Option Investor

Daily Newsletter, Sunday, 11/05/2000

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The Option Investor Newsletter                   Sunday 11-05-2000
Copyright 2000, All rights reserved.                        1 of 5
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       WE 11-03         WE 10-27         WE 10-20         WE 10-13
DOW    10817.95 +227.33 10590.62 +364.03 10226.59 + 34.41  -404.36
Nasdaq  3451.58 +173.22  3278.36 -204.78  3483.14 +166.37  - 44.27
S&P-100  751.70 + 25.52   726.18 - 11.98   738.16 +  9.15  - 21.96
S&P-500 1426.69 + 47.11  1379.58 - 17.35  1396.93 + 22.76  - 34.82
W5000  13382.90 +522.30 12860.60 -196.80 13057.40 +253.90  -338.60
RUT      507.75 + 27.90   479.85 -  7.60   487.45 +  7.06  - 10.63
TRAN    2761.75 +232.78  2528.97 + 59.90  2469.07 + 38.89  -113.47
VIX       26.31 -  3.84    30.15 +  2.73    27.42 -  3.56  +  5.31
Put/Call    .57              .59              .50              .76

Running in place or just marking time?
By Jim Brown

Another day, another +22 points. Or -62 if you own old economy stocks.
Not to beat a dead horse but nobody expected any major moves until
after the CSCO earnings and the election results. Looks like we got
what we expected Friday. No surprises showed up in the lackluster
trading as neither major exchange broke their respective billion
share marks with the NYSE trading 992 mil and the Nasdaq 1.8 bil.
Advances and declines were almost dead even and the market excitement
was about the equivalent of a nine hour plane ride. You are locked
into being there and nothing makes the time go faster. It is hard to
complain however about a week that posted gains of +227 for the Dow
and +173 for the Nasdaq. We are just spoiled and a +22 point day is
like watching paint dry.

There was some really exciting earnings news out if telecom stocks
are what turns you on. Sprint (FON) called in with lower than expected
profits for 2001 making it the third long-distance telephone company
in the last 10 days to warn. FON actually gained +1.38 on the news
while their wireless telephone arm Sprint PCS dropped over -$8 after
growth estimates were cut in half for next year. Are you excited yet?

Even more titillating was the Non-farm payroll or Jobs report Friday
morning. The economy created only 137,000 new jobs in October and
failed to meet expectations of almost 200,000 net additions. Sept
was revised downwards by -50,000 jobs to an average of 140,000 which
would be consistent with a soft landing. The unemployment rate held
steady at the April low of 3.9% which was less than expected and kept
the Fed squarely in our future. While the report was basically a
yawner it does raise the worry that a 3.9% unemployment rate will
not provide enough workers to handle the seasonal crush of holiday
job needs. The number of jobs created over the next two months will
soar but qualified employees will be scarce and bidding for these
employees could provide an inflationary factor to the employee wages
which the Fed watches. Are you bored yet? That last paragraph almost
put me to sleep as well.

When you consider I just covered the two most important events of
Friday's trading day you can imagine there is not much to look forward
to below. I will try to keep your interest but I must warn you I have
to talk about the election and CSCO earnings again. I will try to
keep both brief.

The election is Tuesday in case you live in a vacuum and nothing of
importance is likely to happen in the markets until after the winner
is known. I will not even go into the drinking issue even though I
have heard some pretty good jokes today. About the only visible
evidence of election impact was in the drug and healthcare stocks
which pulled back some on profit taking from the run up into the
expected Bush win. With the DUI news yesterday many traders became
not quite so sure of that win and took profits just in case.

The other major market cloud remains CSCO and their earnings on
Monday. Analysts are battling in the media with conflicting estimates
of revenue growth going forward with some warning about a Nortel
like slow growth warning and others claiming a 50% growth rate into
the next millennium. Obviously the prospect of either are slim but
that difference of opinion is what makes horse races and stock markets.
Several big players loaded up on insurance today with a block of
10,000 QQQ 80 PUTS crossed this morning and several other 1000 lot
or bigger trades cleared as well. There was a block of 17,000 short
81 CALLS sold earlier this week. Looks like someone has inside info
or a really big position to cover and wanted insurance against the
unexpected. These types of trades put the market "on notice" that
some big money is betting against a favorable report. Needless to
say nobody wanted to invest heavily in tech stocks before the weekend.
CSCO is expected to announce +.17 cents earnings and they have a
long term history of beating estimates by a penny. They are not
likely to have a blowout and they are just as likely not to miss.
It is all in the call and traders will be holding their breath
until the guidance going forward is made public.

In spite of the two major clouds over the market the Nasdaq did
manage to post another gain and edge ever closer to resistance
at 3525. While +22 points may not be exciting it is much more
preferable in my book than the alternating +100/-100 point
swings from last week. Look at the bright side, every day the
Nasdaq moves up slowly the volatility is bleeding premium out
of those calls you want to buy on Wednesday. Lower volatility
equals lower premiums and a better opportunity to profit when
the big swings return.

I still think we saw a bottom on October 18th and any pullback
a negative earnings report or election result gives us is just
another buying opportunity. We are likely to see a run to 3525
this week and then fall back on profit taking but once over 3525
we should be good to go. Once the CSCO news is out and traders
decide the election winner is not as bad as they previously
thought then we will start looking at the Dell earnings on
Thursday along with the PPI report. Neither should be a major
problem. I suggest you take a long look this weekend at some
long plays and be prepared to buy any non-CSCO related Tuesday

Here at OIN we are going to be busy doing a face lift and giving
you more choices for your option selections. We are responding
to reader requests to be more reactive to the market and provide
different plays of all types. Since this is a slow market news
day I am going to tell you what to look for next week.

First, we are going to a daily play picking schedule. Each
evening we will add new plays and drop old ones based on that
days market action. Since entry points don't always correspond
with a three day a week publishing schedule we will now be able
to suggest plays when they look the best.

Second, we are adding three categories of plays. Long Term,
Low Volatility (less risk) and Lottery Plays. They will have
their own section in the recommended calls area.

The Long Term plays will not be LEAPs, although there may be
some LEAPs mentioned if we think they apply, but will be plays
based on longer term technicals, bases, news events, value
plays and sometimes just plain speculation. These will not be
current month but 4-6 months or longer.

The Low Volatility plays will be just that. You will not find
a JNPR, ITWO or SDLI but you will not find double digit premium
prices either. These plays will focus on lower volatility stocks
but stocks with good potential and established trends. Some of
these plays may be stocks under $30 which we have avoided in
the past. An example of a low volatility play would be a $20
call on WIN. Check it out.

The last category we are adding is the Lottery Play. This is
a high risk play for very little money but the payoff can be
large. An example would be a NOV 25 call on BMCS for $.31 or
the DEC $25 call for $1.13. These should not be a large portion
of your play list but two or three contracts here and there
will add some spice to someone with normally a low risk tolerance.

Third, we are adding a real time market commentary and stock
watch produced by Jeff Bailey. This is not a one or two
paragraph "market went up, market went down" fluff piece.
This is real meat and will be posted on the site and emailed
four times daily. (yes you can opt in or out of this email)
What is moving the markets, winners, sinners and even intraday
plays when the situation warrants.

Fourth, we are adding a Watch List for stocks we are thinking
about playing and why. This will let you make your own decision
as the market moves and possibly get a better entry point than
waiting for the end of day recommendation. We will try and keep
20-30 stocks on this "pre-pick" list and you can watch the plays

Next week we should have our Option Quote Montage ready with
real time quotes from all five option exchanges. You can't get
that anywhere else!

With the market doldrums hopefully over and yearly fortunes to
be made we are trying to make your stock selection easier and
more plentiful. We welcome your comments as our changes take
place. It should take most of the week as we migrate into the
new formats so pay close attention as it changes each day. We
will try and update you daily with the changes for that day
and show you what is different and how to use it. We are
excited about the changes and hope you will be also.

So here is the game plan for next week. Be careful buying
tech stocks before the CSCO earnings. If CSCO says good things
about the future use any weakness on election Tuesday to ease
into new positions. The next bump in the road is Dell earnings
on Thursday. They have already warned so expectations are
light but again negative talk about future prospects could
impact the market. If Dell does not miss numbers or whine
again about the future then we should move up again. 3525 is
resistance on the Nasdaq but if CSCO and DELL are positive
it should not be a problem. The following Wednesday, Nov 15th
is a Fed meeting and many analysts are already factoring in
a rate cut. Don't hold your breath. The good news is that
very few think the next move will be another rise. With the
economic news mostly positive the Fed is likely to wait until
January before releasing the interest rate pressure. As traders
our course is much clearer. Plan for a continued rally and any
surprise rate cut will be icing on the cake. You have my
permission to take Monday off from trading and rest up for
the coming marathon. Everybody else is, why not us?

Trade smart, don't buy too soon.

Jim Brown

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I am really excited about the coming week. Once we get the
CSCO earnings out of the way and all the election distraction
is over traders will go back to the market and hopefully in
large numbers. There are so many good looking plays that it
is going to be hard just picking a few.

With the Denver Options Workshop last week I was flat in the
market and ready to trade live in class on Monday morning.
The market did not cooperate and we ran out of time before
making any trades. Three of the trades we had picked included
calls on YHOO and naked puts on SDLI and BRCD. I was fortunate
to get the SDLI and BRCD plays off on Tuesday but completely
forgot about YHOO. Of course it soared right off the bottom
from Monday for about +16 points.

I am flat going into the CSCO earnings because I have vivid
memories and lasting scars from when Dell was facing the same
challenge two years ago. Trees don't grow to the sky and CSCO
will eventually have to admit growth is slowing. It may not
be this month but it will happen. I don't want to be in the
market when it does.

So where am I going on Tuesday, assuming CSCO does not spoil
the party? I am going to list some plays that I think have a
better than average chance of success. These are just samples
and are not meant to be an all encompassing list. You should
spend Monday doing your own research and planning your week.

Many stocks I have been watching have blown out in the last
couple days and in my mind are unplayable. These include JNIC,
EMLX, QLGC, AETH and JNPR to name a few. We need to see some
profit taking in stocks like these before we can jump in again.
I would be a buyer of JNPR around 200, JNIC 100, EMLX 160 and
QLGC 110. AETH needs to pull back $5-$10 or break out over
$110 resistance. This same trend is common in most fast moving
Nasdaq stocks from last week. The CSCO earnings hurdle could
give us this pull back on Monday.

Current stocks I like include BRCD, SDLI, DIGL, SCMR, EXTR,

The problem with SDLI, CIEN, DIGL, EXTR and SCMR to some extent
is their reaction to the CSCO earnings. We need to wait for
those earnings before making any new plays.

I am going to list a few of these and plays and how I would
play them on Tuesday if we do not get a CSCO meltdown. Most
investors will not play the strikes I play because of different
risk-reward profiles. I like current month ITM strikes when
I am playing calls. This gives me almost 100% Delta and less
risk. I would recommend December strikes for those not
comfortable with very short term plays.

ANAD - Anadigics

ANAD has a good recovery trend in place and I think we it
move back up to previous resistance at $40 over the next
several weeks. I like the NOV-22.50 calls @ 3.88 which is
already $3 ITM. A longer term play would be the DEC-20 call
@ $6.75 which is $5.50 ITM. I would not be a naked put
player on ANAD because the premium decays too slow and
the stock is not a fast mover.

AKAM - Akamai

AKAM has been decimated from a high of $350 to the current
$54 level. It has been slowly gaining speed as it recovers
from the beating. The last resistance is at $60 and it is
getting close. AKAM is in the content delivery business and
that is the real growth area of the Internet. I heard that
AKAM could easily grow well over 100% per year over the
next several years. If we take a position now before the
breakout over $60 we can position ourselves for the explosion.
I like a longer term position here in case we encounter a
hurdle at $60. The DEC-60 Call @ $5.50 should double with
a $10 move and give us upside for the next five weeks.
Strikes in Feb are very expensive which confirms the
expectation for this stock. The NOV-$70 naked put is $16
and has two weeks to go. I would bet on it expiring worthless.
The DEC-90 put is $36 and I would also bet on it expiring
worthless. Any gamblers out there?

BRCD - Brocade

BRCD had a huge run last week but finished at the high of the
day on Friday. I think it is ready to blow and the previous
high of $267 may be history next week. The problem with BRCD
is the high option prices. The NOV-240 ($13 ITM) is $22 but
I think it is the best deal. Any OTM strike will deflate
instantly if the stock stalls. The possibility of a stall
in front of CSCO earnings is a very good possibility. I am
thinking about target shooting the $230 call around $22-25
on any weakness. If the stock pulls back I want to take
advantage of it by buying deeper ITM. Most of you know I
am a DITM (deep in the money) naked put gambler. The NOV
$320 put at $66 looks really good and on any pullback I
think target shooting it at $70 looks like a good plan.


SDLI is really a play on JDSU. With a 3.8:1 share exchange
any move on JDSU will result in 3.8 x that move in SDLI. If
CSCO is positive the fiber optic market could explode. SDLI
is exactly at resistance at $265 and could pull back in
front of CSCO. I think the calls are unplayable due to the
extreme premiums. The Dec-$270 call for instance is $30
and is still $17 OTM. If you want to play calls on SDLI
let your conscience be your guide. I think selling the NOV
$350 naked put makes more since if CSCO does not disappoint.
The current premium is $86 and you could probably get $90
on any pull back on Monday. For those who are even more
conservative I would buy the stock on a pullback and sell
the covered calls about $20 OTM on the rebound. Picking up
the stock at $250, selling a strike about $20 OTM for $30
as quoted above would provide a $50 profit if called out
on margin of $125 or a 40% return for five weeks. Just
another way to profit. Keep a stop loss on the stock at $250.


Space prevents me from writing on every stock I like but I
think you see the trend. Wait for CSCO and go long on positive
results. I am going to rewrite my DITM naked put concept for
the newsletter next Sunday. It was the most requested lesson
from the seminar. It is not for everyone but it works for me.

Be patient Monday. Trade the known events not the unknowns.
CSCO is an unknown risk.

Jim Brown

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CSCO's Leverage, A Few Too Many Forever Ago, Etc.
By Austin Passamonte

"Give me a lever long enough and I can move the world". That's
what many trader's thought pyramiding their margin accounts would
accomplish but let's leave that sad subject for another time.
This one is about CSCO, seasonals, big-money and where we go from

It's apparent that everyone and Maria's makeup artist want to
rally this market bad. Real bad. Massive volumes of cash lining
up at the starting blocks is virtual proof of high expectations.
It's November, the tough times are over...let's get rich from
the certainty of our fall market rally's arrival.

This just might happen. Market Sentiment can plainly see long-
term strength emerging in weekly charts of every major equity
index that matters; the SPX, NDX, OEX, Dow and Comp in order of
significance. It is very hard for us to believe we will not test
all-time highs in the SPX and possibly the Dow prior to this New
Year's celebration.

That being said, we still harbor great concern over a few vital
fundamentals between here and our curdled eggnog poured down the

First and foremost is the perplexing saga of Commercial traders
in the S&P 500 futures arena continuing to build a historical
ten-year net short position. For those who long since tired of
hearing about this and decided to buy calls with abandon, that
might be like building a retirement home on the slopes of Mt. St
Helen not too many decades ago. The warnings went dismissed for
many years until one fateful moment in time.

Commercial traders in the futures arena are mostly financial
institutions who hedge and speculate against cash positions with
more zeros than the digital code that makes these words visible
to you. Unseen billions at work. It is a certainty they have much
better information about global economics than we do, for sure.

They have held this net position longer and larger than any we
can find going back through historical charts. Not during the
worst of October 1998 and 1999 was it even close to this extreme.
What gives?

An informal study revealed that four-year net extremes they held
were 67% accurate in winning. Five-plus year extremes have been
100% accurate so far. We have nothing to compare this one to, but
we wouldn't bet against the outcome regardless.

This ominous leviathan holds much more magnitude than CSCO
beating estimates by X-number of cents, how high Governor Bush'
B.A.C. was twenty-some years ago, etc. That is all just noise
which fades away quickly. What will move us up or down from here?

One last note to bear in mind was a heavy volume of block-trade
put buying in the SPX and QQQ November contracts on Friday. A
number of multi-million dollar positions were taken by the big
boys in our option world and most of them were bearish in nature.
Some traders with massive accounts and presumably better market
info than we have are betting on a downside move this week.

Our guess is a market breather is in order before the next major
assault up the charts with staying power ensues.

There have been strong rallies and dips since this commercial
activity began and we expect to see much more of the same. It
remains our opinion that the markets will continue to move in
volatile extremes in continued sideways fashion with further
tests of market highs and lows in the process.

As stated before, we will announce long, hard, loud and clear
that the last bottom is in place when S&P 500 commercials cover
shorts and return to net-flat or long. Not a moment sooner. If we
miss the year's long bottom prior to this occurring it will be
nice to err on the side of conservancy.

We may not see one prolonged move in either direction and that
should suit option traders just fine. This is called a trader's
market and last time we checked, that is us! Calls on the way up,
puts on the way down and credit-spreads at each end spell massive
wealth waiting in the wings for those who desire to capture their

Are you one who is willing to try? Market Sentiment is truly
excited about your prosepcts to prosper and win using the right
approach! You should be too.


Friday 11/03 close; 26.31

30-yr Bonds
Friday 11/03 close; 5.85%

Support/Resistance Indicator
The Index Support/Resistance(S/R)Ratio is a formula used to
gauge possible support or resistance based on open-interest
disparity. Ratio listed is percentage of calls to puts or
puts to calls respectively.

Support is factored from dividing puts by calls at strike
levels beneath index closing price. Resistance is factored
from dividing calls by puts at strike levels above current
closing price.

  (Open Interest)        Calls         Puts        Ratio
S&P 100 Index (OEX)
790 - 775               10,639          294        36.19***
770 - 755                8,805        3,004         2.93

OEX close: 751.70

745 - 730               16,308        9,523          .58
725 - 710                3,268       10,120         3.10
Maximum calls: 745/5,967
Maximum puts : 700/4,856

Moving Averages
 10 DMA  737
 20 DMA  731
 50 DMA  767
200 DMA  777

NASDAQ 100 Index (NDX/QQQ)
 92 - 90                27,309        10,737         2.54
 89 - 87                21,013        15,881         1.32
 86 - 84                43,313        28,618         1.51

QQQ(NDX)close: 83.06

 82 - 80                49,424        45,746          .93
 79 - 77                 5,312        40,283         7.58
 76 - 74                11,257        40,164         3.57

Maximum calls: 84/25,416
Maximum puts : 80/29,752
Moving Averages
 10 DMA 81
 20 DMA 80
 50 DMA 87
200 DMA 93

S&P 500 (SPX)
1500                   11,598         3,995          2.90
1475                   15,396         4,771          3.23
1450                   11,296         8,751          1.29

SPX close: 1426.69

1400                   27,475        29,282          1.07
1375                   13,363        18,636          1.39
1350                    8,413        23,716          2.82

Maximum calls: 1400/27,475
Maximum puts : 1400/29,282

Moving Averages
 10 DMA 1400
 20 DMA 1385
 50 DMA 1435
200 DMA 1441


CBOT Commitment Of Traders Report: Friday 11/03
Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts on the
Chicago Board Of Trade. Small specs are the general trading
public with commercials being financial institutions.
Commercials are historically on the correct side of future
trend changes while small specs are not. Extreme divergence
between each signals a possible market turn in favor of the
commercial trader's direction.

                     Small Specs                Commercials
DJIA futures    (Current)  (Previous)      (Current)  (Previous)
Open Interest
Net Value        -1066        +89            +657        -483
Total Open
Interest %       (11.56%)    (1.07%)        (2.84%)     (2.34%)
                net-short    net-long       net-long    net-short

NASDAQ 100      (Current)  (Previous)      (Current)  (Previous)
Open Interest
Net Value         -448        -262          -927          +85
Total Open
Interest %       (2.40%)      (1.48)        (1.89%)      (.21%)
                net-short   net-short     net-short    net-long

S&P 500         (Current)   (Previous)     (Current)  (Previous)
Open Interest
Net Value        +60112      +57,031        -70603     -66,429
Total Open
Interest %       (31.64%)    (31.05%)       (11.10%)    (10.72%)
                 net-long    net-long       net-short   net-short

What COT Data Tells Us: Commercial positions in S&P 500 remain at
their ten-year extreme short levels while small specs held their
net-long positions as compiled Tuesday 10/31 by the CFTC.
Commercials have reversed position albeit modestly on the DOW, and
have now gone to a net-long position while the small specs have
turned net-short positions


As of Market Close - Sunday, 11/05/2000

                                  Key Benchmarks
Broad Market           Last     Support/Resistance   Alert

DOW   Industrials      10,817      10,250  11,100
SPX   S&P 500           1,426       1,385   1,445
COMPX NASD Composite    3,451       3,150   3,550
OEX   S&P 100             751         700     775
RUT   Russell 2000        507         465     520
NDX   NASD 100          3,321       2,950   3,550
MSH   High Tech           954         870     975

BTK   Biotech             775         680     820
XCI   Hardware          1,293       1,230   1,310
GSO.X Software            431         385     440
SOX   Semiconductor       740         640     805
NWX   Networking        1,098         925   1,180
INX   Internet            382         315     400

BIX   Banking             607         560     630
XBD   Brokerage           634         600     655
IUX   Insurance           782         760     830

RLX   Retail              803         730     860
DRG   Drug                419         400     440
HCX   Healthcare          880         865     900
XAL   Airline             149         138     160
OIX   Oil & Gas           300         296     320

No alerts were triggered in the last session.  Raising support
(SOX, BIX, XAL).  Lowering resistance (DOW, INX).  Watch the INX,
if they break above 400 be on alert, as they could be key to a
NASDAQ advance.

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Profits In The Palm Of My Hand
By Eric Utley

Who let the hand-held sector out last week?  In case you missed
it, shares of Palm staged an impressive rally in the latter part
of last week's trading.  Fortunately, I had purchased calls on
Palm a few days prior to the rally.  And, I've elaborated on the
details below.

But, before we get to the charts, just one more thing.  Has
anybody heard from Tim Luke recently?  The Lehman analyst lowered
his price target on shares of Cisco Systems last Monday, which
caused the stock to fall as low as $45.  Four days later, shares
of Cisco traded as high as $57.  But enough of my ranting, let's
move on.

I've never been arrested for a DWI nor claim to have invented the
Internet.  That stuff is all nonsense!  Not this column, though.
We're all about business, baby.  Send your stock requests to
Contact Support.  Please put the symbol of your
requests in the subject line of the e-mail.


Palm - PALM

Over the past two weeks, shares of Palm formed a very bullish
ascending wedge.  The stock broke out above the upper resistance
at $56 last Thursday, which lead to an awesome rally Friday.
I entered the play because of the stock's strong technical
position and the fact Palm is going to be added to the
NASDAQ 100 index on Monday.  I figured the index buying that
had to take place would scare some shorts into covering their
positions - Palm has a decent amount of short interest.  The
trade went according to plan as shares of Palm exploded in the
final moments of trading last Friday.


CMG Information - CMGI

I have heavy losses in CMGI.  Yes, it's my fault!!  I failed to
put stop loss orders as the stock continued to slide lower and
lower.  I simply refused to think it would go lower yet.  How
wrong have I been!!!  What is your analysis?  Will CMGI ever
assume the role it once had in the Internet sector?  - Thanks
for your [help], Enzo

We all make mistakes, Enzo - we trade and learn.  I'd like to
take a minute to analyze something you wrote, Enzo, which was,
"I simply refused to think [CMGI] would go lower yet."  The
market continually defies logic and conventional wisdom.  I wrote
three weeks ago that, in my opinion, capital markets are not
efficient in the near-term.  And, the activity in CMGI over the
past year illustrates my belief.  Shares of CMGI traded to a high
of $163, and recently a low of $17 - all in the year 2000!  That's
not very efficient.  My point is that nothing prevents a stock
from further declines, or continued advances, other than the
market itself.  That's why it's SO critical to heed the market's
warnings when stocks are falling.  Who's to say CMGI couldn't
fall lower yet?  The market - that's who!

I don't mean to make an example of you, Enzo.  There is so much
in the game we call trading that I find fascinating, and I
desperately try to convey different ideas to readers.  But, enough
with that, let's get on with the request by examining this
question, "Will CMGI ever assume the role it once had in the
Internet sector?"

At its peak, shares of CMGI traded around $160.  I don't think
it's reasonable to expect shares of CMGI to trade near $160 any
time soon.  The main reason is expectations for the Internet
companies won't reach the same frothy and inefficient levels
enjoyed just one short year ago.  Another reason is CMGI is not
a profitable company.  Profits matter, it's just that simple.
Recently, CMGI shifted its business model to further itself along
the path to profitability, which is definitely a plus.
Furthermore, I feel the worst is over in the Internet sector in
the way of selling.  The Internet sector as a whole is acting
like it has found bottom, judging by the recent action in shares
of DoubleClick, Yahoo, and of course CMGI.  It wouldn't be
surprising to see shares of CMGI gravitate back towards the $40
level in the next three to six months, maybe sooner.  But, with
a stock such as CMGI's, it's important to watch how the market
perceives the company's future prospects in the way of price


Emulex - EMLX

Please comment on [EMLX] as CALL/PUT play in NOV/DEC - Thanks,

While I cannot comment on specific strategies, I will say this
on shares of Emulex: WHOA!  About one month ago, I reviewed Emulex
in this very column and told readers to watch for a breakout above
$130.  At the time, $130 represented a significant retracement
level from the stock's spring bear market lows.  With the aid of
a blowout earnings report, shares of Emulex now trade $40 higher
since our last review.

What an earnings report it was!  For its third-quarter, Emulex
reported a 92% increase in revenues over the year-ago period,
which helped the company fly past the consensus 26 cent estimate
to report 33 cents in profits per share.  Since reporting such
great numbers two weeks ago, Emulex has been giving bullish
guidance at several investor conferences and its stock has been
bestowed with myriad upgrades.  The company is expected to grow
earnings by 45% next year.  If Emulex continues to accelerate
earnings and surprise to the upside its stock will continue
advancing.  But with such quality earnings growth, shares of
Emulex don't come cheap.  The stock carries a forward-looking
multiple slightly over 100.  If you don't mind the volatility
that accompanies highly valued stocks, shares of Emulex are
worth considering for both an investment and near-term trade.
As long as the broader tech sector continues to make strides,
Emulex should advance into the end of the year.  I don't think
it's unimaginable to expect shares of Emulex to trade above
$200 before the year's end.


Nortel Networks - NT, JDS Uniphase - JDSU

I really look forward to Ask the Analyst, it is like a technical
school every week.  Can you advise your view of the two following
NT and JDSU. - Nick

Given your gracious comments, Nick, I must oblige in reviewing
both of your requests.  Thank you!  Your compliment means a great
deal to me!  Plus, the charts for your two requests are very
similar, which makes our technical reviews easy stuff.  But,
before we get to the charts, let's examine the fundamental
factors that caused shares of Nortel and JDS Uniphase to plummet.
Several months ago, when I reviewed companies such as Nortel
and JDS Uniphase, I wrote about the exceeding demand for optical
networking gear.  As Nortel revealed a short while ago, supply for
optical networking equipment has finally caught up with demand.
That's why Nortel's slight revenue miss had such a massive impact
on its stock.  Before its shortfall, investors were willing to
pay exorbitant prices for shares of Nortel because demand for its
products seemed infinite at the time.  But because of the weak
euro, a slowing economy, and/or turmoil among telecom carriers,
demand for Nortel's networking gear has slowed all the while
the market has been flooded with networking equipment, which
takes away pricing power from the company.

Nortel's revenue miss sent a bearish shockwave through the rest
of the optical sector, which pushed shares of JDS Uniphase lower.
But, according to JDS Uniphase, the slowdown in demand is yet to
be seen.  The company reported exceptional third-quarter results
two weeks ago and even guided analysts higher for next year sales
figures.  Despite blowing away third-quarter estimates though,
shares of JDS Uniphase have not advanced as expected.  The concern
on Wall Street is that the slowdown afflicting Nortel has yet to
reach JDS Uniphase, because the company supplies its products to
the former.  Some analysts feel the slowdown will eventually
reach JDS Uniphase.  However, through acquisitions of competitors,
JDS Uniphase has grown into THE optical component manufacturer
and suppliers.  I won't use the M-word, but it's safe to say JDS
Uniphase has pricing power.  That fact might somewhat insulate the
company from any slowdown in orders from its customers including
Nortel, Alcatel, Ciena, and Lucent.

Although Nortel fell short of estimates, the underlying
fundamentals of the networking business remain strong, as Alcatel
reported last week.  In Nortel's case, the company could be facing
no more than a one or two-quarter hiccup.  After all, this isn't
the first occasion the networking sector has fallen under the
scrutiny of the bears.  Fears of a slowdown in the telecom sector
induced widespread selling in the networking sector back in 1997,
when shares of Nortel traded around $11.


VA Linux - LNUX

Would you please [provide] a simple analysis for LNUX,
for both short-term and long-term.  - Thank you, Tom

Wall Street loves themes.  One of the latest themes endorsed by
the bulls has been the hand-held computer area.  Shares of Palm,
Research in Motion, and Handspring have been acting particularly
well as of late, as I detailed above.  Unfortunately, VA Linux does
not operate in the hand-hand computer arena.  VA Linux (along with
other Linux-related companies) has seen its stock price plummet
since its IPO peak at $320.  The stock has been a short-sellers
dream.  The cause for VA Linux's stock price surge last December
was Wall Street's short-lived fascination with the Linux operating
system.  There's just one problem, though.  The guts of the Linux
operating system is open, unlike that of competitor Microsoft's.
Instead of selling software, VA Linux provides services around
the core operating system.  Its service orientated business model
has not yet been able to produce profits.  As soon as the theme
effect wore off, investors focused on the fact VA Linux was not
a profitable company, which resulted in a crash in its stock

However, Tom, VA Linux's short and long-term prospects are looking
more promising, despite its stock's poor year-to-date performance.
For starters, the company recently inked a deal with IBM, which
calls for the installation of VA Linux's software in Internet
terminals in some 7,000 Japanese convenience stores.  The deal
is significant because it will open the Linux operating system
to consumers more than has already been seen.  While still
lagging in the consumer markets, the Linux operating system has
actually caught on with the corporate market because of its low
cost and reliability.  In fact, nearly 25% of new corporate
servers use the Linux operating system.   With growth in
corporate applications expected to accelerate and increased
consumer exposure, VA Linux's long-term prospects look rosy,
especially given the stock's current depressed price.  The
company is expected to turn a profit next year - albeit a small
profit.  But, earnings are expected to accelerate as the Linux
operating system is more widely adopted.  VA Linux is expected
to grow earnings by 40% over the next several years.  That 40%
gives VA Linux's stock a very attractive 0.75 price-to-earnings
growth (PEG) ratio.  A PEG below 1.0 is generally considered
attractive.  The company is slated to announce quarterly profits
on November 16th.  VA Linux has a history of beating consensus
estimates by a respectable margin, which could ultimately lead to
the company becoming profitable ahead of schedule.  Listen
closely to the guidance VA Linux gives during its conference


This column 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 Ask the Analyst picks are not
to be considered a recommendation of any stock or option but an
information resource to aid the investor in making an informed
decision regarding trading in options.  It is possible at this
or some subsequent date, the editor and staff of The Option
Investor Newsletter may own, buy or sell securities presented.
All investors should consult a qualified professional before
trading in any security.  The information provided has been
obtained from sources deemed reliable, but is not guaranteed
as to its accuracy.


For the week of November 6, 2000


None Scheduled


Consumer Credit        Sep  Forecast: $10.8B     Previous: $13.4B


Export Prices ex-ag.   Oct  Forecast:    NA      Previous:  0.30%
Import Prices ex-oil   Oct  Forecast:    NA      Previous: -0.30%
Wholesale Inventories  Sep  Forecast:  0.50%     Previous:  0.60%


PPI                    Oct  Forecast:  0.10%     Previous:  0.90%
Core PPI               Oct  Forecast:  0.10%     Previous:  0.30%
Initial Claims       4-Nov  Forecast:  310K      Previous:  308K


Michigan Sentiment     Nov  Forecast:    NA      Previous:  105.8

Week of November 13th

14-Nov  Retail Sales
14-Nov  Retail Sales ex-auto
15-Nov  Business Inventories
15-Nov  Industrial Production
15-Nov  Capacity Utilization
16-Nov  CPI
16-Nov  Core CPI
16-Nov  Initial Claims
16-Nov  Philadelphia Fed
17-Nov  Housing Starts
17-Nov  Building Permits

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The Option Investor Newsletter                   Sunday 11-05-2000
Sunday                                                      2 of 5

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Call Play of the Day:

EMC - EMC Corporation $97.75 (+8.94 last week)

See details in sector list

Put Play of the Day:

MNMD - MiniMed Inc. $67.69 (-4.31 last week)

See details in sector list

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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.


No dropped calls today


TIBX $70.88 (+5.94) Sure enough, Wednesday's downward spike was
the bears' last ditch attempt to drive TIBX lower, and in the
end, the bulls won the battle.  Despite the apparent lack of
conviction in the broad technology market on Friday, there was
enough buying interest to push TIBX through resistance and off
the put list this weekend.  Continuing its fledgling recovery
on Friday, TIBX broke out above the $68 resistance level,
defined by its descending trendline.  Although the $4 gain came
on volume less than half the ADV, it was enough to clear the
30-dma, and trigger our stop at the $68 level.


SL  = Suggested stop loss. Sell if bid breaks this price.
OI  = Open Interest - the number of open contracts outstanding.
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.

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.


IMCL - Imclone Systems $67.63 (+12.88 last week)

Engaged in the research and development of novel cancer
treatments, IMCL focuses on growth factor inhibitors,
therapeutic cancer vaccines and angiogenesis inhibitors.  The
company's lead product candidate, IMC-C225, is a therapeutic
monoclonal antibody that inhibits stimulation of a receptor for
growth factors upon which certain tumors depend.  Phase I/II
clinical trials have been promising.  The lead candidate for
angiogenesis inhibition, IMC-1C11 is an antibody that binds
selectively and with high affinity to KDR, a principal
Vascular Endothelial Growth Factor (VEGF) receptor, thus
inhibiting angiogenesis.

Proving that the third time is a charm, IMCL punched through
the $60 resistance level on Thursday and continued its rise
into the ozone on Friday.  This level had stopped the bulls in
late September and mid-October, but this time IMCL had the
support of a positive market to keep it going.  After splitting
its shares 2-for-1 on October 16th, it was natural to expect
some profit taking.  True to form for a healthy stock, our play
found support right at its ascending trendline (then $52), and
headed higher on Monday, keeping alive its string of higher
lows.  Underscoring the strength of the breakout is the nice
smooth upward volume trend, culminating on Friday with a cool
1.54 million shares, double the ADV.  The stock is now at its
highest point since early March when the entire Biotech sector
sold off, leading the NASDAQ into the doldrums.  The last 4 days
have seen IMCL increase by 28% without stopping for breath, so
be on the lookout for profit taking.  We would expect the stock
to find support in the $60-61 range on any serious pullback, so
if it closes below $59, our stop will be triggered and we will
need to let the play go.  Any volume backed bounce from support
is buyable, but a more cautious approach would be to wait for
the profit taking to run its course and then take a new position
as IMCL to pushes above the $68 level enroute to new highs.  Of
course, with the technicals like Stochastics and MACD moving
into ascent mode, IMCL could very well head higher before seeing
any weakness, particularly if the markets rally after the
election.  If you decide to buy continued strength, make sure to
keep your stops in place.

***November contracts expire in 2 weeks***

BUY CALL NOV-65 QCI-KM OI=1471 at $5.00 SL=3.00
BUY CALL NOV-70*QCI-KN OI= 138 at $2.63 SL=1.25
BUY CALL NOV-75 QCI-KO OI=  70 at $1.19 SL=0.00
BUY CALL DEC-70 QCI-LN OI=  55 at $6.25 SL=4.25
BUY CALL DEC-75 QCI-LO OI=  32 at $4.50 SL=2.75

Picked on Nov 5th at     $67.63     P/E = N/A
Change since picked       +0.00     52-week high=$85.99
Analysts Ratings      2-6-0-0-0     52-week low =$13.22
Last earnings 08/00  est= -0.43     actual= -0.46
Next earnings 11-14  est= -0.16     versus= -0.22
Average Daily Volume   = 769 K

VRTS - VERITAS Software $153.94 (+13.19 last week)

VERITAS Software is the industry's leading enterprise-class
application storage management software provider.  They
furnish storage management software for protection against
data loss and file corruption, efficient file processing
and networks back-up.  VERITAS (Latin for "truth") has made
its name by partnering with such technological heavyweights
as Hewlett-Packard, Microsoft, and Sun Microsystems, all of
which have licensed and embedded VERITAS products in their
operating systems.  Its purchase of the network and storage
management software group of disk drives maker, Seagate
Technology, doubled VERITAS's size and gave Seagate
approximately a 33% stake in the company.

VRTS made a nice run into earnings with a breakout price of
$166.81 on October 20th before investors locked in the recent
gains following the announcement.  The company beat consensus
estimates of $0.14 p/s by two pennies, as compared to earnings
of $0.09 p/s a year ago.  After the substantial rollover
that followed its earnings' release, VRTS found support at its
50-dma ($130).  On October 27th, VRTS changed direction and
surged with the NASDAQ for a bullish close above $140.  This
week shares were once again on the move and VRTS saw a 9.4%
increase in value.  Analysts and investors alike are bullish on
the stock.  VERITAS Software, whose products help keep Web sites
running, should continue to prosper as it's likely that there
won't be "a decrease in corporate spending on Internet projects"
according to Mark Leslie, CEO.  Volume is strong and VRTS is
maintaining a strong stance above recent resistance levels and
the near-term DMAs.  We're looking for shares to continue making
advances going forward.  Aggressive traders might consider
buying into strength off the current level or target shooting
for an entry around the $145 mark.  Take profits after any major
surge to the upside, you can always jump back in on a pullback.
If however, VRTS violates the 30-dma and demonstrates weakness
with a close below the $139 level, we will exit the play.  In
recent news, hardware and software giant Sun Microsystems has
teamed up with VRTS to help data centers improve their storage

***November contracts expire in two weeks***

BUY CALL NOV-150 VUQ-KJ OI=2158 at $12.25 SL= 9.25
BUY CALL NOV-155*VUQ-KK OI= 663 at $ 9.63 SL= 6.50
BUY CALL NOV-160 VUQ-KL OI=1462 at $ 7.50 SL= 5.25
BUY CALL DEC-155 VUQ-LK OI=2710 at $17.63 SL=12.75
BUY CALL DEC-160 VUQ-LL OI= 293 at $15.13 SL=11.00

Picked on Nov 5th at    $153.94    P/E = N/A
Change since picked       +0.00    52-week high=$174.00
Analysts Ratings    10-10-1-0-0    52-week low =$ 47.11
Last earnings 09/00   est= 0.14    actual= 0.16
Next earnings 01-11   est= 0.16    versus= 0.12
Average Daily Volume = 5.95 mln

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The Option Investor Newsletter                   Sunday 11-05-2000
Sunday                                                      3 of 5

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charts and graphs, click here:

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MSFT - Microsoft $68.31 -2.00 (+0.75 last week)

MSFT is a software powerhouse.  The company is the world leader
in the design, manufacture and support services for personal and
business computing software.  Their products are almost ubiquitous,
as the majority of the computers in the US and international
countries use Microsoft software.  The company's financials are
enviable, with a profit margin of over 40%, a return on equity
of 25%, annual sales over $23 billion, and a moderate P/E by
today's standards of 38.  Most analysts feel that the famous
monopoly trial is no longer considered to be a major issue in
valuing the company, as the chief prosecutor for the case resigned
weeks ago.  MSFT has had a great ride up for the last three weeks.

MSFT has risen almost twenty points from a low of $50 in mid
October, to a high of over $70 last week.  Consolidation has
occurred last week, with the stock trading from $68.50 to $70.50
On Thursday, MSFT opened strong and traded above $70 for most
of the day, but couldn't clear $71.  On Friday, the stock gapped
down at the open to $69.25, and found support at $68.75.  MSFT
remains above the 5-dma at $66, and the 10-dma at $67.63, and
the 50-dma at $63.41.  Considering that the Dow dropped Friday,
and that profit taking was inevitable, this is a sign of
continuing strength.  The high number of Nov 70 calls has
provided tough resistance, but MSFT is becoming a fund manager's
favorite again after almost a year of being out of favor.
Consider taking new positions if the stock bounces off its
10-dma at $66.  If MSFT can push above $70 and stay there on
strong volume, the stock may have a shot at clearing the
200-dma of $73.75, which would provide a more conservative
entry point.  However, should MSFT fall below $64 on an
extended pullback, we would no longer initiate new plays.

***November contracts expire in 2 weeks***

BUY CALL NOV-65 MSQ-KM OI=34933 at $4.63 SL=$2.75
BUY CALL NOV-70*MSQ-KN OI=38621 at $2.63 SL=$1.38
BUY CALL DEC-65 MSQ-LM OI= 3866 at $6.13 SL=$4.13
BUY CALL DEC-70 MSQ-LN OI= 8831 at $3.38 SL=$1.88
BUY CALL DEC-75 MSQ-LO OI=22617 at $1.63 SL=$0.75

SELL PUT NOV 65 MSQ-WM OI=21264 at $1.19 SL=$0.68
(See risk of selling put in play legend)

Picked on Oct 26 at	$64.44     P/E = 38
Change since picked 	 +3.81     52-week high=$119.94
Analyst ratings     6-10-2-5-0     52-week low =$ 48.43
Last earnings 10/18  est= 0.40     actual= 0.46
Next earnings 01/18  est= 0.49     actual= 0.47
Average daily volume =  38 mln

ADBE - Adobe Systems $80.69 (+5.88 last week)

A long-time leader in desktop publishing software, ADBE
provides graphic design, publishing, and imaging software
for Web and print production.  Offering a line of application
software products for creating, distributing, and managing
information of all types, the company generates nearly 75% of
sales through publishing software products such as Photoshop,
Illustrator, and PageMaker.  Its Acrobat Reader, which uses
portable document format (PDF) is popping up all over the
Internet, as businesses shift from print to digital
communications.  In addition, ADBE licenses its industry
standard technologies to major hardware manufacturers,
software developers, and service providers, as well as
offering integrated software solutions to businesses of all

Sun Microsystems' visionary CEO Scott McNealy once proclaimed,
"The network is the computer."  Thinking along those lines, Adobe
has been taking steps to load itself not only on users' hard
drives, but installing itself directly on the Internet.  The
company has done so in a number of ways, by creating standards
such as the PDF format, providing a suite of integrated web tools
such as GoLive, by leveraging its traditional customer base of
core applications such as Illustrator, Pagemaker and PhotoShop,
and through strategic alliances with companies such as IWOV, NOK
and RNWK.  Not content with being the leading desktop publishing
software company, Adobe wants to dominate the web-publishing
domain as well.  The Street has clearly liked what the company
has done, as the stock is trading near its all-time highs, while
competitors such as Macromedia are trading at much lower levels.
This week, Adobe continued to move upward.  With support from its
5, 10 and 50-dmas, the stock spent the week putting itself in a
position to challenge its high of $85.06, set in early October.
Already moving along nicely in an upward trending regression,
ADBE broke that channel to the upside on Thursday, suggesting it
has moved into an even steeper trading channel, and is finding
support on the upper line of its previous range.  For aggressive
traders looking to enter on a pullback, there is strong support
at the $76-77 area, reinforced by the 5-dma.  There is additional
support at the 10-dma ($73.81), but if the stock closes below
$72, we would no longer recommend the play.  Those looking to
enter on strength will be waiting for ADBE to make a new all-time
high, confirmed by strong buying volume before initiating a play.

***November contracts expire in 2 weeks***

BUY CALL NOV-75 AXX-KO OI=1398 at $8.63 SL=6.00
BUY CALL NOV-80*AXX-KP OI=1384 at $5.75 SL=3.75
BUY CALL NOV-85 AXX-KQ OI=5427 at $3.50 SL=1.75
BUY CALL DEC-80 AXX-LP OI= 231 at $9.75 SL=6.75
BUY CALL DEC-85 AXX-LQ OI=   0 at $7.50 SL=5.25  Wait for OI!!

Picked on Oct 29th at    $74.81    P/E = 68
Change since picked       +5.88    52-week high=$85.06
Analysts Ratings      4-9-2-0-0    52-week low =$26.69
Last earnings 09/14   est= 0.52    actual= 0.57
Next earnings 12-14   est= 0.29    versus= 0.46
Average Daily Volume = 2.13 mln

BRCD - Brocade Communications $253.75 (+27.25 last week)

Brocade is leading the way in a new category of networking:
providing a scalable, reliable foundation for storage
environments.  They are the market leader in Fibre Channel Fabric
switches-the essential framework for networking servers and
storage systems.  Brocade switches deliver the flexible and
secure "Fabric" that supports the tremendous information and
storage demands of today's leading companies.  Brocade Fibre
Channel fabric switches and software provide a networking
foundation for storage area networks (SANs).

Anyone who initiated a play this past week on BRCD has much to be
happy about.  Starting the week off with the holy grail of buying
opportunities on a dip to support at $200, the stock has since
moved straight up to finish at its highs of the week.  In doing
so, BRCD is once again back above all its major moving averages.
What's more, it is now in striking distance of its all-time high.
The stock has been blessed by a number of positive developments.
Coverage initiated by Merrill Lynch on Tuesday certainly helped,
rating BRCD at a Buy and a 12-month price target of $250,
commenting, "We believe investors will bid the shares back up to
our price target as they realize Brocade's barriers to entry
should help it maintain its 100 percent revenue and EPS growth
rates over the next several quarters; thereby enabling it to meet
or exceed (Wall) Street estimates."  True to form, traders and
investors have already taken the stock above these levels.  As
well, BRCD further solidified its leadership position in the
Storage Area Networking (SAN) space in an OEM deal with Dot Hill
Systems Corp., which will see Dot Hill using BRCD's fabric
switches in their SANnet e-business and carrier-class solutions.
As nothing moves up in a straight line, a bounce off moving
average support from the 5 and 10-dma (at $237.03 and $232.32,
respectively) may provide opportunities for aggressive entries.
There is also support at $228.88 from the 50-dma and support in
increments of $5, from $250 all the way down to $215.  While BRCD
is a volatile stock that trades up and down in wide intra-day
ranges, a break below $215 may signal a loss of upward momentum
so be aware of this key support level.  If BRCD decides to
continue its ascent in a strengthening market without taking a
breather, a break through $258 on volume would allow conservative
traders to enter on strength.  From there BRCD would likely
attempt to take out its all-time high.

***November contracts expire in 2 weeks***

BUY CALL NOV-240 GUF-KH OI= 271 at $23.50 SL=17.00
BUY CALL NOV-250*GUF-KJ OI=1813 at $15.00 SL=11.00
BUY CALL NOV-260 ULF-KL OI= 854 at $10.25 SL= 7.00
BUY CALL DEC-250 GUF-LJ OI= 357 at $28.13 SL=20.50
BUY CALL DEC-260 ULF-LL OI= 295 at $22.00 SL=16.00

SELL PUT NOV-240 GUF-WH OI= 917 at $ 7.25 SL=10.00
(See risks of selling puts in play legend)

Picked on Oct 15th at    $239.53    P/E = 657
Change since picked       +14.13    52-week high=$267.44
Analysts Ratings      10-6-2-0-0    52-week low =$ 55.06
Last earnings 08/16    est= 0.13    actual= 0.16
Next earnings 11-29    est= 0.20    versus= 0.03
Average Daily Volume =  3.07 mln

CMVT - Comverse Technology $118.13 (+8.31 last 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.

As one of a select few Tech stocks to finish in the green for the
month of October, investors have found it hard to ignore the
strong fundamentals in CMVT.  With 19 consecutive quarters where
the company has met or exceeded analyst expectations, CMVT has
established a track record of consistency and excellence in
earnings and execution.  A $200-million backlog of orders, its
largest yet, for the remainder of the year and $900 million in
cash and marketable securities, gives CMVT a solid cash flow
position.  In the past four years, CMVT has grown its market
share from 25% to 40%, and now with competitors Lucent and
Ericksson recently falling into disgrace, the company is well
positioned to take advantage and further expand its customer
base.  Uncertainly surrounding the merger between competitors
PHCM and SWCM have also brought investors' dollars into CMVT's
stock.  New products are also on the horizon, with an impending
release of voice-activated software for features such as wireless
dialing.  CMVT's instant wireless messaging software is already a
leader in Europe, and will soon be making its way to the United
States. The company has also found institutional support, with
all 16 analysts covering the stock rating it as either a Strong
Buy or a Buy.  With 55 percent of its employees and operations
based in Israel, news this week that tensions in the Middle
East appear to be subsiding will help in its continuing ascent.
Currently, CMVT has support at $115 and $110, which are
strengthened by the 5 and 10-dma, at $114.18 and $110.28
respectively.  A bounce off these levels on volume would provide
an aggressive entry but make sure CMVT does not fall below $110,
as it could head lower from that point.  A failure at that level
would end the play.  For conservative traders, a break
through $120 resistance with conviction will provide for a solid
entry, with the next stop its all-time high of $123.88.

***November contracts expire in 2 weeks***

BUY CALL NOV-115 CQZ-KC OI=1064 at $ 9.13 SL=6.25
BUY CALL NOV-120*CQZ-KD OI= 510 at $ 6.63 SL=4.50
BUY CALL NOV-125 CQZ-KE OI= 714 at $ 4.75 SL=3.00
BUY CALL DEC-120 CQZ-LD OI= 370 at $13.25 SL=9.75
BUY CALL DEC-125 CQZ-LE OI= 124 at $11.38 SL=8.50

SELL PUT NOV-110 CQZ-WB OI= 311 at $ 3.38 SL= 5.50
(See risks of selling puts in play legend)

Picked on Oct 31st at   $111.75    P/E = 97
Change since picked       +6.38    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 = 2.42 mln

EMC - EMC Corporation $97.75 (+8.94 last week)

EMC is the leading builder of the world's most robust, secure
and trusted information storage infrastructures. Their storage
systems, software, networks and services ensure fast,
round-the-clock access to all of the information businesses
and individuals must have to prosper in the Information
Economy. EMC's wide range of hardware and software products
Enable organizations to create an electronic information
Infrastructure which EMC calls an E-Infostructure. To EMC's
customers, EMC is the caretaker of the world's information.

According to recent estimates, 75% of all information technology
hardware budgets will consist of storage hardware by the year
2003.  As the "Cisco" of the Storage sector, investing in EMC has
been seen by investors as a great way to take advantage of this
possible trend.  This was a busy week for EMC, as it not only
bounced strongly to put itself back above all its major moving
averages, but also made what could be a monumental acquisition
that could pay dividends for many years to come.  When a gorilla
beats its chest, the jungle listens.  This week, EMC acquired
server software company CrosStor Software for $300 million in
stock.  This move not only puts EMC in a position to take
advantage of the higher margins of the software part of the
Storage sector, but also puts the company in a position to enter
the Network Attached Storage (NAS) space, which Network Appliance
(NTAP) is currently the leader.  Considering that NTAP has been
growing year-over-year at a rate of over 120 percent, this is a
lucrative space indeed.  Investors in NTAP are already feeling
the pressure, as their stock has headed lower in light of this
uncertainty.  Some of this money has likely headed to other
storage companies such as BRCD, EMC and VRTS.  At this point, EMC
appears poised to break through the psychological $100 barrier.
A move above this level on strong volume would be the green light
for conservative traders to step in.  For aggressive traders, a
test of the 50-dma at $94, or the converged 5 and 10-dma at
$91.64 are possible targets to shoot for.  In buying off a
bounce, make sure that EMC stays above key support at $86.  A
break below could lead to more weakness, though currently
conditions suggest that this is highly unlikely, as EMC plans to
grow 20 percent of its revenues from the software side of its
business.  This additional stream of income appears to be in the
process of being factored into the stock price.

***November contracts expire in 2 weeks***

BUY CALL NOV- 90 EMC-KR OI= 4248 at $9.50 SL=6.50
BUY CALL NOV- 95*EMC-KS OI= 6589 at $6.00 SL=4.00
BUY CALL NOV-100 EMC-KT OI=11873 at $3.25 SL=1.75
BUY CALL DEC- 95 EMC-LS OI= 3593 at $9.50 SL=6.50
BUY CALL DEC-100 EMC-LT OI= 2065 at $7.13 SL=5.00

Picked on Oct 22nd at    $100.00    P/E = 151
Change since picked        -2.25    52-week high=$104.94
Analysts Ratings     16-10-1-0-0    52-week low =$ 35.06
Last earnings 10/18    est= 0.19    actual= 0.20
Next earnings   N/A    est= 0.23    versus= 0.17
Average Daily Volume =  9.03 mln

PSFT - PeopleSoft $46.75 (+1.75 last week)

PeopleSoft's mission is to provide innovative software solutions
that meet the changing business demands of organizations
worldwide.  Founded in 1987, PeopleSoft is a market-leading
provider of eBusiness application software for Fortune 1000-class
corporations.  From an early focus on the enterprise applications
of human resources and finance, PeopleSoft expanded its tools and
application portfolio to support these core business processes:
materials management, project performance analysis, supply chain
planning, manufacturing operations, and eBusiness.

It's no secret that people love PeopleSoft, as it's stock price
has soared since its early summer lows.  So much so that PSFT is
now the number one performing stock in the S&P 500 over the past
six months.  In the past 30 days, it is number three and over
the past year, is in tenth place.  To outperform so many of the
leading companies in the market over an extended period of time
is no accident, nor is it a one-hit wonder.  The company's recent
shift in focus, from a lower growth (15 percent per year)
intra-company software market to a higher growth (45 to 50
percent) customer management software market is paying off, much
to the delight of investors.  PSFT spent the first half of this
past week in consolidation mode, digesting its recent gains.  As
mentioned in Thursday's write-up, PSFT not only got through the
dreaded month of October in one piece, but gained an astounding
38% during that time.  With volume to the downside low, it has
continued to dry up as traders banked some of the large gains
in this stock.  It appears now, however, that PSFT is ready to
head higher.  Successfully testing its 10-dma, now at $44.73,
PSFT now has strong support from that moving average as well as
the 5-dma near the $45 level.  A bounce off support confirmed
with buying volume would allow for an aggressive entry.  There is
also support at $43 and $42 but in entering this play on a
pullback, make sure that the $42 level holds, as a break below
this point would no longer make this a recommended play.  As
strong supporters of using stop loss orders to limit downside
risk, we are placing a stop at this level.  For a safer entry,
look for a break through its all-time high of $48, backed by
strong buying pressure, before entering.  Breaking through $50
will put PSFT into brand new territory.

***November contracts expire in 2 weeks***

BUY CALL NOV-40 PQO-KH OI=1428 at $7.75 SL=5.50
BUY CALL NOV-45*PQO-KI OI=3086 at $3.88 SL=2.50
BUY CALL NOV-50 PQO-KJ OI=1440 at $1.50 SL=0.75
BUY CALL DEC-45 PQO-LI OI= 179 at $6.00 SL=4.00
BUY CALL DEC-50 PQO-LJ OI=3395 at $3.75 SL=2.25

Picked on Nov 1st at    $46.13     P/E = 136
Change since picked      +0.62     52-week high=$48.00
Analysts Ratings     2-8-9-0-0     52-week low =$12.00
Last earnings 10/17  est= 0.07     actual= 0.08
Next earnings 01-16  est= 0.09     versus= 0.04
Average Daily Volume= 6.37 mln

RIMM - Research In Motion Ltd. $109.25 (+9.31 last week)

Based in Waterloo, Ontario, Canada, Research In Motion Limited is
a leading designer, manufacturer and marketer of innovative
wireless solutions for the mobile communications market.  Through
development and integration of hardware, software and services,
RIMM provides solutions for seamless access to time-sensitive
information including email, messaging, Internet and
intranet-based applications.  RIMM technology also enables a
broad array of third party developers and manufacturers in North
America and around the world to enhance their products and
services with wireless connectivity.

The handheld computing sector got a nod from the market this
week, as PALM was added to the NASDAQ 100 (QQQ) as of Friday's
close.  With other recent additions Ariba (business-to-business)
and Broadcom (broadband semiconductors), it appears that the
Internet appliance industry is gaining some well-deserved
recognition.  Considering that the NASDAQ 100 committee bypassed
the criteria of having to be listed for a minimum of one year
(PALM went public this past March), PALM's addition becomes an
even greater compliment.  As one of the three leading companies
in this sector, RIMM finds itself in the center of what could
turn out to be an all-out bidding war.  It's a simple case of
supply and demand, really, with many investor dollars chasing so
few stocks.  But there are unique characteristics to RIMM's
business model, which make this stock an especially attractive
one.  Like PALM, which generates revenue from the sale of its
handheld devices as well as royalties from licensing its PalmOS,
RIMM has a dual income stream.  Along with making profit from
selling its Blackberry line of portable devices, RIMM generates a
steady monthly cash flow from subscription fees.  The law of
discounting in Finance dictates that the more predictable the
revenue stream, the higher the premium afforded.  What this means
is, RIMM's revenue stream from monthly subscription fees can be
more highly valued because there is less risk, which if the math
is done right, means a higher stock price.  This is just what we
want to hear about our call play.  Aggressive entries can be had
on a bounce off the 5-dma near the psychological $100 as well as
the 10-dma near $105.  We would however, recommend setting a stop
at $95 as a break below this key level would no longer make this
an attractive play.  An entry on strength is a better bet, with a
break through $110 with conviction, confirmed by a strong market
(in this case, we would recommend watching the Toronto Stock
Exchange, which RIMM trades on under the symbol RIM) for a
conservative entry point.

***November contracts expire in 2 weeks***

BUY CALL NOV-105 RUL-KA OI=345 at $11.75 SL= 9.00
BUY CALL NOV-110*RUL-KB OI=563 at $ 8.75 SL= 6.00
BUY CALL NOV-115 RUL-KC OI=595 at $ 6.63 SL= 4.50
BUY CALL DEC-110 RUL-LB OI=278 at $16.00 SL=11.50
BUY CALL DEC-115 RUP-LC OI=149 at $13.75 SL=10.25

SELL PUT NOV-100 RUL-WT OI=311 at $ 4.63 SL= 2.75
(See risks of selling puts in play legend)

Picked on Oct 19th at   $122.44     P/E = 1775
Change since picked      -13.19     52-week high=$175.75
Analysts Ratings      6-8-0-0-0     52-week low =$ 23.25
Last earnings 09/28  est= -0.03     actual= -0.02
Next earnings 12-28  est= -0.02     versus=  0.05
Average Daily Volume = 2.00 mln

PKI - PerkinElmer Inc. $115.94 (+4.56 last week)

PerkinElmer is a global technology company, which provides
products and systems to the Telecom, Medical, Pharmaceutical,
Chemical, and Semiconductor markets.  The company's Life
Sciences unit provides chemical reagents, sample handling and
measuring instruments, and computer software to bio-screening
and population screening laboratories.  PKI's Optoelectronics
unit produces products such as high volume and high
performance specialty lighting sources, detectors, optical
fiber communications components, and imaging devices.  The
company's Instruments division makes sophisticated analytical
instruments and imaging detection systems.

Providing products to a broad spectrum of technology-related
industries, one would expect PKI to be subject to the whims
of the broader technology market.  While a case could be made
for that position over the past couple days while both the
NASDAQ and our play consolidated, it doesn't explain how PK
 was able to charge to new highs earlier in the week.  The
simple explanation would seem to be that the stock is more
closely related to the DJIA, but even that doesn't entirely
explain buyers' interest in the stock over the past 3 months
while the major indices languished.  With the broader markets
getting healthy again, PKI could very easily catch the wave and
charge to new highs, especially once the election is behind us.
Resistance is intake between $120-121, and conservative players
will want to wait for a solid push through this level before
initiating new positions.  Volume on Friday remained near the
ADV as our play fell for most of the day, finally finding
support near $114.50.  This was rather encouraging as it
coincided with the 10-dma (currently $114.88), and the bulls
stepped up near the close to tack on more than $1.  A recovery
from this level is definitely buyable, but just keep in mind
that our stop is placed at $113.  If PKI falls victim to heavy
selling that drops it through $113 on a closing basis, it will
be grounds for expulsion from the playlist.

***November contracts expire in 2 weeks***

BUY CALL NOV-115*PKI-KC OI=198 at $6.63 SL=4.50
BUY CALL NOV-120 PKI-KD OI=505 at $4.38 SL=2.75
BUY CALL NOV-125 PKI-KE OI=277 at $2.19 SL=1.00
BUY CALL DEC-120 PKI-LD OI= 13 at $8.75 SL=6.00
BUY CALL DEC-125 PKI-LE OI=  0 at $6.50 SL=4.50  Wait for OI!!

SELL PUT NOV-110 PKI-WB OI= 17 at $3.00 SL=5.00
(See risks of selling puts in play legend)

Picked on Oct 31st at  $119.50     P/E = 58
Change since picked      -3.56     52-week high=$121.00
Analysts Ratings     4-0-1-0-0     52-week low =$ 37.81
Last earnings 10/00  est= 0.45     actual= 0.66
Next earnings 01-18  est= 0.57     versus= 0.61
Average Daily Volume   = 644 K

MEDX - Medarex, Inc. $68.81 (+5.81 last week)

One of several Biotechnology companies that is using
genetically engineered mice to create human monoclonal
antibodies and develop therapeutic products, MEDX calls its
invention the HuMAb-Mouse.  Several treatments are in clinical
trials; some target cancers (prostate, colon, kidney) tumors
(head, neck, breast), and others are designed to fight forms of
anemia and acute leukemia.  The company's lead product, MDX-RA,
may prevent secondary cataracts.  Spreading its influence, MEDX
currently has deals with more than a dozen firms, including
Centacor, Merck, and Aventis Behring.

Like many Biotech companies, MEDX is being tight-lipped about
its earnings release date.  When we called on Friday, we were
told the date has not been set, but to expect the announcement
45 days after the end of the last quarter.  Hmmm...sounds like
November 14th to me, but we'll keep checking until we get a more
definitive answer.  Shares of the company have seen a pretty
nice run in the wake of the company's 2-for-1 split, which took
place on October 18th.  Two days later the buyers were back in
force, bidding the price higher, possibly on news of the
alliance formed with ZymoGenetics.  The combination of MEDX's
fully human monoclonal antibody development technology with
ZymoGenetics' expertise in the field of genomics and protein
therapeutics bodes well for bringing additional products to
market, and driving MEDX towards profitability.  The
consolidation early last week near $60 provided a nice
springboard and the share price subsequently shot up to
temporarily top the $70 level, posting another higher high.
Friday's consolidation may continue until after the election,
and then MEDX should be off to the races again.  Intraday
support is found near $66, and a bounce near this level looks
like a good entry point for aggressive players.  Wait for the
bounce before jumping into the play though, as a close below $64
would trigger our stop, as it would be a sign that our play is
losing its upward momentum.  More conservative investors will
wait for continuing strong buying volume to propel MEDX through
the $71 level before initiating new positions.

***November contracts expire in 2 weeks***

BUY CALL NOV-60 MZU-KL OI=260 at $11.00 SL=8.25
BUY CALL NOV-65 MZU-KM OI=270 at $ 7.63 SL=5.25
BUY CALL NOV-70*MZU-KN OI=849 at $ 5.00 SL=3.00
BUY CALL DEC-65 MZU-LM OI=  6 at $10.75 SL=8.00
BUY CALL DEC-70 MZU-LN OI=334 at $ 8.38 SL=6.00

Picked on Nov 2nd at     $70.25     P/E = N/A
Change since picked       -1.44     52-week high=$103.00
Analysts Ratings      3-3-0-0-0     52-week low =$  3.78
Last earnings 08/00  est= -0.05     actual= -0.08
Next earnings 11-09  est= -0.05     versus= -0.08
Average Daily Volume   = 601 K

ITWO - I2 Technologies Inc  $170.44 (+2.94 last week)

ITWO is a global provider of intelligent eBusiness solutions for
supply chain management and enhanced business applications.  On
June 12, 2000 ITWO merged with Aspect Development (ASDV) to
create one of the largest software providers for eBusiness and
eMarketplace solutions.  TradeMatrix, its Internet marketplace,
provides an open digital community powered by i2's advanced
optimization and execution capabilities that help manufacturers
plan production and other related operations.  Clients include
3M, Compaq, Ford and Nokia.

I2 Technologies is a solid performer and a company that forms
the backbone of the electronic marketplace.  It's strategically
positioned to survive any Internet controversy.  Last month the
company reported blow out 3Q earnings, coming in two pennies
ahead of the consensus estimates at $0.12.  The top line
revenues rose a substantial 118% to $319.5 mln from $146.3 mln a
year ago and easily surpassed the expected $264 mln to $285 mln
range.  The BoD also announced a 2:1 stock split payable on or
around December 5th, pending shareholders' approval.  A
shareholder vote is scheduled for November 28th.  It also hit
the press last week that ITWO, along with 12 other equity
partners, are merging two purchasing exchanges: AirNewco and
MyAircraft and creating a single enterprise for the $500 bln
aviation industry.  In recent times, ITWO mounted a steadfast
recovery following the tech carnage.  Coming off the October
26th low of $145.70, ITWO has since captured $24.69, or 17% in
gains.  Going forward, look for ITWO to stretch higher ahead of
the proposed stock dividend.  As we saw during Wednesday's
session, there is resistance at the $180 level.  Modest traders
may want to buy into strength as ITWO moves through this
resistance level.  The 5 and 10 DMA lines at $168 also serve as
solid launching points on the climb.  If you choose to take
entry on a downdraft, keep it above the $160 mark as we'll exit
 the play on any close below that level.

***November contracts expire in two weeks***

BUY CALL NOV-165 QYI-KM OI= 471 at $14.00 SL=10.50
BUY CALL NOV-170*QYI-KN OI= 485 at $11.50 SL= 8.75
BUY CALL NOV-175 QYI-KO OI= 297 at $ 9.13 SL= 6.25
BUY CALL DEC-175 QYI-LO OI=  20 at $17.50 SL=12.50
BUY CALL DEC-180 QYI-LP OI=  86 at $15.50 SL=11.25

Picked on Oct 31st at   $170.00    P/E = N/A
Change since picked       +0.44    52-week high=$223.50
Analysts Ratings    13-20-4-0-0    52-week low =$ 34.75
Last earnings 09/00   est= 0.10    actual= 0.12
Next earnings 01-16   est= 0.15    versus= 0.10
Average Daily Volume = 4.46 mln

MANU - Manugistics Group $120.50 (+10.53 last week)

Manugistics Group provides a suite of strategic, tactical, and
operational supply chain planning software products.  However
nearly 60% of its sales is derived from consulting and other
related customer support services.  Their blue-chip clients are
in the automotive, chemical, electronics, food, pharmaceutical,
and retail markets.

MANU has seen an astonishing recovery in the past few weeks.
Going into October, the share price took a beating and lost
almost 50% of its value.  The downward momentum took MANU from a
recent pinnacle of $109.44, reached on September 22nd, to $61.75
where it found support above the 200-dma line.  On the rebound,
its quick climb to the topside of $100 was encouraging.  However
it was the recent rotation back into the tech sector that acted
as the catalyst for the upward momentum to really take hold.
MANU is currently above the resistance levels of $110 and $115
and is developing strength above $120 on good volume.  We're
looking for the current momentum to move MANU higher as the
markets rally into the end of the year and the company
approaches earnings in December.  If MANU explodes into next
week, high-volume moves off $120 are reasonable.  Look for MANU
to make a convincing break through $126.25, Thursday's intraday
high; although, it isn't out of the question for some profit
taking to surface in the coming sessions.  If investors do lock
in some gains, you might instead want to take entry off the 5-
dma ($115.49) and short-term support at $115 and ride up a
rebound.  But take heed, don't begin new plays if MANU
demonstrates too much weakness and closes under $110.  If that
happens, we'll quickly exit and move on to more opportune plays.
Good financial news surrounded Manugistics this week.  The
company announced that it will receive total net proceeds of
approximately $242 mln from its recent private placement, which
ender November 2nd.

***November contracts expire in two weeks***

BUY CALL NOV-115 ZUQ-KC OI=16 at $15.88 SL=11.50
BUY CALL NOV-120*ZUQ-KD OI=57 at $13.25 SL=10.00
BUY CALL NOV-125 ZUQ-KU OI=70 at $10.88 SL= 8.25
BUY CALL DEC-120 ZUQ-LD OI=16 at $21.00 SL=15.25
BUY CALL DEC-125 ZUQ-LU OI=53 at $18.75 SL=13.75

Picked on Nov 2nd at   $123.63    P/E = N/A
Change since picked      -3.13    52-week high=$126.25
Analysts Ratings     3-8-1-0-0    52-week low =$ 12.50
Last earnings 09/00  est= 0.00    actual=  0.03
Next earnings 12-21  est= 0.06    versus= -0.17
Average Daily Volume =   985 K

MLNM - Millennium Pharmaceuticals $84.06 (+10.25 last week)

Millennium Pharmaceuticals is engaged in the commercial
application of genetics, genomics & bioinformatics for treatment
and diagnostics of such diseases as asthma, stroke, colitis, and
Crohn's disease.  It derives revenues from research and
development alliances with the major drug companies.  Currently
Millennium's LeukoSite subsidiary has developed CAMPATH, a
potential leukemia treatment that has received FDA fast-track

Strong upside action through historical resistance at $80 and a
favorable light on the biotech sector put MLNM on our call list
last week.  The stock exploded on Thursday with a $7.19, or 9.4%
advance for a bullish close at the $84 mark.  Volume was grand
at almost twice the ADV.  Friday's session saw modest overall
gains, but MLNM went center stage with another 52-week high.
The record to beat now stands at $87.50.  Momentum is building
quickly and the technical DMAs are now dots in the rear-view
mirror.  Aggressive traders could take entry on deep intraday
pullbacks to the 5-dma, currently at $77.78.  However, it'd be
wise to consider closing out positions if MLNM closes below $75.
At that level, we would deem it necessary to drop the play on
account of the downside bias.  However, we're going into next
week with a positive outlook.   With the company's recent
earnings release and 2:1 stock split now history, the calendar
is clear for a pure momentum run into the holiday season.  We're
looking for momentum players to move MLNM through the $90 level.
Volume should remain robust on the climb.  Recent news too
reminded investors that Millennium Pharmaceuticals and Bayer
AG's five-year research alliance is producing results.  Their
collaboration to streamline the drug discovery process is a
great success.  So far the collaboration resulted in more than
70 disease-relevant drug targets moving into high-throughput
screening or lead identification, a key step in drug discovery.

***November contracts expire in two weeks***

BUY CALL NOV-80 UMY-KP OI= 694 at $ 9.00 SL=6.25
BUY CALL NOV-85*UMY-KQ OI= 648 at $ 6.13 SL=4.00
BUY CALL NOV-90 UMY-KR OI=1153 at $ 4.00 SL=2.50
BUY CALL DEC-85 UMY-LQ OI= 516 at $10.25 SL=7.00
BUY CALL DEC-90 UMY-LR OI= 300 at $ 8.25 SL=5.75

Picked on Nov 2nd at     $84.00    P/E = N/A
Change since picked       +0.06    52-week high=$84.25
Analysts Ratings      6-6-2-0-0    52-week low =$17.56
Last earnings 09/00   est=-0.11    actual=-0.13
Next earnings 01-16   est=-0.06    versus= 0.01
Average Daily Volume = 2.18 mln

Attention Online Traders:

NobleTrading.com has become the first online trading firm to
offer both Direct Access Trading, and web based trading to its
customers. Trade Direct using any ECN, SOES, and SelectNet, or
trade right through your browser using our web based trading
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Please read our disclaimer at:

The Option Investor Newsletter                   Sunday 11-05-2000
Sunday                                                      4 of 5

To view this email newsletter in HTML format with embedded
charts and graphs, click here:

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GSPN - GlobeSpan $73.47 (+5.72 last week)

GlobeSpan is a worldwide developer of advanced digital
subscriber line (DSL) integrated circuits, which enable
high-speed data transmission over the existing network of
copper telephone wires at rates over 100 times faster than
today's 56 Kilobit modems.  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.
GSPN is the result of Lucent's 1996 spin-off of AT&T Paradyne,
and still outsources most of its production to Lucent.

Since completing a triple top at the $140 level in late
September, shares of GSPN have been in a painful downward trend,
giving up nearly 50% of their value since then.  The top of the
channel containing the decline is now positioned at $80, and it
looks like the stock is heading south again, having failed to
break through earlier this week.  Even the announcement of
strong earnings on October 23rd was insufficient to kick the
stock out of its funk, and the decline resumed after a one day
respite.  Stopping the post-earnings rally attempt dead in its
tracks was the 200-dma, then sitting at $97.88.  The string of
lower highs and lower lows remains intact and the most recent
relative high defines our stop at $82.  While a test of this
resistance level would provide a very attractive entry for
aggressive players, it looks like the more likely near-term
direction is down.  Instead of looking for a move to the top of
the descending channel, we would recommend looking for a
rollover from intraday resistance at $77 to initiate new plays.
Mild support seemed to materialize on Friday near $71, and
more conservative players will want to enter on weakness,
opening new positions as GSPN dips below this level with the
assistance of increased selling volume.

***November contracts expire in 2 weeks***

BUY PUT NOV-75*GHY-WO OI=400 at $8.00 SL=5.75
BUY PUT NOV-70 GHY-WN OI=177 at $5.88 SL=3.75

Average Daily Volume = 2.31 mln

MNMD - MiniMed Inc. $67.69 (-4.31 last week)

Minimed designs, develops, manufactures, markets, and sells
advanced microinfusion systems and continuous glucose monitoring
systems for the intensive management of diabetes.  Its pumps
deliver hundreds of tiny infusions of insulin, thus replacing
the need for injections; MNMD's implantable insulin pump is
approved for sale in Europe.  Using its drug delivery expertise,
the company is also developing infusion devices for the
treatment of other chronic medical conditions such as high
blood pressure.

Caught in the crosshairs by speculation that the weak Euro
would impact revenues of the medical device makers, MNMD fell
out of its uptrending channel in early October and never
recovered.  As it turned out, the worries about profits were
justified, but misplaced.  The company failed to meet analysts'
estimates when it reported its quarterly results on October
18th, but the culprit was that a larger than expected portion
of the company's business went to Medicare, which strings
payments out over time.  Although the company's fundamentals
remain strong, the damage had been done, and the stock dropped
by more than 16% the day of the announcement.  Even an upgrade
by Wedbush Morgan from LT Attractive to Buy was only sufficient
to push the share price up to resistance (the top of the gap
from the 18th), before the selling resumed.  Adam Harkness
started coverage with an Accumulate rating last week, but that
isn't exactly a glowing recommendation, and it went largely
ignored by investors.  Adding insult to injury, selling volume
began increasing towards the end of the week, hitting 150% of
the ADV on Friday, as the share price fell 5%.  It now looks
like the bottom of the earnings-related gap down ($72) will
contain any upward moves in the near-term.  Accordingly, a move
above this level will stop us out of the play, as it will likely
presage a more sustained recovery.  Look for new entries to
materialize as MNMD continues its decline.  A fall through $66
(Friday's low and historical support) looks like a good point
to initiate conservative plays.  Those looking for a more
aggressive entry will want to look for an attempted rally to
fail near resistance before jumping into the play.  Tighten up
your stops as MNMD approaches its 200-dma (currently $61.44),
as it sits right at significant historical support.

***November contracts expire in 2 weeks***

BUY PUT NOV-70*MAQ-WN OI= 155 at $5.00 SL=3.00
BUY PUT NOV-65 MAQ-WM OI=1809 at $2.38 SL=1.25

Average Daily Volume = 631 K


SLR - Solectron $44.13 -0.88 (-3.88 last week)

Solectron is an electronics manufacturing service provider.
The company’s clients are primarily original equipment
manufacturers, which design and sell computers, workstations,
electronics equipment, and telecommunications equipment.
Solectron provides outsourcing solutions along the entire
product life cycle, from design, circuit board assembly, product
distribution and repair.  Solectron also has New Product
Introduction centers in several countries, which offer new
product development services.

Anyone who bought a SLR put earlier in the week could have taken
a nice profit on Friday morning, as it dropped as low as $42.25
on strong selling.  And it was very strong, as over four million
shares traded by 10:30 AM, knocking the stock below its 50-dma
of $45.  While SLR managed to recover from the oversold position
by midday, it did not have the strength to keep its head above
water.  Towards the end of the day, SLR rolled over, and fell
below the previous day’s close and support level at $45. SLR is
solidly below the 10-dma of $46.81 and the 5-dma of $44.89.  The
company issued a press release stating that their earnings for
the fiscal year ending August 2001 would be $.99 to $1.02 per
share, down from their previously released expectations of $1.12
to $1.15 per share, due to the dilutive effect of the $2.4 billion
NatSteel purchase.  In addition, the electronics components sector
lacks strength.  SLR appears to have hit a double top at $45
and retreated.  There is no near-term bullish factor driving
momentum,  and heavy institutional selling is occurring.  Friday’s
volume was 6.3 million shares, more than double the average daily
volume.  Consider entering new positions on a failed attempt to
clear $45, and exit all positions if the stock should clear $48.

***November contracts expire in 2 weeks***

BUY PUT NOV-50 SLR-WJ OI=1726 at $6.50 SL=$4.50
BUY PUT NOV-45*SLR-WI OI=4103 at $2.81 SL=$1.50

Average daily volume = 2.88 million

MERQ - Mercury Interactive $112.44 (-4.38 last week)

As a provider of integrated performance management solutions
that enable businesses to test and monitor their Internet
applications, MERQ is looking for growing e-commerce demand to
continue to fuel its business.  The company's products perform
such tasks as analyzing and eliminating Web site performance
bottlenecks and automating quality assurance testing.  MERQ's
client base spans a wide range of industries including
Internet companies such as Amazon.com and America Online,
infrastructure companies Ariba and Oracle, as well as Apple
Computer, Cisco Systems and Ford Motor Company.

When we started this play on Thursday, we cited a number of
reasons for weakness in this stock.  Valuation concerns, large
debt load, high interest charges acting as a lodestone to the
company's growth, sexier and more reasonably valued prospects for
investor dollars, fear over decreases in capital spending in an
slowing economy, all of these factors have contributed in the
stock's downtrend.  A downgrade in mid-October from Prudential
from Strong Buy all the way down to Accumulate only added fuel to
the fire sale.  Ever since it hit a high in early October, MERQ
has been trading lower in a downward trending regression channel.
Connecting its highs and lows since late September, it appears
that the stock is currently close to the top of this channel.
Along with strong resistance from the 10-dma, the stock appears
headed to its 200-dma, just below the psychological support level
of $100.  The 100-dma has provided especially formidable
resistance, as MERQ has failed to rally above this moving average
all week long.  In entering this play, aggressive traders may
want to consider a failed rally off this moving average,
currently sitting near $115, as a possible entry point.  But make
sure that MERQ does not close above this point, as this would be
a signal that the downtrend may be broken, and we would no longer
recommend this play.  The 10-dma, currently at $114.85, only
serves to emphasize the importance of $115 as a key support
level.  For conservative traders, a break below $110 on volume is a
target to shoot for but just to make sure, you may want to wait for
MERQ the fall through its 5-dma at $109.17 before entering.

***November contracts expire in 2 weeks***

BUY PUT NOV-115 RBF-WC OI=839 at $11.88 SL=$9.00
BUY PUT NOV-110*RBF-WB OI=316 at $ 9.13 SL=$6.25
BUY PUT NOV-105 RBF-WA OI=241 at $ 6.88 SL=$5.00

Average daily volume = 1.76 mln

LVLT - Level 3 Communications Inc $39.81 (-4.56 last week)

Level3 Communications is a global telecommunications and
information services company that is building an international
fiber-optic network based on internet protocol (IP).  Their
focus is primarily on the business market.  Services include
local, long distance, and data transmission as well as other
enhanced services. Currently they serve 20 cities in the US and
Europe.  LVLT also has its hands in the coal mining business.

Three years ago, this Colorado company went public and wooed the
Street with its plan to build a global fiber optics network that
would rival the major players.  Investors poured billions of
dollars into Level 3 Communications, which ultimately have
allowed it to fund its five-year construction project to build a
16,000-mile US fiber optic highway connecting 56 metro networks.
With that said, it sounds like LVLT should be gilded in gold and
untouchable.  But the Street is harsh and investors want nothing
less than perfection.  News of Nortel's (NT) woes and WorldCom's
(WCOM) 4Q concerns and restructuring plans put the pressure on
LVLT.  The current downtrend line is intact with the price level
now below $40.  If you're aggressive and are anticipating taking
an entry on a high-volume rollover, you might consider $48 your
cutoff point.  We will exit the play if LVLT demonstrates
strength about this level.  We want to avoid getting caught in a
buying spree.  Remember these prices haven't been seen in almost
two years!  More conservative entries can be found on downward
bounces from the 5-dma ($43) or on further weakness from the
current price.  The nearest thing to support is Friday's new 52-
week low at $37.25.  Expect some opposition moving through this

***November contracts expire in two weeks***

BUY PUT NOV-40*HGY-WH OI=629 at $ 3.75 SL=2.00
BUY PUT NOV-35 HGY-WG OI=210 at $ 1.63 SL=0.75

Average Daily Volume = 3.49 mln

DGX - Quest Diagnostics $96.75 (+6.25 last week)

Quest Diagnostics is the nation's leading provider of diagnostic
testing, information and services. The testing performed on
human specimens helps doctors diagnose, treat and monitor
disease; enables employers to detect workplace drug abuse; and
supports pharmaceutical and biotechnology companies in clinical
trials of new therapeutics worldwide. Quest Informatics analyzes
laboratory and other medical data to help health care providers
improve the care of patients.

A solid earnings report that beat estimates certainly shouldn't
have agitated investors.  But, as we've seen in the past, traders
took chips off the table following the announcement.  the sharp
sell-off on October 20th brought DGX to its historical support
level at the century mark.  It proceeded to trade sideways amid
the fickle marketplace, despite the array of analysts tagging it
with buy recommendations.  There was no other company-specific
news to explain the sell-off.  The immediate downtrend was more
the result of profit taking gone overboard.  This Monday's low
at $86.75 marked a bottom for the week's trading, but subsequent
intraday gyrations provided the chance to aggressively target
shoot.  The peaks and valleys pattern were at significantly
higher levels, but nevertheless tradable.  As the week
progressed, DGX couldn't move lower than $88 and found
shorter-term support at $96 and $97 by Friday.  A move to the
upside of the 10-dma line ($97.41) would be critical.  If the
stock fails to rollover and manages to close above the critical
$100 level, we'll exit the play.  Wait for conclusive downside
action before beginning new positions.

***November contracts expire in two weeks***

BUY PUT NOV-95*DGX-WS OI= 50 at $6.13 SL=4.00
BUY PUT NOV-90 DGX-WR OI=103 at $3.75 SL=2.50

Average Daily Volume = 618 K

Attention Online Traders:

NobleTrading.com has become the first online trading firm to
offer both Direct Access Trading, and web based trading to its
customers. Trade Direct using any ECN, SOES, and SelectNet, or
trade right through your browser using our web based trading
application. FREE DSL service for active traders.

Visit our website and sign up for a Free real-time demonstration!


October: In Like A Bear, Out Like A Bull
By Mark Phillips
Contact Support

Living up to its reputation, October put fear into the hearts
of the die-hard bulls, sending the DJIA down for an intraday
test of 9650, and forcing the NASDAQ to endure 3 tests of the
3000 level.  Finally getting a clean bill of health, the bulls
began coming timidly back to the market, resuscitating the old
economy stocks first and then moving back to their favorite
technology stocks.  By the end of the week, the DJIA had settled
in nicely above 10800 (more than 1000 points above its October
low), while the NASDAQ managed to creep gradually higher,
settling above the 3400 support/resistance level.

Fortunately, this selloff and subsequent recovery came with the
requisite swings on the VIX.  Corresponding to the extremes in
the broader markets, our favorite fear index put in a nice
double top at 36.74, and a lower high at 34.00, before giving
the markets the all-clear, diminishing fear signal.  Falling
back into the middle of its historical range in a more sedate
fashion than we saw 2 weeks ago, the VIX settled nicely on
Friday at 26.34.  This is solidly out of the danger zone, and
the corresponding recoveries in the broader market, make a
strong case for the worst being behind us now.

The sigh of relief was almost audible as CSCO moved back above
the $50 level, and we saw the week close out with solid gains in
the Networking stocks.  Even NT, the instigator of the selloff
in the sector less than 2 weeks ago, managed to post a gain for
the week, closing back above the $45 level.  The effects of the
rally can be seen in the playlist, with virtually every play
looking better than it did a week ago.  Sharp gains visited most
sectors with AXP, EMC, NOK and GENZ among the notable winners
for the week.

Crude Oil seems to be settling into the $30-35 per barrel range,
partially due to reduced tensions in the Middle East.  The
presidential election is almost upon us, the economy still seems
to be humming along in fine fashion, and we feel fairly
comfortable saying the fall correction is now in the rear view
mirror.  Combine all of these factors and you get a pretty
healthy upside bias to the markets.  We know there is a lot of
cash sitting on the sidelines,...all we need to do now is
convince investors and fund managers to put it to work.

So it looks like the stage is set for a solid fall rally.  I
wouldn't look for it to rival the kind of mania we saw last
year, but positions entered over the past week (and over the
next couple weeks) should profit handsomely between now and the
REAL beginning of the New Millennium.

Happy Trading, and don't forget to vote.

Current Plays


EMC    11/07/99  JAN-2002 $ 45  WUE-AI   $ 9.50   $58.75   518.42%
       09/17/00  JAN-2003 $100  VUE-AT   $32.75   $34.38     4.96%
CSCO   11/14/99  JAN-2002 $ 45  WIV-AI   $11.00   $21.88    98.86%
NT     11/28/99  JAN-2002 $37.5 WNT-AU   $15.13   $17.88    18.14%
       09/10/00  JAN-2003 $ 75  ODT-AO   $27.50   $10.75   -60.91%
SUNW   12/19/99  JAN-2002 $ 90  WJX-AR   $22.00   $42.88    94.89%
       11/05/00  JAN-2003 $120  VSU-AD   $39.50   $39.50     0.00%
AOL    03/12/00  JAN-2002 $ 65  WAN-AM   $18.63   $ 8.30   -55.45%
       08/13/00  JAN-2003 $ 55  VAN-AK   $17.50   $17.10   - 2.29%
AXP    03/12/00  JAN-2002 $46.6 WXP-AQ   $ 9.33   $19.75   111.68%
WM     03/19/00  JAN-2002 $ 30  WWI-AF   $ 5.38   $15.75   192.75%
       10/22/00  JAN-2003 $ 45  VWI-AI   $ 7.88   $10.00    26.98%
JDSU   04/16/00  JAN-2002 $ 80  YJU-AP   $39.63   $28.75   -27.45%
       08/27/00  JAN-2003 $130  VEQ-AF   $55.25   $24.00   -56.56%
NOK    05/21/00  JAN-2002 $ 50  IWX-AJ   $17.25   $ 9.63   -44.20%
       07/30/00  JAN-2003 $ 50  VOK-AJ   $17.75   $13.38   -24.65%
C      06/18/00  JAN-2002 $48.8 YSV-AW   $10.31   $13.88    34.58%
       10/01/00  JAN-2003 $ 60  VRN-AL   $12.25   $12.13   - 1.02%
VRSN   07/02/00  JAN-2002 $190  YVS-AR   $66.25   $37.00   -44.15%
       09/03/00  JAN-2003 $190  OVS-AR   $86.63   $52.88   -38.96%
GENZ   07/16/00  JAN-2002 $ 70  YGZ-AN   $17.13   $32.38    89.00%
                 JAN-2003 $ 70  OZG-AN   $23.13   $39.38    70.23%
HWP    07/30/00  JAN-2002 $ 55  WPW-AK   $14.13   $ 8.50   -38.96%
                 JAN-2003 $ 60  VHP-AL   $16.25   $10.50   -36.92%
EXDS   08/06/00  JAN-2002 $ 55  WZZ-AK   $20.75   $ 7.63   -63.25%
                 JAN-2003 $ 60  VTQ-AL   $25.38   $10.38   -59.12%
MFNX   08/06/00  JAN-2002 $ 40  WOF-AH   $13.75   $ 5.25   -61.82%
                 JAN-2003 $ 45  VKW-AI   $15.63   $ 7.25   -53.61%
FRX    08/13/00  JAN-2002 $ 95  WRT-AS   $31.38   $53.13    61.82%
                 JAN-2003 $100  VFB-AT   $37.38   $58.75    53.61%
BRCD   08/27/00  JAN-2002 $220  YNU-AD   $65.38   $90.88    39.00%
                 JAN-2003 $220  OMW-AD   $86.50   $115.13   33.09%
CMRC   09/10/00  JAN-2002 $ 80  YCU-AP   $30.13   $29.38   - 2.51%
                 JAN-2003 $ 80  OCU-AP   $38.75   $38.88     0.32%
QCOM   09/17/00  JAN-2002 $ 70  WBI-AN   $22.50   $24.38     8.33%
                 JAN-2003 $ 70  VLM-AN   $29.63   $32.38     9.26%
COMS   10/01/00  JAN-2002 $ 20  WTH-AD   $ 6.38   $ 5.00   -21.57%
                 JAN-2003 $ 25  VTH-AE   $ 7.13   $ 5.88   -17.54%
INTC   10/15/00  JAN-2002 $ 45  WNL-AI   $ 9.50   $12.38    30.26%
                 JAN-2003 $ 45  VNL-AI   $13.38   $16.50    23.36%
TXN    10/22/00  JAN-2002 $ 50  WTN-AJ   $13.75   $13.13   - 4.55%
                 JAN-2003 $ 50  VXT-AJ   $18.38   $17.75   - 3.40%
ADBE   10/29/00  JAN-2002 $ 80  YEJ-AP   $23.50   $26.88    14.36%
                 JAN-2003 $ 80  VAE-AP   $30.75   $35.13    14.23%

Spotlight Play

SUNW - Sun Microsystems $113.06

Although coming in fits and starts, the dawn of the NASDAQ's
fledgling recovery was marked by the inadvertent early release
of SUNW's earnings results on October 18th.  Fortunately for the
bulls, the company handily beat analyst estimates and posted
better than 60% revenue growth, allaying investor fears about
the entire technology sector moving into a period of slower
growth.  After rebounding off the 200-dma (then at $95.88) a
week earlier, the positive news propelled our play up to
resistance at the $120 level before more technology fears
prompted one more test of the lows on the NASDAQ.  With one
final bounce at the 200-dma on October 26th, SUNW has been
steadily marching higher, clearing the 30-dma ($111) on Friday.
Even though the 50-dma ($114.94) provided some resistance
towards the close, the improving technicals and steady upward
trend give the impression that this time the recovery has legs.
Consistent with the theory that old resistance becomes new
support, look for new entries to materialize on a pullback to
support in the $110-112 range.  Stronger support is found at
$105, and a close below this level would be a strong signal to
stand aside from the play.  More conservative players will want
to wait for a push through resistance before playing, and a
close over $120 will be just the sign we need that SUNW is
serious about moving to new highs..

BUY LEAP JAN-2002 $120.00 WJX-AD at $28.63
BUY LEAP JAN-2003 $120.00 VSU-AD at $39.50

New Plays

BGEN - Biogen, Inc. $62.63

After surging up north of $120 in the Biotech frenzy this past
spring, BGEN has had a rough time, failing to participate in the
recent recovery in the sector.  After missing its earnings
estimate by 2 cents in early April, nobody wanted the stock and
it languished between $50-60 for nearly 2 months before showing
any signs of life.  On its two most recent rallies, BGEN was
turned back at the 200-dma (currently resting at $69), before
heading back to test its lows near $50.  With the Biotech index
testing its highs near 800, it looks like the sector could head
higher, dragging our new play along with it.  Additionally, BGEN
has managed to meet or beat its earnings estimates the past 2
quarters and if the company can manage to light a fire under its
revenue growth, the stock has plenty of room to run.  The
company's flagship Multiple Sclerosis drug, AVONEX, has recently
been shown to be the most potent drug currently on the market
for combating the debilitating disease.  The most recent
recovery in BGEN's stock price began the same day that story
broke.  It looks like the sentiment in the marketplace may be
changing for the better, when beaten down stocks respond
positively to good news.  Mild support sits at $60, with $55-56
being a much stronger level.  Use a pullback to either of these
levels as an opportunity to get into the play at a bargain, but
don't try to catch a falling knife.  If $55 can't contain the
profit takers, stand aside from the play, because the stock will
likely be headed back for a retest of the $50 level.  At this
point, entering on strength may be the best plan of action - if
that fits your style, wait for strong volume to propel the price
through resistance, currently situated at $65.  Due to the fact
that the 200-dma has proved so difficult to crack recently,
tighten up your stops as BGEN approaches that level.  There's no
sense in giving back your profits if the bears unexpectedly

BUY LEAP JAN-2002 $70.00 WGN-AN at $17.25
BUY LEAP JAN-2003 $70.00 VNG-AN at $25.00




Thanksgiving For November
By Ryan Nelson

I think it is safe to say that we are all happy that October
is over and November has begun.  The month has begun on a
positive note and investors are now looking for a seasonal
rally.  This should help the momentum return to the split
plays.  Unfortunately, there isn't a whole lot to choose from.
Almost everything that has an ex-dividend date in the coming
weeks can be considered since we have an upside bias to the
markets, but as always, narrow it down to the best potential
play.  While most analysts do see the market going higher to
year-end, many have relatively low estimates compared to what
we became used to in 1999.

Current Split Run Plays


Current Split Candidate Plays


Candidates That Are Not Current Plays


10 Most Recent Announcements We Predicted

MUSE - 10/25 (most recent announcement)
AMCC - 10/11
DNA  - 10/05
LEH  - 09/20
ORCL - 09/14
SUNW - 08/17
GLW  - 08/16
HWP  - 08/16
CIEN - 08/15
SEBL - 08/08

Major Announcements So Far This Month = 3


For our complete stock split calendar, click here...

Symbol  Company Name                Splits  Payable    Executable

TLB  - Talbots, Inc.                  2:1  11/07/2000  11/08/2000
PKE  - Park Electrochemical Corp.     3:2  11/08/2000  11/09/2000
CDIS - Cal Dive Intl Inc              2:1  11/13/2000  11/14/2000
EPNY - E.piphany, Inc.                3:2  11/13/2000  10/31/2000
DCTM - DOCUMENTUM                     2:1  11/13/2000  11/16/2000
EV   - Eaton Vance Corp               2:1  11/13/2000  11/14/2000
CPN  - Calpine Corp.                  2:1  11/14/2000  11/15/2000
AZA  - ALZA Corporation               2:1  11/15/2000  11/16/2000
BEIQ - BEI Technologies, Inc.         2:1  11/21/2000  11/22/2000
ARXX - Aeroflex                       2:1  11/22/2000  11/24/2000
PHCC - Priority Healthcare Corp.      2:1  11/22/2000  11/24/2000
TNL  - Technitrol, Inc.               2:1  11/27/2000  11/28/2000
ANEN - Anaren Microwave               2:1  11/27/2000  11/28/2000
MXC  - MATEC Corporation              3:2  11/27/2000  11/28/2000
ATK  - Alliant Techsystems            3:2  11/27/2000  11/28/2000
MWAV - M-Wave, Inc                    2:1  11/28/2000  11/29/2000
PVN  - Providian Financial Corp       2:1  11/30/2000  12/01/2000
SHFL - Shuffle Master, Inc.           3:2  11/30/2000  12/01/2000
CHRW - C.H. Robinson                  2:1  12/01/2000  12/04/2000
PSC  - Philadelphia Suburban          5:4  12/01/2000  12/04/2000
ITWO - i2 Tech                        2:1  12/04/2000  12/05/2000
SUNW - Sun Microsystems               2:1  12/05/2000  12/06/2000
BEC  - Beckman Coulter, Inc.          2:1  12/07/2000  12/08/2000
CREE - Cree                           2:1  12/08/2000  12/11/2000
ABK  - Ambac Financial                3:2  12/12/2000  12/13/2000
SYY  - SYSCO Corporation              2:1  12/15/2000  12/18/2000
UNH  - UnitedHeath Group Inc.         2:1  12/22/2000  12/26/2000
SPIR - Spire Corporation              2:1  12/22/2000  12/26/2000
IWOV - Interwoven                     2:1  12/29/2000  01/02/2001

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The Option Investor Newsletter                   Sunday 11-05-2000
Sunday                                                      5 of 5

To view this email newsletter in HTML format with embedded
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Volatility in Option Pricing
By Mark Wnetrzak

The first requirement for successful option trading is to
understand the basic laws of pricing theory.

Most new traders that enter the derivatives market are quickly
overwhelmed by the incredible number of choices to be made when
selecting a position for a specific strategy.  Even when we limit
the candidates to short-term positions (90 days or less), there
are still a large assortment of contracts from which to choose.
With so many different options available, how can one hope to
select the correct position for the underlying instrument with
the highest probability of profit?  The choices are so numerous
that many beginning traders give up long before they have time
to learn (and absorb) the various components of option pricing.

These are the four major factors that determine the price of an

1. The price of the underlying stock
2. The strike price of the option itself
3. The time remaining until the option expires
4. The volatility of the underlying stock

There are two, less important factors that also affect the price
of an option:

5. The current risk free interest rate (usually the 90 day T-Bill
   is used for this calculation)
6. The dividend rate of the underlying stock

Volatility is the most important variable in valuing an option.
All other factors are known; share value, option strike price,
dividends, interest rates, and time remaining until expiration.
The volatility of the underlying issue is also the most difficult
value to accurately determine.  Professional traders use several
different timeframes to assess a stock's potential movement.  In
most cases, the 20-day historical volatility provides a reasonable
projection of the short-term volatility of any instrument.  But,
for longer-term strategies, the 50-day and/or 100-day historical
volatility values should be compared with the near-term numbers to
identify any disparities in the recent character of the issue.  A
significant move in the underlying instrument, due to an earnings
report or other major event, can cause an artificial change in
volatility, thus skewing the short-term data.  In general, 20-day,
50-day, 90-day and 1-year periods are the most common timeframes
used to reflect the magnitude of future movement that can be
expected over the life of an option.

Comparing historic volatility to implied volatility helps a trader
determine whether options are cheap or expensive.  The most common
way to use implied volatility is to observe an average of some
past period of time, such as a 100 DMA.  Experienced traders also
use an adverse volatility estimate, based on historical volatility,
in order to provide a more conservative appraisal of an option's
true value.  By definition, implied volatility is a mathematical
measure of the relative cost of an option, and it is largely based
on the historical volatility of the underlying issue.  In reality,
the implied volatility of an option is mostly determined by market
expectations of the underlying security.

When evaluating historical and implied volatility for specific
option trades, it is best to use the most conservative values in
pricing calculations.  For example, if you are going to sell an
an option, use a high estimate, perhaps the maximum value of the
most common (20, 50 and 100 DMA) short-term volatility data.  With
that approach, the current price of the option will have to be
inflated for the premium to appear "overpriced."  In contrast, if
you plan to engage in a strategy where you expect the underlying
issue to be active, then a low volatility estimate (the minimum of
the 20, 50, or 100 DMA) would be more appropriate.  Using that
technique, the option will look "cheap" only when it is relatively
inexpensive, based on historical stock movement.

For more information, read the appropriate chapters in McMillan's
"Options as a Strategic Investment" and Sheldon Natenburg's "Option
Volatility and Pricing."  These are the bibles of floor traders and
they will help you understand the complex subject of volatility and
theoretical derivatives pricing.

Good Luck!

NOTE: Using Margin doubles the listed Monthly Return!

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

MTSI    9.38  12.00   NOV   7.50  2.81  *$  0.93  15.4%
AVID   14.75  14.50   NOV  12.50  3.63  *$  1.38  10.8%
TSIX   16.75  18.75   NOV  12.50  5.00  *$  0.75   9.2%
FFD    12.00  14.13   NOV  10.00  2.75  *$  0.75   8.8%
ANSR   17.00  16.88   NOV  12.50  5.13  *$  0.63   7.7%
ANSR   18.31  16.88   NOV  12.50  6.63  *$  0.82   7.6%
ENTU   29.25  32.56   NOV  25.00  5.50  *$  1.25   7.6%
BCGI   23.13  25.00   NOV  20.00  4.00  *$  0.87   6.6%
CTXS   21.44  23.94   NOV  17.50  4.88  *$  0.94   6.2%
VMSI   25.63  30.56   NOV  22.50  4.00  *$  0.87   5.8%
RDRT    7.94   7.06   NOV   5.00  3.25  *$  0.31   5.7%
FIBR   32.50  41.00   NOV  20.00 13.50  *$  1.00   5.7%
BPUR   17.38  23.94   NOV  15.00  3.25  *$  0.87   5.4%
PROX   58.75  65.94   NOV  50.00 10.50  *$  1.75   5.3%
UAXS   15.31  15.00   NOV  12.50  3.38  *$  0.57   5.2%
ECLP   21.38  23.50   NOV  17.50  4.63  *$  0.75   4.9%
WDC     6.13   5.94   NOV   5.00  1.44  *$  0.31   4.8%
ENMD   32.56  38.00   NOV  25.00  8.25  *$  0.69   4.1%

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


Sequenced by Return

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

MTSI   12.00  NOV  10.00  TQM KB  2.50  318   9.50   14    11.4%
GOAM   11.63  NOV  10.00  GUA KB  2.06  355   9.57   14     9.8%
ARDM   24.63  NOV  17.50  QRQ KW  7.63  0    17.00   14     6.4%
GALT   28.13  NOV  22.50  QFG KX  6.25  500  21.88   14     6.2%
ACXM   40.75  NOV  35.00  UQA KG  6.63  319  34.12   14     5.6%
HWP    46.25  NOV  40.00  HWP KH  7.25  1997 39.00   14     5.6%

MTIC    6.00  DEC   5.00  QTX LA  1.44  5     4.56   42     7.0%

Company Descriptions

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

ACXM - Acxiom  $40.75   *** New Trading Range! ***

Acxiom is engaged in customer data integration in support of
customer relationship management and they have three primary
business lines: Services, Data Products and IT Management.  The
Services segment provides solutions that integrate and manage
customer, consumer and business data using its information
management skills and technology.  The InfoBase data products
include both business and consumer data.  The IT Management
division offers technology services in such areas as mainframe
computing operations, client server management, network Web
hosting and content change management, help desks and others.
Acxiom recently reported that its second-quarter earnings rose
a higher-than-expected 33% and that it expects the rest of the
fiscal year to beat year-earlier results by at least 25%.  The
results were boosted by sales of Acxiom's new database software
and the completion of 15 new contracts totaling $40 million.
Our position is based solely on the move to a new trading range
with a cost basis near technical support.

NOV 35.00 UQA KG LB=6.63 OI=319 CB=34.12 DE=14 MR=5.6%

ARDM - Aradigm  $24.63  *** New Drug Delivery System ***

Aradigm is currently developing aerosol-based drug delivery
alternatives to injectable therapeutics. The company's advanced
pulmonary delivery technologies provide leading pharmaceutical
and biotechnology partners with effective drug delivery solutions.
Current development programs focus on diabetes, pain management,
cystic fibrosis and the pulmonary delivery of emerging protein
therapeutics.  In September, the company announced initiation of
a Phase IIb clinical trial of its AERx. Pulmonary Drug Delivery
System, using opioid analgesics, to provide immediate pain relief
to patients in the home environment.  Aradigm also announced
the successful completion of a U.S. Phase IIa clinical trial of
the AERx Pulmonary Drug Delivery System which delivers dornase
alfa to patients with cystic fibrosis.  Aradigm's future looks
bright as the company is positioned to benefit from partnerships
with pharmaceutical and biotechnology companies seeking less
invasive or less cumbersome dosing regimens.  We simply favor
the bullish move up and out of a recent consolidation area.

NOV 17.50 QRQ KW LB=7.63 OI=0 CB=17.00 DE=14 MR=6.4%

GALT - Galileo Technology  $28.13  *** Marvell Makes a Bid! ***

Galileo Technology is one of the semiconductor industry's fastest
growing suppliers of complex, high-performance, integrated circuit
devices serving the needs of the LAN, MAN, and WAN markets.  GALT
is organized around two principal product groups:  Internetworking
Products and Switching Products.  Galileo's products form the heart
of many advanced communications systems built by leading OEMs, such
as Cabletron, Cisco, Ericsson, Intel, Nokia, and Nortel Networks.
A couple of weeks ago, Galileo reported favorable earnings with net
sales increasing 31% to a record $28.8 million.  At the same time,
Marvell Tech (MRVL) said it would buy Galileo, swapping 0.674 shares
of its stock for each share of Galileo.  Marvell's stock dropped on
news of the deal but the selling has since abated.  Galileo's CEO
says the deal will still go through in January or February, and
there is plenty of time for Marvell to recover in price.  We will
speculate conservatively with this position at the risk of owning a
company that recently reported outstanding earnings and "beat the
Street" by a penny.

NOV 22.50 QFG KX LB=6.25 OI=500 CB=21.88 DE=14 MR=6.2%

GOAM - GoAmerica  $11.63  *** Internet Sector Rally! ***

GoAmerica is a nationwide wireless ISP that enables its individual
and business subscribers to remotely access the Internet, email
and corporate intranets by delivering its proprietary technology
through a wide variety of mobile computing and wireless network
devices.  Through its Wireless Internet Connectivity Center, GOAM
offers its subscribers comprehensive and flexible mobile data
solutions for wireless Internet access by providing wireless
network services, mobile devices, and subscriber service support.
GoAmerica reported a strong quarter, significantly beating both
subscriber and revenue estimates, though it did report a slightly
larger loss than expected.  It appears investors are concentrating
on the 683% increase in subscribers and 597% increase in revenue.
In addition, the company expects to end the year with more than
40,000 subscribers and revenues exceeding $3.8 million.  The stock
continued to climb on Friday, on extremely heavy volume, and that
bodes well for its near-term outlook.

NOV 10.00 GUA KB LB=2.06 OI=355 CB=9.57 DE=14 MR=9.8%

HWP - Hewlett-Packard  $46.25  *** Blue-chip Play! ***

Hewlett-Packard Company is a leading global provider of computing
and imaging solutions and services.  The company is focused on
making technology and its benefits accessible to individuals and
businesses through simple appliances, useful e-services and an
Internet infrastructure that's always on.  Hewlett-Packard has
86,000 employees worldwide and had total revenue from continuing
operations of $42.4 billion in its 1999 fiscal year.  HWP's stock
has sagged with the rest of the box-makers after warnings by Dell
and the slumping Euro spooked investors.  Though the company isn't
out of the woods yet, it appears a short-term base is in place for
HWP, as well as the sector.  We favor speculating for two weeks at
the risk of owning a blue-chip favorite at a fire-sale price.

NOV 40.00 HWP KH LB=7.25 OI=1997 CB=39.00 DE=14 MR=5.6%

MTSI - MicroTouch Systems  $12.00  *** What's Up? Earnings! ***

MicroTouch Systems is a leader in the manufacture of computer
touchscreen display products incorporating the two most popular
touch technologies; analog capacitive and resistive membrane.
The company applies these technologies in a variety of products,
and markets them under the ClearTek and TouchTek brand names.
There was no news to explain MicroTouch's recent spike in price
though Bloomberg.com stated that Texas investor Edward W. Rose III
and his affiliates acquired a 7.1 percent stake in Microtouch,
spending $6.2 million to buy 460,300 Microtouch shares from Sept.
27 to Oct. 11.  That still didn't account for the surge in price
a couple of weeks ago when we first recommended MicroTouch as a
candidate.  But the sharp rally that started this Thursday was
in reaction to a favorable earnings report that showed record
Touchscreen revenues in the third quarter.  The "Tape" didn't
lie and this play offers a second chance to speculate on MTSI's
future share value at a reasonable cost basis.

NOV 10.00 TQM KB LB=2.50 OI=318 CB=9.50 DE=14 MR=11.4%

December Candidates
MTIC - MTI Technology  $6.00  *** Cheap Speculation! ***

MTI Technology provides Continuous Access to Online Information
through fault-tolerant, cross-platform Vivant data storage systems.
MTI develops, manufactures, sells and services open systems data
server solutions for Global 2000 companies on a worldwide basis.
MTI Tech has been in a Stage I base since July as the company has
had to focus on replacing business that had been lost as a result
of the dramatic slowdown in the dot.com market.  As MTI works on
rebuilding and diversifying its customer base, the strength in the
storage industry should help the company accomplish its goals.  MTI
Tech is moving forward with product development and anticipates
introducing new data storage solutions in the near future.  Traders
who have a bullish outlook for the company can use this position to
establish a conservative cost basis in MTIC stock with a cost basis
near technical support.

DEC 5.00 QTX LA LB=1.44 OI=5 CB=4.56 DE=42 MR=7.0%

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Naked Put Percentage List
By Matt Russ

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

ADBE   80.69     75  AXX-WO    2.19   2017   11%      75
AETH  105.75     90  HIZ-WR    4.13   2644   16%      90
ALXN  106.94     95  XQN-WS    3.00   2674   11%      95
AMCC   71.88     60  AZV-WL    1.31   1797    7%      60
ARBA  132.94    120  RBU-WD    4.25   3324   13%     120
BRCD  253.56    240  GUF-WH    6.38   6339   10%     240
CTIC   66.94     60  CUC-WL    2.25   1674   13%      60
CVTX   80.88     75  UXC-WO    3.38   2022   17%      75
DCTM   89.19     80  QDC-WP    3.00   2230   13%      80
DGX    96.75     90  DGX-WR    3.00   2419   12%      90
ELNT  116.00    100  UET-WT    2.31   2900    8%     100
EMC    97.75     90  EXR-WR    1.56   2444    6%      90
EMLX  170.88    155  UEL-WK    5.38   4272   13%     155
EPNY   97.94     85  PEY-WQ    3.75   2449   15%      85
ISSX   89.00     85  IHD-WO    2.63   2225   12%      80
ITWO  170.00    160  QYI-WL    5.75   4250   14%     160
IWOV  112.19    100  IQG-WA    4.75   2805   17%     105
JNPR  216.13    195  JUD-WD    8.13   5403   15%     195
MANU  120.88    100  ZUQ-WT    4.50   3022   15%     100
NEWP  111.88     95  NZZ-WS    4.75   2797   17%      95
NTAP  108.50    100  ULM-WT    6.00   2713   22%     100
PHCM  106.00     90  UMN-WR    2.44   2650    9%      90
QLGC  122.19    100  QLC-WT    1.63   3055    5%     100
VRTS  153.88    140  VUQ-WH    4.25   3847   11%     135
VRTX   93.94     85  VQZ-WQ    3.25   2349   14%      80

DISCLAIMER: Before entering any of the positions listed above,
you need to understand your risk tolerance. Selling puts can be
a High-Risk endeavor depending on the strike you choose to sell.
For a greater return, you run a higher risk of being exercised.
Therefore, please consider other strikes than the ones listed
below if you aren't comfortable with the one we choose. We are
gearing these towards higher-risk players. In any case, you can
always select a lower strike with a lower return if it better
meets your suitability.


Trends and Cycles...
By Ray Cummins

Traders are always busy studying what happened in the past but
rarely are they capable of accurately predicting what will happen
in the near future.  In most cases, they use one or another of the
more common methods of market analysis.  The first approach is
backward-looking; it constitutes chart reading, or the study of an
issue's historic price behavior.  Unfortunately, past performance
of the economy, the stock market or of an individual issue is no
guarantee of future activity.  In addition, while trading on
market momentum may seem easier, and even more profitable in the
short term, it is difficult for investors to achieve consistent
returns in this manner.  The reason that short-term trends are so
difficult to profit from is that chart formations rarely evolve in
a favorable pattern; with a steady rise to the top, where there's
an extensive plateau that provides ample opportunity to assess the
situation and take profits before starting the trip back down.
Instead, stock charts often resemble the contour of the "Rockies,"
with staggering peaks and precipitous gorges, and ranges that rise
sharply towards the tallest mountain, with each one getting higher
than the last until reaching the summit.  Those of you that have
recently participated in the stock market know that in real life,
the trip down from the summit is always scarier (and more abrupt)
than the climb.

Another approach involves forward-looking analysis.  This method
is based on the economy and fundamental issues.  It anticipates
interest rate changes and other business and political conditions
that might impact future earnings or the public's attitude toward
the stock market.  Investors who use this method should remember
that market cycles usually precede economic cycles.  The various
facets of our economy, including the virtually limitless range of
elements that determine the financial health of the nation as a
whole are anticipated by the investing public, and this sentiment
is exhibited by the emotion of the market.  A common example is
when stock prices move higher in expectation of rising profits and
down in anticipation of greater losses; an occurrence that we all
witnessed in the most recent earnings quarter.  In addition, the
market can be substantially affected by other circumstances, even
those that appear to have little outcome with regard to financial
instruments.  Any study of a detailed timeline that compares key
historical events with the movement of a major stock index will
demonstrate how war, recession, or a presidential election can
influence the current market cycle.

The stock market historically moves in identifiable cycles.  To
be a successful investor, one must be able to identify the current
phase of activity.  Many investors will try to spot the top and
bottom of each cycle but the truth is, nobody can do this on a
regular basis.  The key is to have an accurate perception of the
overall trend and manage your portfolio with the appropriate

The "January Effect" is now the "November Effect"...

Since we are discussing the subject of market rhythms and cycles,
it's that time of the year to start thinking about the historical
trading relationship between small-cap and large-cap stocks.  Some
experts refer to this phenomenon as the "January Effect."  The
change is barely noticeable but generally the big-caps outperform
smaller issues from mid-November to mid-December due to profit
taking in the lower priced stocks.  As we move towards the new
year, many investors transition into the small-caps and the trend
reverses.  The historically strong performance of small stocks in
the first few months of the year is well known and easily proven.
The less obvious cycle in November and December is probably more
profitable as the majority of traders don't use the trend to their
advantage, thus leaving the effect intact for those that are aware
of it's existence.  Some of the analysts that participate in this
strategy are debating whether or not the recent market decline has
skewed the cycle for this year.  Many refer to severe October
declines in previous years which did not significantly affect the
trend.  The impressive performance of big-caps stocks over the
last week may support this theory.  Regardless of the outcome, a
successful trader should be aware of these market tendencies and
use that knowledge to his (or her) advantage.

Good Luck!


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

ANSR   17.00  16.88   NOV  12.50  0.63  *$  0.63  22.6%
ECLP   25.31  23.50   NOV  20.00  0.50  *$  0.50  13.0%
APWR   55.63  47.50   NOV  35.00  1.06  *$  1.06  12.6%
BCGI   23.94  25.00   NOV  17.50  0.56  *$  0.56  11.4%
CYTC   50.25  62.50   NOV  40.00  1.13  *$  1.13  11.0%
STAT   22.72  21.00   NOV  20.00  0.69  *$  0.69  10.6%
RNBO   23.50  24.00   NOV  17.50  0.44  *$  0.44   9.3% Adj 2-1 Split
ENTU   29.00  32.56   NOV  20.00  0.50  *$  0.50   8.6%
PATH   17.63  16.75   NOV  15.00  0.38  *$  0.38   8.6%
OCR    16.88  17.06   NOV  15.00  0.63  *$  0.63   8.3%
CERN   60.31  57.00   NOV  50.00  0.75  *$  0.75   7.5%
AMZN   35.63  37.56   NOV  22.50  0.38  *$  0.38   7.3%
ACXM   40.25  40.75   NOV  35.00  0.56  *$  0.56   7.1%
CHTR   19.38  19.59   NOV  17.50  0.63  *$  0.63   7.0%
VICR   49.38  50.50   NOV  40.00  0.88  *$  0.88   6.8%
PLMD   57.50  56.75   NOV  45.00  0.50  *$  0.50   6.0%
HSIC   22.56  25.50   NOV  20.00  0.50  *$  0.50   5.2%
ICN    40.19  34.38   NOV  35.00  0.56   $ -0.06   0.0%
VPI    25.50  20.94   NOV  22.50  0.50   $ -1.06   0.0%

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


Astropower's (APWR) earnings disappointed Wall Street this week
and the company was subsequently downgraded.  The chart reflects
a technical breakdown and an early exit may be warranted.  On
Friday at the close, the bid/ask spread on the NOV-$35 Put was
$0.75 X $1.00.  I-Stat (STAT) seems to be holding at support
though the action this week was horrid.  ICN Pharma's (ICN)
mysterious drop on Friday is being attributed to pre-earnings
jitters, with the company due to report on Monday.  It seems
like somebody already knows something...very strange.  We will
show Vintage Petroleum (VPI) closed, as the oil service sector
continues to weaken and a favorable "early-exit" debit was
attainable on Wednesday.


Sequenced by Return

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

ARQL   28.50  NOV  22.50  ARQ WX  0.38  30   22.12   14    13.6%
ATSN   45.38  NOV  40.00  UAT WH  0.88  0    39.13   14    13.9%
BVSN   35.75  NOV  30.00  BDV WF  0.69  1916 29.31   14    16.2%
CLTR   44.00  NOV  25.00  QCE WE  0.50  79   24.50   14    11.7%
ENMD   38.00  NOV  22.50  QMA WX  0.25  272  22.25   14     6.9%
FIBR   41.00  NOV  30.00  QFW WF  1.00  85   29.00   14    23.6%
JDEC   28.00  NOV  22.50  QJD WX  0.50  510  22.00   14    17.5%

Company Descriptions

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

ARQL - Arqule  $28.50  *** New Trading Range? ***

ArQule designs and produces molecules for the medicines of the
future.  ArQule offers chemistry-based products and services
that improve the efficiency and effectiveness of the discovery
process including accelerated lead optimization services, novel,
diverse screening libraries and access to its high-throughput
parallel synthesis platform technology.  In addition, ArQule
ArQule seeks to bridge the gap between genomic and clinical
development by applying its proprietary technology platform and
world class chemistry capabilities to drug discovery.  A recent
filing to sell 2.5 million shares of common stock had a brief
negative affect on the issue but Friday's move to an all-time
high bodes well for the near-term share value of this unique

NOV 22.50 ARQ WX LB=0.38 OI=30 CB=22.12 DE=14 MR=13.6%

ATSN - Artesyn  $45.38  *** Blue Sky Territory! ***

Artesyn is engaged in the design, development, manufacture, sale
and service of electronic products and subsystems for producers
of electronic equipment in the computing and telecommunications
industry.  Artesyn is also a supplier of power supplies to the
many other companies in these industries, and they maintain a
worldwide network of leading distributors including Arrow, Avnet,
EBV/Unique, Sager Electronics and Newark Electronics.  Artesyn
provides a full range of both custom and standard AC/DC power
supplies and DC/DC converters.  The company reported favorable
earnings in early October and the demand for Artesyn's products
remained strong as orders exceeded $196 million in the quarter.
Product backlog rose to record levels and strong demand across
all lines of business will boost revenues in the coming months.
The technical breakout to a new all-time high suggests there is
additional upside potential in the issue.

NOV 40.00 UAT WH LB=0.88 OI=0 CB=39.13 DE=14 MR=13.9%

BVSN - Broadvision  $35.75  *** On The Move! ***

BroadVision develops, markets and supports application software
solutions designed for one-to-one relationship management across
an extended enterprise.  These solutions enable businesses to use
the Internet as a platform to conduct electronic commerce, offer
online customer self-service, deliver targeted information to
constituents, and provide online financial services.  Each of the
capabilities can be made available to all constituents of the
extended enterprise, including customers, suppliers, partners,
distributors and employees.  The recent rally in BVSN started in
mid-October when the company reported favorable earnings with
both revenue and EPS ahead of consensus expectations.  Highlights
of the quarter included the rollout of two new products, several
key contracts and the signing of 115 new customers and 27 new
partners.  Analysts say that BVSN, with its army of consultants
and broad product offering, will be one of the big winners in
e-commerce.  The short-term technical indications agree with that

NOV 30.00 BDV WF LB=0.69 OI=1916 CB=29.31 DE=14 MR=16.2%

CLTR - Coulter Pharma  $44.00  *** Corixa Buyout! ***

Coulter Pharmaceutical is engaged in the development of novel
drugs and therapies for the treatment of people with cancer and
autoimmune diseases.  Coulter is developing a family of potential
therapeutics based upon two drug discovery programs: therapeutic
antibodies and targeted oncologics.  Seattle-based Corixa (CRXA)
recently announced it will purchase Coulter Pharmaceuticals for
almost $1 billion in stock, bolstering its portfolio of cancer
fighting drugs and creating the foremost immunotherapy company in
the world.  Corixa gets Bexxar, a cancer drug that could hit the
market in 2001, and Coulter gets Corixa's rich drug development
pipeline with many products in clinical trials, filling in behind
Bexxar and protecting Coulter should the FDA deny its application
to market the drug.  The deal calls for Corixa to exchange 1.003
of its shares for every Coulter share and based on CRXA's closing
price of $50 on Friday, this position offers favorable speculation
for traders who wouldn't mind owning shares in the new company.

NOV 25.00 QCE WE LB=0.50 OI=79 CB=24.50 DE=14 MR=11.7%

ENMD - EntreMed  $38.00  *** Silver Bullet Symposium! ***

EntreMed is a clinical-stage biopharmaceutical company emphasizing
antiangiogenesis therapeutics that inhibit abnormal blood vessel
growth associated with a broad range of diseases such as cancer,
blindness and arteriosclerosis.  EntreMed's strategy is to quicken
development of its core technologies through collaborations and
sponsored research programs with university medical departments,
research companies and government laboratories.  EntreMed gained
the spotlight when a preliminary research report showed that the
growth of the small blood vessel network feeding coronary artery
plaques in mice could be reduced by giving them an angiogenesis
inhibitor (Endostatin).  EntreMed plans to present the first
public presentation of the data from the on-going Phase I clinical
trials of Endostatin in the U.S at a symposium in Amsterdam that
is scheduled the week of November 7th.  This was announced at the
same time the company started its fourth Phase I clinical trial
to explore the continuous infusion and subcutaneous administration
of Endostatin.  The implied volatility in EntreMed's options has
spiked in recent sessions and we will use the inflated premiums to
speculate conservatively on the issue's future movement.

NOV 22.50 QMA WX LB=0.25 OI=272 CB=22.25 DE=14 MR=6.9%

FIBR - Osicom Technologies  $41.00  *** Up, Up and Away! ***

Osicom Tech is a developer and marketer of metropolitan optical
networking systems, through its optical networking subsidiary
Sorrento Networks.  Sorrento Networks has been a provider of all
optical networking solutions that are used in both interoffice
and access networks since 1997.  In October, Sorrento announced
a sweeping agreement with Atlanta-based Cox Communications to
provide optical transport solutions nationwide, with immediate
installations in Virginia, California, Arizona and Louisiana.
They will build a next-generation network with scaleable band-
width capabilities allowing Cox to deliver broadband services in
these locations more efficiently.  The new deal demonstrates how
Sorrento is expanding to meet the requirements of its growing
customer base and the need to deliver innovative solutions to the
marketplace.  With the potential infusion of $40 million, Osicom
appears to be undergoing a change of character and the move above
$35 on heavy volume suggests there is further upside potential in
the issue.  Our position offers a chance to own FIBR shares at a
reasonable cost basis.

NOV 30.00 QFW WF LB=1.00 OI=85 CB=29.00 DE=14 MR=23.6%

JDEC - J.D. Edwards  $28.00  *** Own This One! ***

J.D. Edwards develops, markets and supports enterprise software
and supply chain computing solutions that enable customers to
translate ideas into practical realities quickly and efficiently
using the company's software.  JDEC's integrated applications
deliver e-business solutions that give customers control over
their front office, manufacturing, logistics/distribution, human
resources, finance and customer service management processes for
the consumer products, industrial and services industries.  The
company recently demonstrated the ground-breaking supply chain
management capabilities for discrete manufacturers in their new
OneWorld Advanced Planning Solution.  The product is an Internet
designed system that helps customers streamline processes across
supply chains to more effectively collaborate with customers,
suppliers and other business partners.  Investors appear to be
pleased with the recent developments in the company's products
and we believe this issue is a favorable holding for long-term
stock portfolios.

NOV 22.50 QJD WX LB=0.50 OI=510 CB=22.00 DE=14 MR=17.5%

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A welcome rest for the weary Dow...

The market ended mixed today as technology stocks edged higher
while blue chips consolidated after recent gains.

Friday, November 3

The market ended mixed today as technology stocks edged higher
while blue chips continued to consolidate after recent gains.
The Nasdaq closed up 22 points at 3,451 while the Dow ended down
62 points at 10,817.  The S&P 500 index was relatively unchanged
at 1,426.  Trading volume on the NYSE reached 992 million shares,
with declines beating advances 1,438 to 1,351.  Activity on the
Nasdaq was moderate at 1.8 billion shares traded, with advances
beating declines 2,065 to 1,832.  In currency trading, the Euro
rose slightly against the dollar after the European Central Bank
intervened to support its value.  The 30-year Treasury dropped
1 4/32, pushing its yield up to 5.86%.

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

Englehard   EC     JAN22C/NOV22C   $1.12   debit    calendar
Seagate     SEG    NOV55P/NOV60P   $0.50   credit   bull-put
Mercury     MERQ   NOV145C/NO80P   $2.38   credit   strangle

Our new group of spread candidates experienced favorable activity
during today's session.  Englehard and Seagate were available at
the target entry prices while Mercury Interactive offered a lower
than expected opening credit.

Portfolio Plays:

Industrial stocks took a breather today as investors reveled in
the Dow's recent gains.  The blue-chip average has been "on the
move" over the past two weeks, climbing from 9,950 to the 11,000
mark on strength in old economy issues.  Those same stocks were
among the day's losers with J.P. Morgan (JPM), Microsoft (MSFT),
General Motors (GM), and IBM (IBM) leading the bearish movement.
American Express (AXP), Johnson & Johnson (JNJ) and International
Paper (IP) opposed the trend, as value players sought positions
in safety and cyclical issues.  In the technology group, Qualcomm
(QCOM) surprised the Street, posting a fourth-quarter profit of
$0.25 a share, which beat consensus estimates by a penny.  The
issue jumped over $7 on the news, and the upside activity spread
to other issues in the sector.  Internet and semiconductor issues
also advanced but wireless telecom stocks declined amid weakness
in Sprint PCS (PCS).  The company's share value slid $9 to $28
after Sprint (FON) announced a plan to sell $3 billion worth of
PCS stock to cover its cash requirements for the upcoming year.
The broader market was affected by employment data from the Labor
Department that showed the pace of job creation slowed in October,
adding to a growing list of evidence indicating that the pace of
U.S. economic growth is easing.  However, the report offered few
indications the tight labor market, which economists have long
worried might push up inflation, is loosening.

The Spreads portfolio experienced some favorable activity during
today's session.  Juniper Networks (JNPR) was the big winner, up
$21 to $215 as investors moved back into the networking sector.
Our bullish position at $175 is expected to expire at maximum
profit.  Emc Inc (EMC) led the Data Storage group with a $3 move
to $98 in a third consecutive day of advances, and United Health
(UNH) bounced back from a recent sell-off to finish $2 higher at
$106.  The bullish credit spread at $100 remains profitable.  A
number of other top-tier technology issues rallied but the best
performances were seen in mid-cap and lower priced companies.
Our new position in Curagen (CRGN) is off to a good start and the
issue moved up another $3 to $65 today on momentum from a recent
technical break-out.  Industrial stocks Mead (MEA) and Kellogg
(K) have enjoyed bullish activity over the past few sessions and
our calendar spreads in those issues are once again profitable.
Other time-selling positions in Maxtor (MXTR), Caremark RX (CMX),
and Biochem (BCHE) have also performed well.  In addition, we
enjoyed a new winner in that category this week as Mattel (MAT)
moved back into the $12 range.  The issue appears to be bracing
for a test of past resistance (near $13) and that outcome will
determine our adjustment strategy as we move to December options.
The long position does not expire until April so there is plenty
of time to capitalize on the upward movement.  Our new LEAPS/CCs
play in Microsoft (MSFT) experienced some favorable activity in
Friday's trading.  The issue retreated to $68 and the overhead
supply near $70 appears to be having some affect on the current
rally.  If the stock continues to consolidate next week, we will
re-evaluate our position and consider the potential adjustments
as a new trading range is established.

Questions & comments on spreads/combos to Contact Support
                         - NEW PLAYS -
HWP - Hewlett Packard  $46.25  *** Blue-chip Play! ***

Hewlett-Packard is a global provider of computing and imaging
solutions and services for business and the home.  HWP's major
businesses include Imaging and Printing Systems, Computing
Systems and Information Technology Services.  HWP's Imaging and
Printing Systems provides laser and inkjet printers, copiers,
scanners, all-in-one devices, personal color copiers and faxes,
digital senders, large-format printers, print servers, network
management software, networking solutions, digital photography
products, imaging and printing supplies, imaging and software
solutions, and related professional and consulting services.
The company's Computing Systems segment provides solutions for
the enterprise, commercial and consumer markets.  Information
Technology Services provides consulting, education, design and
installation services, ongoing support and maintenance, and
proactive services like mission-critical support, outsourcing
and utility computing capabilities.

We discovered this position while researching for covered-calls
and although it may be a bit optimistic in the current economic
environment, the inflated front-month option premiums provide a
small downside margin in the event of a retreat in HWP's share
value.  Hewlett-Packard is one of the premier companies in the
high profile group of Diversified Computer manufactures and a
number of analysts are bullish on its long-term outlook.  The
recent trading range bottom near $40 defines this position as a
relatively safe entry into the volatile Computer Hardware sector
and the spread offers a low risk cost basis with a reasonable
expectation of profit.  Note: Earnings are due on November 15.

PLAY (conservative - bullish/diagonal spread):

BUY  CALL  JAN-40.00  HWP-AH  OI=781   A=$9.12
SELL CALL  NOV-47.50  HWP-KW  OI=6472  B=$2.38

JNIC - JNI Corporation  $116.56  *** On the Move! ***

JNI is a designer and supplier of unique Fibre Channel hardware
and software products that connect servers and data storage
devices to form storage area networks (SANs).  SANs were made
possible by the emergence of Fibre Channel technology, a new
generation of server to storage communications technology that
improves data communication speeds, connectivity, distance
between connections, reliability and accessibility.  JNI markets
high-performance application specific integrated circuits (ASICs)
based on its proprietary technology, a range of Fibre Channel host
bus adapters and software that facilitates advanced SAN device
integration and management.  Its products provide flexibility,
scalability and availability, as well as superior performance in
network storage systems.

JNI reported outstanding results last month, with net revenues
coming in at a record $30 million, reflecting growth of 177% over
the third quarter of 1999.  Sequentially, revenues in the third
quarter increased 25% over the previous period.  Net income was
$5 million or $0.18 per share, compared to $769,000 or $0.03 per
share, in the same period last year.  The quarterly numbers were
well in excess of consensus estimates, reflecting the continued
strong demand for JNI's Fibre Channel devices, and the company
expects continued growth in revenues from their unique products.
Analysts agree with the company's positive future and investors
have pushed the issue up $30 in just three days.  Our cost basis
establishes a conservative position in an industry-leading issue
with a bullish technical outlook.

PLAY (conservative - bullish/credit spread):

BUY  PUT  NOV-85  JOQ-WQ  OI=31  A=$1.43
SELL PUT  NOV-90  JOQ-WR  OI=65  B=$1.81
INITIAL NET CREDIT TARGET=$0.56-$0.62  ROI(max)=11%

GLX - Glaxo Wellcome  $58.00  *** Trading Range! ***

Glaxo Wellcome and its subsidiary and associated undertakings
create, discover, develop, manufacture and market prescription
and non-prescription medicines.  Glaxo Wellcome has 48 principal
prescription medicine products grouped into the therapeutic
areas of respiratory, bacterial infections, viral infections,
neurology and psychiatry, gastrointestinal, oncology/emesis
(cancer), cardiovascular, dermatologicals and anesthesia.  The
company has a number of products in various stages of development
and they many products that are pending FDA approval, including
drugs for the treatment of gastrointestinal, metabolic and
rheumatology diseases, HIV and HIV-related infections, cancer
and the side effects of chemotherapy, hypertension and stroke,
infectious diseases and hepatitis, neurology and psychiatry and
respiratory disease.  The company is also developing various
devices for delivering medicine for asthma relief.

Glaxo is mired in merger details with SmithKline Beecham (SBH)
and although company officials recently announced they expect to
complete the merger by the end of the year, no precise date has
been issued.  SmithKline and Glaxo approved merger plans in July,
but the closing of the transaction has been repeatedly delayed
due to U.S. anti-trust concerns.  Analysts say uncertainty about
deal has weighed on the share prices of the two companies, and
has reportedly resulted in low morale among employees, some of
whom could lose their jobs once the merger is complete.  Having
previously said they were confident the merger would take place
by deadlines that have long since passed, SmithKline and Glaxo
executives have refrained from making further predictions.

Based on the recent pessimistic outlook, there is little chance
anything will occur in the next two weeks to significantly alter
the technical character of GLX's stock.

PLAY (aggressive - bearish/credit spread):

BUY  CALL  NOV-65  GLX-KM  OI=1138  A=$0.12
SELL CALL  NOV-60  GLX-KL  OI=976   B=$0.88
INITIAL NET CREDIT TARGET=$0.81-$0.88  ROI(max)=19%

                   - STRADDLES & STRANGLES -
FLO - Flowers  $15.31  *** Keebler Sale! ***

Flowers Industries is a holding company that owns all of the
outstanding common stock of Flowers Bakeries and Mrs. Smith's
Bakeries, and owns a majority of the outstanding common stock
of Keebler Foods Company.  The company is one of the largest
nationally branded producers and marketers of a full line of
baked foods in the United States.  The products of Flower's
three segments include Flowers Bakeries' fresh breads, Mrs.
Smith's Bakeries' fresh and frozen baked desserts, snacks,
breads and rolls, as well as Keebler's cookies and crackers.

Flowers Industries is selling its controlling stake in Keebler
Foods to cereal giant Kellogg (K).  Kellogg is buying Keebler
for $42 a share, or about $3.6 billion and the deal is expected
to be completed in early 2001.  Flowers officials expect cash
proceeds of about $12.50 a share to be paid to its shareholders
from the Keebler deal and the holding company will spin-off its
remaining businesses to shareholders.  The spin-off company, to
be called Flowers Foods, will be comprised of Flowers Bakeries
fresh bread and Mrs. Smith's Bakeries frozen pies businesses.

It's difficult to determine exactly how FLO's stock price will
react in the next few weeks but this position meets our basic
criteria for a favorable straddle; cheap option premiums, a
history of adequate price movement and future events that may
generate volatility in the issue or its industry.  This process
of selection provides the foremost combination of low risk and
potentially high reward.

PLAY (speculative - neutral/debit straddle):

BUY  CALL  DEC-15.00  FLO-LC  OI=88  A=$0.62
BUY  PUT   DEC-15.00  FLO-XC  OI=80  A=$0.62

GBLX - Global Crossing  $21.44  ** Which Way Now? ***

Global Crossing offers voice, data and Internet services in most
of North America and Europe.  The company provides a variety of
integrated telecommunications and Internet-based products to meet
the customer's total communications needs.  Global Crossing also
provides domestic and international voice services, data products,
Internet-based services, structured bandwidth services and other
communications products, to primarily small to mid-size business
customers, Web-centric businesses and other telecommunication
carriers.  In the coming year, Global Crossing intends to offer
similar services in Asia, Mexico, Central America and South

Global Crossing has endured some tough times over the past few
months and no one is quite sure where the company's shares are
headed in the short-term.  Some analysts say the stock is a
bargain at this price but based on the recent technical outlook,
there will likely be further selling before a recovery occurs.
In any case, the current earnings-related volatility has inflated
the near-term option premiums to record levels and those of you
who like to speculate can use that to your advantage with this
moderately aggressive, neutral position.

Note: As with any recommendation, the play should be carefully
evaluated for portfolio suitability and reviewed with regard to
your strategic approach and personal trading style.

PLAY (aggressive - neutral/credit strangle):

SELL CALL  NOV-30.00  QGV-KF  OI=6427  B=$0.31
SELL PUT   NOV-15.00  QGV-WC  OI=184   B=$0.38
INITIAL NET CREDIT TARGET=$0.75-$0.88  ROI(max)=14%
UPSIDE B/E=$30.75  DOWNSIDE B/E=$14.25

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Please read our disclaimer at:


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.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

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