technology.  The
company is now focused primarily on the research and development
of proteins for the treatment of human disease.

HGSI was one of the high fliers of last year and also the first
quarter of this year.  Then the Nasdaq crashed and with it came
HGSI, all the way down to the mid $20 range.  After several
months of consolidation and forming a Stage I base, it resumed
its upward trend.  The most recent bullish move occurred after
the unexpected announcement that pharmaceutical giant SmithKline
Beecham exercised an option to jointly develop and commercialize
Repifermin, a wound-healing agent.  Repifermin is currently the
subject of phase II clinical trials and it has the potential to
treat a number of afflictions, including diabetic ulcers and
inflammatory bowel diseases.  The companies have agreed to share
the costs of phase III as well as development costs beyond those
studies and a US Bancorp Piper Jaffray analyst estimated that
potential revenues for Repifermin could reach $1 billion.

Last week, HGSI said it plans to begin clinical trials next year
of an antibody therapy which could be an effective treatment for
lupus and rheumatoid arthritis.  The company, which raised $825
million in a recent stock offering, said its scientists found
that the blood of people with those diseases had abnormally high
levels of a certain protein.  The findings suggest that reducing
the higher than normal BLyS levels may be an effective way to
treat the autoimmune diseases and HGSI believes a solution can
eventually be developed.

The current technical outlook is favorable and our conservative
position offers a great way to participate in the volatile issue
with relatively low risk.

HGSI - Human Genome Sciences  $96.00

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

Sell Put  NOV 75   HHA WO  327       0.75    74.25     7.1% ***
Sell Put  NOV 77.5 HHA WW  39        1.13    76.38    10.2%
Sell Put  NOV 80   HBW WP  1564      1.44    78.56    11.5%
Sell Put  NOV 82.5 HBW WX  19        1.75    80.75    12.5%



******

MANU - Manugistics  $115.97  *** Still Going Up! ***

Manugistics Group is a global provider of intelligent supply
chain optimization solutions for businesses and eBusiness
trading networks.  Its solutions include client assessment,
software products, and consulting services, all of which can
be customized for a clients specific requirements.  Their
newest generation of solutions help businesses to improve
their logistics and trading with their partners by utilizing
the Internet.

Manugistics has been one of the application software industry's
great recovery issues and since the turnaround began in late 1998,
the company's stock has increased over 1000%, and Manugistics has
won deals with key companies such as Cisco Systems (CSCO), Texas
Instruments (TXN), and 3Com Corp. (COMS).  The company's earnings
have been instrumental in the rebound and during the most recent
quarter, Manugistics achieved revenues of $58.2 million, a 72%
increase over the same period last year.  The company also posted
a profit of $1 million, or $0.03 per share, when analysts had been
expecting a small loss.  It's easy to see why investors favor the
fundamental outlook for MANU and now that the company is starting
to generate a recurring stream of revenue, we think there is a
bullish future in store for its share value.

MANU - Manugistics  $115.97

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

Sell Put  NOV 60   ZUQ WL  103       0.94    59.06     7.4% ***
Sell Put  NOV 65   ZUQ WM  70        1.13    63.88     8.8%
Sell Put  NOV 70   ZUQ WN  331       1.38    68.63    10.6%



******

PDLI - Protein Design Labs  $140.03  *** Sector Leader! ***

Protein Design Labs, a member of the S&P 600 Small Cap Index, is
a leader in the development of humanized monoclonal antibodies
for the prevention and treatment of disease.  They have licensed
rights to their first humanized antibody product, Zenapax
(daclizumab) to Hoffmann-La Roche Inc. and its affiliates, which
markets it in the U.S., Europe and other countries for the
prevention of kidney transplant rejection. They have seven other
humanized antibodies in clinical development for autoimmune and
inflammatory conditions, transplantation and cancer.

There is general realization that new medicines being made by
leading biotechnology companies have the promise of helping
control the cost of healthcare by providing better results than
current therapies.  PDLI is one of the top candidates in this
group and the company's stock has been "on the move" since the
announcement that it will adapt a murine antibody for human use
under an agreement with pharmaceutical giant Eli Lilly.  Lilly
will develop it as a pharmaceutical product, and Protein Design
will be compensated by Lilly with a non-refundable upfront fee
of $1.7 million, milestone payments upon completion of specified
objectives, annual maintenance fees and royalties on sales of the
humanised antibody.  That news was followed by a second agreement
with Lilly for another humanized antibody, with terms similar to
the first, except the upfront signing fee for this agreement was
$1.36 million.  Most recently, Protein Design announced positive
Phase I clinical results with its development-stage drug SMART
Anti-Gamma Interferon Antibody.

Even as biotech stocks slumped during the past week, PDLI managed
to lead the group and today the issue closed up almost $5, near an
all-time high at $140, on almost twice its normal volume.  That's
a good indication of its strength, relative to other companies in
the sector.

PDLI - Protein Design Labs  $140.03

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

Sell Put  NOV 105  RPV WA  24        0.88   104.12     5.8% ***
Sell Put  NOV 110  RPV WB  60        1.31   108.69     8.5%
Sell Put  NOV 115  RPV WC  13        2.00   113.00    11.5%


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

BEARISH PLAYS - Naked Calls

The issues are excellent candidates in the premium-selling
category of options trading.  Based on analysis of historical
option pricing and the underlying stock's technical background,
these positions meet our fundamental criteria for profitable
naked-calls.  Each issue has robust option premiums, a well
defined resistance area and a high probability of remaining
below the target strike prices.  As with any recommendations,
these positions should be carefully evaluated for portfolio
suitability and reviewed with regard to your strategic approach
and personal trading style.  Many traders may favor a more
aggressive approach, selling options that are closer to the
current price of the issue, to produce a higher initial return.
While that technique may be more attractive, it also increases
the theoretical risk of loss.  Only you can know what plays are
suitable for your personal risk-reward tolerance and portfolio
outlook.

******

JNPR - Juniper Networks  $183.38  *** Sector Slump! ***

Juniper is a provider of Internet infrastructure solutions that
enable Internet service providers and other telecommunications
service providers, to meet the demands resulting from the rapid
growth of the Internet.  The company delivers next generation
Internet backbone routers that are specifically designed, or
purpose-built, for service provider networks.  The company's
flagship product is the M40 Internet backbone router, and it
recently introduced the M20, a new Internet backbone router
purpose-built for emerging service providers.  The company's
Internet backbone routers combine the features of the JUNOS
Internet Software, high performance ASIC-based packet forwarding
technology and Internet-optimized architecture into a solution
for service providers.

Technology investors ran for the exits last week after Nortel
Networks (NT) crushed the notion that fiber-optic networking
stocks would lead the rally higher.  Investors believed optical
equipment makers like Nortel wouldn't be able to keep pace with
demand and would escape the slowdown plaguing personal computer
makers and semiconductor manufacturers.  Instead, Nortel proved
that industries which were once considered bulletproof are now
showing that they can be affected by the economy, and the recent
slowdown in spending patterns.  The weakness spread to many of
the leading companies in the technology group, especially within
optical manufacturing.  Juniper was just one of the many issues
hurt by the news and the company's share value has drifted lower
over the past week.

Analysts say that the optical market is still healthy, but with
the valuations for these companies as high as they were, a brief
correction was necessary.  Tuesday's bullish report from Alcatel
(ALA) not only lifted the price of its own shares, and that of
other downtrodden optics companies, it helped to launch a broad
Nasdaq rally.  Now investors are speculating on the future upside
potential of many of the networking issues and we will use that
interest (and the overpriced option premiums) to our advantage
with these relatively conservative, bearish positions.

JNPR - Juniper Networks  $183.38

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

Sell Call NOV 240  JUD KH  1775      2.88   242.88    13.8%
Sell Call NOV 250  JUD KJ  2104      2.06   252.06    10.1%
Sell Call NOV 260  JUP KL  938       1.56   261.56     7.8% ***



******

NEWP - Newport $106.06  *** Technicals Only! ***

Newport Corporation is a global supplier of high-precision test,
measurement and automation systems and subsystems that enable
manufacturers of fiber optic components, semiconductor capital
equipment, industrial metrology, aerospace and other precision
products to automate their manufacturing processes, enhance
product performance, and improve manufacturing efficiencies and
yields.  Newport's high precision products enhance productivity
and capabilities of test and measurement and automated assembly
for precision manufacturing, engineering and research applications.

This play is simply based on the current price or trading range
of the underlying stock and its recent technical history.  The
near-term NEWP price trend is bearish and reflects a pronounced
negative divergence from an intermediate-period moving average.
In addition, the decline has come on increasing selling pressure
and a major support level has been violated.  With the failure
at $165, a short-term "head-n-shoulders" formation is in place
and it appears the share value has little chance of reaching our
sold positions in two weeks.

NEWP - Newport $106.06

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

Sell Call NOV 150  NOQ KJ  371       2.06   152.06    16.8%
Sell Call NOV 155  NOQ KK  107       1.56   156.56    13.0%
Sell Call NOV 160  NOQ KL  376       1.13   161.13     9.6%
Sell Call NOV 165  NOQ KM  309       1.00   166.00     8.6% ***




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