Option Investor

Daily Newsletter, Sunday, 11/19/2000

Printer friendly version

The Option Investor Newsletter                   Sunday 11-19-2000
Copyright 2000, All rights reserved.                        1 of 5
Redistribution in any form strictly prohibited.

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

Entire newsletter best viewed in COURIER 10 font for alignment
       WE 11-17         WE 11-10         WE 11-03         WE 10-27
DOW    10629.87 + 26.92 10602.95 -215.00 10817.95 +227.33  +364.03
Nasdaq  3027.19 -  1.80  3028.99 -422.59  3451.58 +173.22  -204.78
S&P-100  725.09 +  5.98   719.11 - 32.59   751.70 + 25.52  - 11.98
S&P-500 1367.72 +  1.74  1365.98 - 60.71  1426.69 + 47.11  - 17.35
W5000  12659.90 - 28.90 12688.80 -694.10 13382.90 +522.30  -196.80
RUT      482.61 +  1.71   480.90 - 26.85   507.75 + 27.90  -  7.60
TRAN    2817.30 +113.08  2704.22 - 57.53  2761.75 +232.78  + 59.90
VIX       27.85 -  4.65    32.50 +  6.19    26.31 -  3.84  +  2.73
Put/Call    .89              .83              .57              .59

It is not over until it is over!
By Jim Brown

Another way to put it, "It is not over until the thin lady sings!"
In this case it would be the Florida Secretary of State Kathryn
Harris who must sing the certification on national TV after
receiving permission from the Florida Supreme Court on Monday. Or
maybe Tuesday or Wednesday or New Years eve or Valentines Day or
when Gore finally gets enough votes to win, whichever comes first.
The markets rallied on the news that the election might be over
with the counting of the absentee ballots but then sold off quickly
when the Gore camp announced yet another round of court battles
that would delay the decision. The Nasdaq rallied +100 points on
the good news and then dropped -130 points on the Gore news. The
Dow soared +140 points only to drop -190 one hour later. The markets
are tired of this constant battle and ready for a winner to be named.
Ironically, the Dow is down about -450 points from the election but
except for the big drop and recovery from Monday the Dow traded even
for the week with a +26.92 gain. The Nasdaq closed the week with a
-1.80 loss for the week. Looks like a holding pattern to me.

The markets were not kind today to BellSouth after warning yesterday
that growth was slowing. BLS lost -$7 today and the race was on by
analysts to try and distance the other telecoms from the same type
of problem BLS had confessed. AT&T traded down to $20 a low not seen
since January of 1991. OUCH! WCOM traded down to $15.50 less than $1
from its lows dating back to April of 1997. Sprint is also trading
at 1997 levels as well. If you are looking for beaten up stocks
with real value this sector has got to be it but before buying these
stocks you need to really check your risk profile. They will probably
not go under but it could be a long time before the trend reverses.
The only decent telecom is Dow component SBC which lost -2.06 today
but is still near a 52 week high.

I spoke Thursday night about the margin call on the PSIX CEO for
11 million shares. It appears he is not the only CEO on the chopping
block. Bernie Ebbers, CEO of WCOM, borrowed $61.5 million and got
a loan guarantee from WCOM for another $100 million to keep from
having to liquidate his stock in WCOM to satisfy margin. The Price
Line CEO was forced to sell several million shares in PCLN for $3
that he purchased past year for over $60. Now that is painful. And
you thought your trading account was hurting. The moral to this story
is take small losses instead of big ones and being a CEO does not
protect you from the ravages of the markets. The CEOs mentioned above
probably could not have simply sold their stock when it started
dropping but most traders reading this newsletter can and should.

Another fun day for Commerce One. After a memo to their sales force
was misinterpreted as an indication of weak sales CMRC dropped from
near $55 to a low of $43. The company's head of investor relations
denied the rumor categorically saying the memo, sent to motivate
salespeople, was routine. Shares began to recover after the denial
but were still down -$7 near the close. After the close CMRC felt
the need to reiterate their earnings guidance for next quarter
and the year in order to stop the bleeding. Still the stock was
flat after the close. CMRC rival Ariba was also pulled down by the
news hitting a low of $72.88 but closing down only -$2. Does this
give you some idea how spooky this market really is?

The financial stocks took yet another hit today. The vote of no
confidence by the Fed and the continued and increasing fear of
a crash landing have investors on the run. Fears of more loan
losses yet unannounced like the BAC and FTU revelations this
week are also weighing heavily on those stocks. JPM lost -3.88
and was again the leader but FTU, BAC, C and CMB still attended
the party.

The colder weather spreading across the country is pushing up the
prices of oil and natural gas with the October dip on positive
OPEC news now just history. The comments recently that production
cuts in the spring would be needed to hold the price up has put
reality back into the oil market that we are not going back to
$20 oil any time soon. Oil prices was one of the key points in
the Fed's continued warning on inflation. With energy prices still
moving up it is only a matter of time until those prices filter
down into almost everything we buy and use.

The battle of the David and Goliath of the chip sector moves into
another chapter on Monday. Intel will start delivering the new
Pentium 4 chips with a 1.4 gigahertz and a 1.5 gigahertz model.
Kind of makes your 500 mhz desktop look like a 98 pound weakling
in comparison. This brings back bragging rights to Intel since
the fastest chip AMD is now claiming is the 1.2 ghz model. Don't
expect Intel stock to soar instantly although it may add a dollar
or two on Monday anyway. The problem is the scale. Intel is likely
to only sell 200,000 of the new models compared to over 30 million
of the "classic" Pentium 3 models. The new chips will only be
available in computers costing well over $2000 and IF you can find
one. If you are just dying to be the fastest trader on the block
then wait for the price cuts in December and you should be able to
find them cheaper and more plentiful. Expect an announcement from
AMD soon to try and steal back the bragging rights for fastest chip.

There is a real war going on right now between the bulls and bears.
Almost every bullish pundit, led by Abbey Joseph Cohen, is calling
for a bottom in this market around 3000, give or take a 100 points,
and proclaiming good times ahead. The bears are grinning and shorting
with reckless abandon. The bulls are pointing to the next move by
the Fed as more than likely a series of rate cuts and an enormous
amount of money on the sidelines waiting to be invested. The bulls
are literally drooling over the drop in PE for the leading sectors
as evidenced by the drop of the Nasdaq Comp PE from 264 to the
current 124. While there is a pile of money on the sidelines to
be invested in stocks there is also a money crisis building for
corporate America with the money supply drying up as the Fed
continues to withdraw liquidity out of the market. When the Y2K
crisis was looming last year the Fed was literally pouring money
into the economy by the hundreds of billions to prevent any crisis
from reaching critical mass. Now that the Y2K event is distant
memory people forget that the Fed has been pulling that liquidity
back out.

There is a real and growing fear that the economy is about to
accelerate into a crash landing and the Fed is asleep at the wheel.
The market wanted some indication from the Fed last week that they
were in control and they would not let that happen. Obviously we
did not get it and the institutional money is now scared. The
short interest is still at record highs on the S&P and there is
no indication it is changing. This holding of the line by the big
traders is causing many funds to stand aside as well. The big
market gurus like Abbey Cohen are still able to push the market
around by going public with a timely "market call" whenever the
market is extremely oversold but the "bull call" only held for
two days before the negative news pushed the market down again.

Everyone "knows" that the election indecision is causing the
current market weakness. What if it is not the only problem?
What if we get a resolution in the election this week and the
market rallies for a day or two and then rolls over again?
Nobody wants to think about it but that is a real possibility
and one that we as traders need to consider. There is nobody
more bullish than me but note I said "bullish" not "stupid." (No
comments from you Austin, thanks) Not wanting to play the down
side does not make you a bad trader. Trying to play the upside
when the market is going down does. My point here is this. We
need to plan for a post election resolution rally (if it is
ever resolved) but keep our eyes open just in case it has no
legs. There are more and more whispers of the "R" word and if
we are headed into a recession then the bull market is likely
hamburger. I mentioned on Thursday that the expected earnings
for the next two quarters have been cut in half and still
falling. Markets run on earnings and you could make a case
that earnings are in real danger of dropping into single digits.
That is way down from the 29% growth estimates from six weeks
ago. Bullish we may be but you can't create much of a rally on
single digit earnings and a coming recession. That is the worst
case. I would like to think that the worst is over and the end
of the election crisis will bring back sanity? to the markets.
The days before and after Thanksgiving are normally up days
even in a shortened trading week. (hey, we grasp at any straws
we can here!) We got out of options expiration Friday alive
and now that volatility is behind us for another four weeks.

So here is the concept for next week. With the dueling court
cases there is no possibility of forecasting any closure tonight.
While I have been writing this on Friday night there has been
a new ruling somewhere almost every 20 minutes. With 65 of 67
counties reporting absentee ballots Bush is ahead by only 760
votes. Pundits were claiming he needed over 1,000 to beat the
recounts if they are allowed. Regardless of the absentees we
are now looking at days of delays as the courts wade through
the different cases. It is entirely possible that this could
last through Thanksgiving. Sounds like hell week in the markets
again. No direction, no decision, short week, low volume, decliners
beating advancers, etc. About the only thing in our favor is
a very light economic calendar for next week. No news is not
good but at least it is not bad news.

I still think 3200 looks like a good benchmark entry point.
As the recent high it is now resistance and although you can
buy now at -150 points cheaper we could still have another
failed rally between here and there. There are many technicians
calling for another retest of the 2850 lows from this week on
Monday or Tuesday. Maybe, maybe not. After every low there are
always traders calling for a retest. We had 6 retests of the last
lows and it did us no good. I would however be a buyer on any
rebound from under 2900 should we see that again. I was encouraged
by the slow climb back up to almost positive at the close on Friday.
When you consider all the negative news traders should have been
running for cover. Instead they were nibbling at stocks before
the weekend. This is bullish but the volume was so anemic that
you cannot really reach any significant conclusions from the
action. So here we sit. Directionless and decisionless. If the
Nasdaq does not turn around next week and head north at a high
rate of speed this will be the worst year for the Nasdaq since
1974. Think about that. 1974. Still think this is a bull market?
Regardless of what label we put on the current market we need
to either play what it gives us OR wait until it gives us what
we want to play. For some that may mean looking at both calls
and puts this weekend and for others it may mean going Christmas
shopping instead of trading before Thanksgiving this year. You
may not like this train of thought or me for writing it but
everyone needs to reevaluate the circumstances and reconsider
their trading strategy from time to time. Take some time this
weekend to step back and consider your strategy for the rest of
the year. We only have six weeks left in Y2K. Only 28 trading
days. Whether you lose or profit in those 28 days will probably
depend on the trading plan you put in place over the next two
weeks. Are you going to be a gunslinger shooting at everything
that moves or an investor that carefully plans each play with
an eye on the markets and waits for an entry point?

Trade smart, don't buy too soon.

Jim Brown


Here is your chance to learn from the pros. Three days
of Technical Analysis, Stock and Option education.
Don't miss it!

At less than the cost of a bad trade you can learn how
to analyze stocks and trade options like the pros.
Don't wait, do it now.

Date      City

Dec 07-09 Philadelphia

Has the market been beating you up? Did you give back
your gains from April/August? Would you like to understand
all the technical indicators our writers use? Does
the alphabet soup of technical terms like RSI, DMA,
MACD, ROC, Stochastics, Bollinger bands, sound like
Greek to you?

You can learn from the experts how to interpret all
these indicators, read charts, pick stocks and which
option strategies to use on those stocks for less than
the cost of one bad trade.

Reserve your seat now for one of our regional seminars.

Click here for more info:


Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at Preferred Capital Markets
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with Preferred Capital

Anything else is too slow!



Now that I have made everybody mad in my market wrap today I will
finish the job by showing my concern in my own plays for next
week. I was away from my PC on Monday so I missed the big drop
and the rest of the week was sideways to down. No plays there
for me.

Next week being a short week with market direction dependent
on the election results it is very difficult to pick plays before
the outcome is known. I am strictly going to be a dip buyer or
a rally buyer. I am not going to "play" in the sand box with
the market makers beating me up for $2 a trade with no direction.

There is a time to trade and a time to watch and I think it
is a time to watch. Don't get me wrong, we could blowout on
Monday morning on an election resolution and post triple digits
every day for a week. (I wish!) You can bet I would be in the
middle of the run and shooting at everything in sight.

Until this happens I will keep looking at charts and trying to
decide what stocks I am going to play when the rally finally
comes. Those stocks I am looking for are the ones that are not
dropping on these weak days. Sure some of them died on the big
down days but they rebounded and are silently easing back up

The ones I am going to chart below are just the most likely
targets as of Friday night. This list will change as of the
market open on Monday. Stocks moving down will be dropped and
stocks moving up will be added. Sounds simple but we do our
best to make it hard by applying our preconcieved bias to every
chart instead of letting the charts tell us which ones to play.

To be very honest there just was not a lot (hardly any) of decent
charts on Friday night. We could be in for some rough sailing
next week or an explosion off support on good election news.
It is a coin toss and the market gets to keep the coins.

VRTS - $160 DEC Naked PUT]

I like VRTS because it is dead on support at $110 and the news
after the close was that Gary Bloom a 14 year veteran at Oracle
and EVP was named as the president of Veritas. This is a great
deal for VRTS and adds strength to the management side. I think
the downside is minimal and we could see a $20 move to the upside
very easy.

ADIC - DEC $20 Call

ADIC is a new play on OptionInvestor this weekend. I like the
bullish wedge it is building at $18 and the December $20 call
is only $1.19. If it breaks over resistance at $18 it could run
to $25 pretty easy. This is strictly a momentum play and has
fairly low risk.

BRCD - $260 DEC Naked Put

I kept going back to BRCD all night. This is one of those stocks
I want to play but there is no compelling reason. I could build
you a technical case to go up or down but I want to play it up.
The big drop on Monday only knocked it back to $200 from support
at $215 and it immediately went back to this support. It struggled
all week as the Nasdaq waffled and finally gave up -$6 on Friday
to $220. I want to think this is an entry point assuming we get
some good news next week. I would try to enter on a pull back
on Monday and once in if it breaks $215 I would get out.

MANU - $150 DEC Naked Put

This is purely a technical play. MANU hit a 52 week high on Nov
7th and then tanked on profit taking. It has recovered half of
the loss and over the last three days has built a base at $110-
$115. If the market turns positive I think MANU could hit a new
high of $150 in a matter of days. I would close any play if it
fell under $110.


We are in no hurry and we could wait all week on the sidelines.
Every time you jump into a play that busts out it costs you
capital and confidence. We can't afford to lose either.


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!


South-bound Rally
By Austin Passamonte

That's what we experienced all week as the markets continued to
move south. Most traders and pundits blame this behavior on the
presidential fiasco down south as well but Market Sentiment is
not so sure after what we saw on Friday.

The first piece of real news to give a strong hint on this race's
outcome resulted in a furious "retail" rally as traders blew the
indexes up over 100 points off the bottom in minutes. It truly
was something to behold.

Unless one was of the dwindling die-hard bulls left out there.
They were forced to watch all those inflated calls wither in a
nanosecond as massive waves of eager selling greedily engulfed
this opportunity. We had heard from sources in the pits that
floor traders and institutions were waiting on such a rally to go
short with a vengeance.

To be honest we were skeptical but that's precisely what took
place. Hope for a sustained rally taking shape anytime soon might
need to be rethought.

This is a classic last-stage, bear-market bottom where earnings
are poor across the board, leadership stocks are sold off and
negative sentiment prevails. Seen anything like that around here

We haven't found the bottom yet. It lies below us somewhere at
numbers most thought would never be revisited again. The COT
report shows big boys holding all of their shorts and adding a
few in the Dow besides. This is looking like a better idea each &
every session.

Technical indicators on our charts can't catch a break either.
Every hint of bullish momentum building gets snuffed out quickly.
We still see signs of a pending rally and keep in mind these are
exactly the conditions our next upside surprise will come from.
When that happens we need to treat it as a short-term tradable
event until proof of duration is in our hands.

Let's visit the fundamental side for a change. What is happening
and what needs to take shape for the next bull market move to

Earnings. Interest rates. Economy.

Earnings will likely suffer in the next quarter as well. Oil
prices haven't dropped, winter expenses are just ahead and the
economy is already soft. The retail sector and all attached began
the Christmas season at Labor Day. This ridiculous ploy is
intended to boost fourth-quarter earnings, but do you think it
will work? Shoppers have a finite amount of money to spend
regardless how long the season becomes, which in our opinion is
just one day on Dec 23rd. We don't wait until the last minute
around here!

That is not a recipe for blowout results across the board in what
is traditionally a leading sector. Economic pressure and lack of
wealth effect may be a drag this time around.

Earnings will improve when interest rates change and that will
come before long. A soft landing is in question and a harder
landing will be met swiftly by the FOMC as it has before. Perhaps
not swift as we'd like it but relief will come.

Our robust economy will resume after catching its breath and the
markets have built another solid base. The main core of traders
will remain to hone their skills and position themselves for the
next incredible leg of this historic bull-run.

Peripheral day traders and call buyers who never took time to
learn the trading game will return to give their money to those
who stayed. This cycle has repeated long before our time and will
likely continue far beyond.

Some will stick & stay to earn great pay. Others will drift in
and out to provide that great pay for others. Which will you
choose to be? Market Sentiment will see you in the winner's
circle for a long time to come!


Friday 11/17 close; 28.38

30-yr Bonds
Friday 11/17 close; 5.75%

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)
765 - 750                6,677        2,480         2.69
745 - 730                7,061        3,644         1.94

OEX close: 725.09

720 - 705                1,376        4,127          3.00
700 - 685                  195        4,414         22.64***
Maximum calls: 770/3,881
Maximum puts : 700/3,045

Moving Averages
 10 DMA  733
 20 DMA  735
 50 DMA  749
200 DMA  776


NASDAQ 100 Index (NDX/QQQ)
 82 - 80                32,833        42,897          .77
 79 - 77                10,512         7,019         1.50
 76 - 74                16,111        41,602          .39

QQQ(NDX)close: 72.82


 71 - 69                 5,181        22,149         4.28
 68 - 66                   487        11,146        22.89***
 65 - 63                   831        16,797        20.21***

Maximum calls: 80/25,445
Maximum puts : 80/35,348

Moving Averages
 10 DMA 75
 20 DMA 78
 50 DMA 83
200 DMA 93


S&P 500 (SPX)
1425                   29,110        15,408          1.89
1400                   58,601        59,241           .99
1375                   30,750        24,848          1.24

SPX close: 1367.71

1350                   11,836        28,585          2.42
1325                    3,983        18,513          1.56
1300                    6,466        20,846          3.22

Maximum calls: 1400/58,601
Maximum puts : 1400/59,241

Moving Averages
 10 DMA 1390
 20 DMA 1395
 50 DMA 1412
200 DMA 1440


CBOT Commitment Of Traders Report: Friday 11/17
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        +100        -1105           -2436       -792
Total Open
Interest %      (+1.42%)    (-14.39%)       (-9.60)     (-3.33%)
                net-long    net-short       net-short   net-short

NASDAQ 100      (Current)  (Previous)      (Current)  (Previous)
Open Interest
Net Value         -733        -1999           -77        -293
Total Open
Interest %       (-3.58%)    (-11.37%)      (-.16%)     (-.60%)
                 net-short   net-short     net-short   net-short

S&P 500         (Current)   (Previous)     (Current)   (Previous)
Open Interest
Net Value        +61563       +58260        -72376       -67783
Total Open
Interest %       (32.17%)     (+30.75%)     (-10.91%)    (-10.52%)
                 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 and have increased their
net-short DOW positions.

Small specs held their net-long S&P positions while changing from
net-short to net-long in DOW positions as compiled Tuesday 11/14
by the CFTC.


Please visit this link for Market Posture:


Get a NextCard Visa, in 30 seconds!
1. Fill in the brief application
2. Receive approval decision within 30 seconds
3. Get rates as low as 2.9% Intro or 9.9% Fixed APR


Preventative Medicine And Apologies

As the faithful readers of this column know, I came down with a
nasty cold last week, which painfully prevented me from
reviewing a full load of charts.  I was REALLY sick!  One of
our subservient readers, Larry, sent in a recipe to prevent
future illness.  Larry wrote, "It is hard to believe but there is
a way to prevent colds."  According to Larry, the secret to
preventing the common cold is by taking large doses of
antioxidants, which are found in a variety of multivitamin
products sold at health stores.  Larry testified, "I never get
colds or the flu as long as I have had the vitamins in me for
several months.  Hope it works for you."  I'd like to thank
Larry for his time and effort.  Antioxidants are now a regular
part of my diet.

Additionally, I must apologize for my horrendous error last week.
The title of last week's column read, "Enough Already, One Of
You Needs To Conceit."  I was referring to the everlasting
election and pleading to Governor Bush or Vice President Gore
to concede, not conceit.  My apologies and thanks to the many
readers who pointed out my error.

Send your stock requests, and health tips like that of Larry's,
to Contact Support.  Please put the symbol of
your requests in the subject line of the e-mail.


Krispy Kreme Doughnuts - KREM

Do you think it's time to buy puts on KREM? - Thanks, Ruben

In this game we call the market, I find it perplexing that a
doughnut maker can trade with a near triple digit multiple
while the bears bash the valuation of such stalwarts as
Cisco Systems.  Since coming public at $29 per share, the
stock of Krispy Kreme Doughnuts now trades nearly three-fold
higher.  Is that efficient?  I don't think so.  Now, don't
get me wrong, I'm not bashing the company that makes such
tasty doughnuts.  In fact, Krispy Kreme is expected to grow
earnings by 25% over the next five years.  Plus, the
company is not as adversely afflicted by such events as
slowing economic growth, nor a pullback in capital
expenditures from customers.  They sell doughnuts!

But, the question remains if Krispy Kreme Doughnuts are just
a fad, which presents a compelling case that its stock is
overvalued, if the fad accusation is true.  Merrill Lynch
downgraded the stock last week on concerns of poor
execution by the company and the question of whether or not
Krispy Kreme is a lasting brand.  If Merrill's concerns
are realized by the market, shares of Krispy Kreme have a
long way to fall after such a meteoric post-IPO rise.  Of
course, my valuation argument and Merrill's case could
prove false and Krispy Kreme could become the next
Starbucks.  Only time and the market will tell...



I bought NVDA November 7th at $73 based on fundamentals and
technical analysis.  It looked poised to go to the mid 80's.  It
dropped substantially since then.  Can I have your opinion on
this one? - Thank you, Jay

All things considered, Jay, shares of NVIDIA have held up very
well recently.  Like many things tech, the stock ran up from
$10 in early 1999 to its current trading range between support
around the $60 level to resistance around the $80 area.  The
stock is simply consolidating those massive gains experienced
over the last two years.

The company makes 3D graphics chips used to power computer
graphics.  NVIDIA's chips are used by nearly every PC
manufacturer, including Compaq, Dell, and IBM.  The fact that
shares of NVIDIA have held up relatively well during the recent
drubbing of the box makers bodes very well.  In fact, I'm a
little surprised the stock hasn't sold off more in sympathy with
the likes of Dell and Apple.  Maybe it stems from the fact that
NVIDIA recently overcame rival ATI Technologies as the leading
graphics chip maker.  NVIDIA's newfound market leading role has
apparently helped insulate the company from the slowdown in the
broader PC sector.

Since shares of NVIDIA have held up so well during tough times
for box makers, I'd expect the stock to take off once we see an
uptick in the PC business.  As long as support around the $60
level continues to prop up shares of NVIDIA, I'd expect the
stock to trade well beyond your initial purchase price, Jay,
once the PC market improves.


Citrix Systems - CTXS

This stock looks like its shaping up - some pretty good news.
How do you see it? - Thanks, Ed

The fate of Citrix is closely tied to that of Microsoft.
Through licensing agreements and strategic alliance, Citrix
makes software that adapts computer networks of all types to
run Microsoft's Windows operating system.  For its part, Citrix
fell under the control of the bears back in June after it was
realized that Microsoft's business was slowing.  Sales of
Citrix's key products, MetaFrame and WinFrame, slowed as a
result.  However, business is turning up for Citrix as sales
of Micrsoft's Windows 2000 are accelerating.  In fact, Lehman
Brothers commented on that very fact two weeks ago in a
research report, and upgraded shares of Citrix to a buy from
a neutral rating.  Along with the fundamental picture
improving for Citrix, there's also the fact the stock has been
heavily shorted since its shortfall last June.  According to
the most recent numbers, there are approximately 10 millions
shares sold short of Citrix.  I bet they've been covering

Citrix's improving fundamentals along with the short covering
taking place landed the stock on our call play list this
weekend.  The two aforementioned facts are combining to add
some much needed repair to Citrix's chart.  There's still an
unfilled gap all the way up to the $41 level.  I don't know
if there are enough shorts left in the stock to induce a
squeeze, which could cause a big and swift run back up to
that level.  Nonetheless, I think Citrix has the business
momentum and price momentum to carry its stock higher into
the end of the year.


Digital Lightwave - DIGL

First let me say that I find each of your Sunday columns a
veritable education in technical analysis and they are much
valued and appreciated.  May I have your comments on DIGL.  They
seem to have excellent fundamentals with good earnings and a
phenomenal 5-year earnings growth of about 350%.  And to borrow
a page from your own recent analysis of RIMM, there is an
apparent "head and shoulders" formation on the DIGL daily chart,
with the head forming in July and the two shoulders in June and
August.  Top of the head is at 120 and the neckline about 80 for
a difference of 40.  Subtracting this from the neckline, we
arrive at 40, which is quite close to the [recent] closing price.
This may very well be the bottom for the stock. - Thank you, Dan

First let me say that I very much appreciate your kind comments,
Dan.  And, you're absolutely correct about Digital.  The
company has a solid balance sheet (debt free), and an equally
solid history of growing earnings, plus a very healthy outlook -
earnings are expected to grow north of 40% in the next five
years.  At current levels, Digital's future earnings growth rate
gives the stock a price-to-earnings growth ratio (PEG) around
1.  As I've stated before, a PEG around 1 is considered fairly
cheap for a tech stock - especially with the kind of growth
Digital is expected to experience.  The recent poor performance
of Digital can be attributed to the uncertainties in the telecom
sector.  The company makes testing equipment for fiber optic
networks, and we all know what's been happening to leading fiber
optic stocks.  But, shares of Digital might be worth a close
look right now, not only for the company's fundamentals, but
also for the stock's technical position.

As you eloquently wrote, Dan, shares of Digital traced a
bearish head-and-shoulders back in the summer, and have recently
bounced off the bearish price objective from that very technical
formation.  Depending on which technical analyst you asked, the
bearish price objective extrapolated from the head-and-shoulders
last summer should be around $35 or $40.  Not by coincidence,
shares of Digital bounced traced an intraday low at $34 5/16
last Monday, and subsequently rebounded back above $40.  I think
Digital presents a compelling trade right now because the risk to
reward characteristics are clearly defined, with the reward
outweighing the potential risk.  One strategy might be to enter
the stock at current levels, and set a hard stop at $34 - the
low from last week.  If the tech and telecom sectors rebound in
the coming weeks, shares of Digital could sail back up to fill
the gap at $56, and even trade back around the $65 value area.
Of course, if the stock falls below $34, the theory of a
rebound goes out the window.


Corning - GLW

I would appreciate your comments about GLW.  I know the entire
optical fiber sector was hit with NT woes but GLW hasn't
recovered as some of the others in the sector have.  I'm aware
of the 30 million shares sold by the company at 71 1/4 [two weeks
ago].  Was this the reason and do you see a recovery short term
(one to three months). - Maureen

You are correct, Maureen, in that the entire optical fiber
sector has been whacked recently.  I'm also aware of the stock
and debt offering issued by Corning on November 3rd, but I don't
think that afflicted the stock as much as the worries over demand
in the optical space did.  Two weeks ago, I reviewed JDS Uniphase
and Nortel and wrote of the concerns over supply in the optical
business finally catching up with demand from the telecom
carriers.  That current flux in the optical business will likely
lead to nervous trading in shares of Corning.  I wouldn't be
surprised to see the leading optical makers such as Corning,
Ciena, and JDS Uniphase pullback even further from their
current levels.  However, most of the concerns over slowing
demand have already been factored into their stock prices.
That said, sentiment could shift rather quickly with a few
bullish forecasts.  One such forecast was provided by Alcatel,
the French telecom equipment maker, in late October, who
reported blowout third-quarter results and provided bullish
guidance going forward.  A few more reports such as the one
from Alcatel could get Corning rolling higher.

I don't think Corning will return to its all-time highs in
the next one to three months, Maureen, barring a major
shift in sentiment.  The fact is, the broader telecom space
is experiencing a hiccup, which could last a while longer.
However, according to many tech gurus and industry analysts,
the future of telecom is optical.  And, Corning is the
largest supplier of optical cable that is needed to build
the millions of miles of networks over the next ten years.
Furthermore, of the major optical players, Corning is the
most reasonably valued stock in the group.  Its shares
trade with a forward-looking PE of around 45.  Plus, the
company is expected to grow earnings by more than 30% in
the coming years.  For the long-term players with a time
horizon of at least two or three years, shares of Corning
might be trading at an attractive level.  Although the
stock might drift downward until the sentiment in the
telecom arena shifts, I'd be willing to bet shares of
Corning will be trading much higher a few years out.


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 20, 2000


None Scheduled


Trade Balance          Sep  Forecast:-$30.6B     Previous:-$29.4B
Treasury Budget        Oct  Forecast:-$13.9B     Previous:-$26.7B


Initial Claims      18-Nov  Forecast:    NA      Previous:   326K


None Scheduled


Michigan Sentiment     Nov  Forecast: 106.3      Previous: 107.7

Week of November 27th

27-Nov  Existing Home Sales
28-Nov  Durable Orders
28-Nov  Consumer Confidence
29-Nov  GDP-Revised
29-Nov  GDP Chain Deflator
30-Nov  Personal Income
30-Nov  PCE
30-Nov  Initial Claims
30-Nov  Chicago PMI
30-Nov  Help-Wanted Index
1-Dec  Nonfarm Payrolls
1-Dec  Unemployment Rate
1-Dec  Hourly Earnings
1-Dec  Average Workweek
1-Dec  Auto Sales
1-Dec  Truck Sales
1-Dec  NAPM Index
1-Dec  Construction Spending

Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at Preferred Capital Markets
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with Preferred Capital

Anything else is too slow!



If you like the results you have been receiving we
would welcome you as a permanent subscriber.

The monthly subscription price is 39.95. The quarterly
price is 99.95 which is $20 off the monthly rate.

We would like to have you as a subscriber. You may
subscribe at any time but your subscription will not
start until your free trial is over.

To subscribe you may go to our website at


and click on "subscribe" to use our secure credit
card server or you may simply send an email to

 "Contact Support"

with your credit card information,(number, exp date, name)
or you may call us at 303-797-0200 and give us the
information over the phone.

You may also fax the information to: 303-797-1333


Please read our disclaimer at:

The Option Investor Newsletter                   Sunday 11-19-2000
Sunday                                                      2 of 5

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


Butterfly With An Insurance Policy
By Lynda Schuepp

Using a calendar spread is a cheap way to protect yourself when
you have any kind of spread that caps your upside.  Thursday,
I was looking to put on some long-term bullish positions with
little risk.  I have had very good luck with butterflies on GE,
because it is not that volatile a stock but has an up-trend that
keeps on running like the Energizer bunny.  Let's take a look at
a long-term chart on GE to see what I mean.

Monthly Chart of GE:

From the chart above, you can see that GE has plodded from $12.75
in the beginning of 1996 to about $50 on Friday.  That's about a
300% increase in four years.  Now I know that's not too exciting
for you dot.com traders, but these type of stocks should be a part
of everyone's portfolio.  Using the leverage of options turns that
300% increase to about a 3000% return.  To review a butterfly for
those who are not familiar, it a trade that consists of one long
option, two short options with a higher strike and one option with
an even higher strike, using all calls or puts.  Butterflies can
be used for an intermediate sideways trend or they can be used for
a long-term bullish position such as the butterfly I put on GE by
using strikes 10-30 points higher than what the stock is currently
trading for.

The goal is to have the stock close at the middle range at
expiration to maximize your profits.  You must understand your
break-evens and your profit potential and your total risk of any
trade BEFORE you initiate the trade.  For the sake of brevity, the
example I'll use is the trade I actually selected on Thursday.  I
bought 10 contracts of the Jan '02 60 calls, sold 20 contracts of
the Jan '02 70 calls and bought 10 contracts of the Jan'02 80 calls
for a total cost of $1.63.  The assumption with a butterfly is that
the stock will close within the range of the butterfly.  You have
to look at prices on the call and the put side to determine which
will cost you less.  It turned out that the calls were cheaper to
use than the puts.

There are two break-evens on a butterfly.  The lower break-even
is the lower strike plus the cost of the trade and the upper
break-even is the highest strike minus the cost of the trade.  In
this case, the lower break-even would be $61.63(60 + 1.63) and
the upper break-even would be $78.38(80 - 1.63).  I will make
money if GE closes between $61.63 and $78.38 on Jan '02 or before.
That leaves me a lot of wiggle room to be right.  The maximum
profit I can make is the spread from the middle to the outer
strike less the cost of the spread or $8.38 in this case (70 minus
60 minus 1.63).  The maximum loss would be the cost of the trade
or 1-5/8.  You lose everything ($1.63) if the stock trades outside
of the range (below $61.63 or above $78.38).

Monthly Chart of GE with channel Extensions:

Above is a chart of GE that I have drawn support and resistance lines
and extended them in order to make projections where GE might be
trading before expiration.  Generally, I look to close out the
position a couple of months before expiration.  Using the trendlines
shown on the chart above we can project that GE should close somewhere
between 65 and 80 by mid-year.  My profit is capped to the upside.
What happens if GE makes a bigger run and closes at 85?  I'd be out
$1.63 even though I was right about the direction of the stock.

Here's the new twist--insurance using a Calendar spread.  Because
GE's volatility is relatively stable, day in, day out and month in
and month out, I am very comfortable legging into these transactions,
taking advantage of price variations from exchange to exchange.
The calendar spread I took, was 10 contracts (long) on the Jan '03
80 puts and short 10 contracts of the Jan '02 80 puts.  My risk
is the cost of the transaction, in this case a measly 1/4 point
but my reward could be 2 or more.  On Thursday, I bought the Jan'03
80 puts for $27.38 on one exchange and then sold the Jan '02 80
puts for $27.63 on a different exchange taking advantage of the
price discrepancies on the various exchanges.  Look at the quotes
below from Friday's close to see what I mean.

Fridays quotes show the best ask (the price you'd have to pay) on
the Jan 03' 80 puts was $28.38 on the Philadelphia exchange (X)
and the best bid (the price you would have to sell) the January '02
80 puts was 28 on the Chicago exchange (C).  The net difference,
your cost, would have been 5/8 at the close on Friday.  I try to
squeeze a little bit out of each side, so I was able to actually do
the trade for 1/4 debit.  Now here's how to make the projections of
what the profit might be from this calendar spread.  If GE closes
at 82 on expiration in January '02, you would have a put that is
close to being "at the money", one short '02 and one long '03.

To project what the values of those would be, lets look at current
"at the money" puts to determine what the value of those puts
would be worth at January expiration.  First of all, we know that
the January '02 puts would expire worthless, allowing us to keep
the $27.63 (the price I sold the put for).  Now let's determine
the value of the January '03 80 put.  The January '03 put would
have 1 year left, so for that we could look at the current prices
on the December puts as a close approximation.  From the prices
below, we see that the December 51-5/8 is very close to being at
the money.  The best bid (the price we could sell our long put)
is $2.25 on the CBOE (C).  That's a 900% return.  Granted you
won't get rich with so few contracts, but it is merely a trading
style you can incorporate into your trading.  If you want to
kick it up a notch, you can buy back the short leg when GE
hits the upper band of the trading channel and starts to turn
back down and then sell the long leg when GE bounces off the bottom
of the channel.  Oh well, that's enough for today.  These strategies
provide very good returns with little risk particularly is you have
little capital to invest or no time to watch the market daily.

Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at Preferred Capital Markets
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with Preferred Capital

Anything else is too slow!



Call Play of the Day:

CIEN - Ciena Corporation $104.44 (+16.44 last week)

See details in sector list

Put Play of the Day:

FCEL - Fuel Cell Energy $54.25 (-7.25 last week)

See details in sector list

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!


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.


IDPH $170.50 (-29.18) The rolling corrections of late hit IDPH
like a tidal wave in Friday's session.  In spite of the biotechs
recent resiliency, IDPH failed to recover in the shaky markets.
The buyers just didn't flock back in to the group.  The decline
following amateur hour was swift.  If you were one of the more
aggressive traders who took a riskier entries on Thursday, your
stop losses should have taken you out of the play at no lower
than the $170 level.

CMTO $11.00 -0.63 (-0.56)  While this low volatility play has
provide good quick trades from support at $12 and $11, this week's
trading established a relatively lower high at $12.75.  The first
bounce from $12 ran for a buck and stopped at $13.  A subsequent
rollover found a springboard at $11, offering another entry.  But
since CMTO topped out at $12.75, it has steadily declined during
the week, closing smack dab at $11.  Although we set our stop at
$10, we are dropping this low volatility play tonight due to the
concern over that failure to reach a higher high.


LVLT $32.88 (-3.19) The play on LVLT was advantageous to gains
while we had it on our list, but now it's time to reassess our
position.  It's true that the telecom sector is still plagued
with bad news, the most recent being BellSouth's announcement of
its reduction in 2001 profit estimates.  Many of the stocks in
the group are indeed seeing new 52-week lows; however recent
trading indicates that LVLT may have found a comfortable zone at
$32 and $33.  In light of this stock-specific development, we've
decided to take our profits and moved onward.


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.


SUNW - Sun Microsystems $89.31 (+0.13 last week)

Incorporated in February 1982, Sun Microsystems, Inc. has long
been synonymous with leading edge technology.  Now, after 18
years of telling the world "The Network is the Computer," Sun is
poised to become the leader in the emerging network-driven
economy.  Forward thinking organizations are looking to Sun to
lead them into the dot com future.  Sun was founded with one
driving vision.  A vision of computers that talk to each other no
matter who built them. A vision in which technology works for
you, not the other way around.

Having picked SUNW as a November options expiry lottery call pick
on Tuesday, we are segueing this play from the lottery list to
the aggressive call list.  There are a number of reasons to be
bullish on SUNW, and many analysts agree.  In the conference call
on Thursday, the theme was no change in guidance.  This was taken
as good news, since it would mean that the company would meet
earnings estimates going forward.  Lehman Brothers reiterated
their Buy rating, citing the company's plans to reduce its
backlog as a positive sign.  Banc of America Securities
reiterated their Strong Buy rating, raising their first year
second quarter estimates by a penny.  Credit Suisse First Boston
and UBS Warburg also came out with positive comments.  This
helped the stock to move up $2.06 or 2.36% on Friday, on almost
180% of ADV.  There is also a 2-for-1 stock split, set on
December 5th to keep the momentum fires burning.  At this point,
we think SUNW is a low risk/high-reward play because the stock
has solid support at the $85 level.  If not for weakness in the
Tech sector last week, SUNW may well have already rallied.  For
now, upside could be to at least $100 if the NASDAQ rebounds next
week.  But first it must break through resistance from the 5-dma
at $90.  This would allow conservative traders to take a position
but confirm the breakthrough with buying volume.  After $90, SUNW
may also encounter resistance at $95, reinforced by the 10-dma,
currently at $95.92.  For more aggressive traders, a bounce off
support and our stop price at $85 could allow for an ideal entry
point but a close below this level would likely see us closing
out this play.  As a large cap Tech stock, the movements of SUNW
can in part be attributed to those of NASDAQ.  As such, confirm a
bounce or break through resistance with the NASDSAQ when
initiating a play.

BUY CALL DEC-85 SUX-LQ OI= 687 at $10.50 SL=7.50
BUY CALL DEC-90*SUX-LR OI=2629 at $ 7.50 SL=5.25
BUY CALL DEC-95 SUX-LS OI=2698 at $ 5.25 SL=3.25
BUY CALL JAN-90 SUX-AR OI=4640 at $11.50 SL=8.50
BUY CALL JAN-95 SUX-AS OI=3448 at $ 9.38 SL=6.50

SELL PUT DEC-80 SUX-XP OI=5567 at $ 3.63 SL=5.50
(See risk of selling put in play legend)


CTXS - Citrix Systems, Inc. $30.88 (+6.81 last week)

Founded in 1989, Citrix Systems is a global leader in application
server software and services that offer "Digital Independence,"
the ability to run any application on any device over any
connection, wireless to Web, so that now, everything can compute.
Citrix technology enables organizations to provide access to
server-based applications from a wide variety of client devices
and platforms.  Since these applications are installed, updated
and maintained on central servers instead of each client, the
cost and complexity of administration are significantly reduced.

It may have been a down week for most Tech stocks but for CTXS,
it's been a five-day winning streak.  Since bouncing off support
at $15 in mid-October, shares of CTXS have doubled in value.  In
fact, the day its ascent began was the day after its
third-quarter earnings report.  Beating Street estimates by two
cents, the report was nothing spectacular but analysts and
institutions alike were impressed with the conference call, as
management laid out increasing growth numbers going forward.  As
well, sales of electronic licensing for their software accounted
for 20 percent of their revenues for the quarter.  This is good
news indeed, since this part of their business sports the highest
profit margins.  Since then, an alliance with Sequoia Software
has helped CTXS to position itself more firmly in the XML space.
As well, Lehman Brothers upgraded the stock from a Neutral to a
Buy rating, saying that the company is well positioned to benefit
from the migration of corporations to Windows 2000.  Already
above its 50 and 100-dma, both in the low-20's area, the last
line of moving average resistance is from the 200-dma at $43.
But CTXS will likely find resistance in increments of $5 all the
way up, at $35 and $40.  Strength in a weak market is a good
sign, as improving market conditions could bring in more buyers,
bidding the stock higher.  All the same, nothing moves up in a
straight line.   A bounce off $30 could allow for an aggressive
entry. There is also support at our stop price of $27, near the
5-dma at $27.41, but confirm with volume.  For conservative
traders, look for a break above $32 with conviction as a target
to shoot for.

BUY CALL DEC-25 XSQ-LE OI=6440 at $6.63 SL=4.50
BUY CALL DEC-30*XSQ-LF OI=9478 at $3.50 SL=1.75
BUY CALL DEC-35 XSQ-LG OI=4832 at $1.50 SL=0.75
BUY CALL MAR-30 XSQ-CF OI=2600 at $6.75 SL=4.75
BUY CALL MAR-35 XSQ-CG OI=1124 at $4.88 SL=3.00


CLS - Celestica, Inc. $63.44 (+8.69 last week)

Celestica is a provider of electronics manufacturing services
(EMS) to original equipment manufacturers worldwide.  The
company provides a wide variety of products and services to its
customers, including manufacture, assembly and test of complex
printed circuit assemblies.  The company's broad range of EMS
services includes design, procurement, product assurance,
assembly, full supply chain management, worldwide distribution
and after sales support.  CLS complements its EMS services by
providing memory and power products to its customers.

Finally succumbing to the decline in the broader Semiconductor
sector, contract manufacturers like CLS have declined sharply
in recent weeks.  Concerns about a bearish shift in the
supply/demand for semiconductor products combined with
valuation concerns and a clearly slowing economy are all having
their effect on these stocks.  CLS ran up to challenge its
highs near $85 prior to its earnings report on October 19th, but
then the stock sold off sharply, despite an earnings report that
beat estimates by a nickel.  The company posted revenue growth
of 92% and made bullish comments about the outsourcing industry
going forward.  Dragged lower with the broader Technology
sector, CLS seems to have found solid support at $53, and
investor nervousness seems to be giving way to the strong
fundamentals of the industry and the stock.  CLS rallied sharply
on Monday and Tuesday, recovering above the 200-dma (currently
$58.75), before consolidating for the remainder of the week
between $61-64.  Daily stochastics have turned up, indicating
the stock is likely to continue its recovery, with the first
upside target sitting at the $70-71 resistance level.  Support
at $59 is reinforced by the 200-dma, so this is where we are
setting our stop.  Aggressive investors can shoot for new
entries on a bounce from this level, or milder support at $61.
The more conservative approach will be to enter on continued
strength, marked by a rally above $65.  In either case, keep
an eye on the volume, and be suspect of any rally that is not
accompanied by strong buying.

BUY CALL DEC-60 CLS-LL OI= 295 at $ 7.50 SL=5.25
BUY CALL DEC-65*CLS-LM OI=1669 at $ 4.88 SL=3.00
BUY CALL DEC-70 CLS-LN OI=1032 at $ 3.13 SL=1.50
BUY CALL MAR-65 CLS-CM OI= 155 at $10.50 SL=7.50
BUY CALL MAR-70 CLS-CN OI=1165 at $ 8.50 SL=6.00

SELL PUT DEC-55 CLS-XK OI= 598 at $1.88 SL=3.50
(See risks of selling puts in play legend)



ADIC - Advanced Digital Information $18.13 (+1.83 last week)

Advanced Digital makes automated tape libraries.  The company
buys tape drives from other manufacturers and outfits them with
robotic arms.  These arms select a tape from a multitape unit,
then add or access data.  About a third of the company's are
international, generated primarily in Europe.

With its low valuation and improving outlook, investors have
been moving back into shares of Advanced Digital.  Company
officials recently guided analysts to expect sales to meet
previous estimates for its fiscal fourth quarter.  Although it
may not sound like much, the fact that ADIC didn't warn had
many investors pleased and buying.  We're looking to capitalize
on ADIC's recent momentum by entering positions in its low cost
options.  Entries could be had on bounces off current levels at
$18 or lower around the $17.50 level.  However, a close below
$17 would effect our stop at that level.  Additionally, entries
could be taken on a volume-backed breakout above ADIC's
historical resistance level at $19.

BUY CALL DEC-15 QXG-LC OI=1104 at $3.88 SL=2.50
BUY CALL DEC-20*QXG-LD OI=1770 at $1.19 SL=0.25
BUY CALL MAR-20 QXG-CD OI= 365 at $2.88 SL=1.50
BUY CALL JUN-20 QXG-FD OI=  40 at $4.25 SL=2.75


Get a NextCard Visa, in 30 seconds!
1. Fill in the brief application
2. Receive approval decision within 30 seconds
3. Get rates as low as 2.9% Intro or 9.9% Fixed APR


Please read our disclaimer at:

The Option Investor Newsletter                   Sunday 11-19-2000
Sunday                                                      3 of 5

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

Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at Preferred Capital Markets
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with Preferred Capital

Anything else is too slow!



CIEN - Ciena Corporation $104.44 (+16.44 last week)

Ciena Corporation's market leading optical networking systems
form the core for the new era of networks and services worldwide.
Ciena's lightworks architecture enables next generation optical
services and changes the fundamental economics of service
provider networks by simplifying the networks and reducing the
cost to operate it.

Ciena had a successful week in a down market.  The low point
of the week for Ciena was Monday, when the stock dipped below
$85, but did not drop below the 200-dma of $82.  This is
impressive, considering the fact that the Nasdaq dropped below
3000.  The Federal Reserve’s decision not to change their bias
to neutral weighed heavily on the markets on Thursday and
Friday.   Ciena has been moving between the 10-dma of $97.44
and Friday's high of $105.63 consistently for the last couple
of days.  Since Ciena reports earnings the first week in
December, the next couple of weeks should be strong ones,
market conditions permitting.  Volume continues to be about
30% higher on the up days.  In order for a really strong upward
trend to continue, we want to see Ciena close above the 50-dma
of $107 on strong volume.  This would put CIEN above all of
its major moving averages, and en route to resume the stronger
up trend of September and October.  In the news Friday, Bank of
America analyst Chris Crespi was reported to have told clients
that Nortel was losing a significant amount of business to Ciena.
Nortel denied this, however, the news may have helped to boost
Ciena’s price to the expense of Nortel.  Consider taking new
positions on a bounce off the 10-dma of $97.44 or the 5-dma of
$99.44.  Additionally, watch for the breakout above the $107
level.  We'll keep our stop set at $90, and exit positions
should CIEN close below that level.

BUY CALL DEC-100 UEE-LT OI= 814 at $16.13 SL=11.50
BUY CALL DEC-105*UEE-LA OI=1046 at $13.87 SL=10.50
BUY CALL DEC-110 UEE-LB OI=2172 at $11.50 SL= 8.75
BUY CALL JAN-100 UEE-AT OI=7524 at $20.00 SL=14.50
BUY CALL JAN-105 UEE-AA OI=2825 at $17.87 SL=13.00


MSFT - Microsoft $69.06 (+2.38 last week)

Microsoft is a software powerhouse.  Microsoft's vision is to
empower people through great software-any time, any place, and on
any device.  As the worldwide leader for software in personal and
business computing, Microsoft strives to produce innovative
products and services that meet our customer's evolving needs.
At the same time, Microsoft realizes that success is about more
than just making great products.

Microsoft has been acting like the little engine who could,
as the stock tries to push its way through resistance at $70,
despite the weak market conditions and election uncertainty.
The low point of the week for Microsoft was Monday morning,
when the stock touched its 50-dma of $64.44 briefly as the
Nasdaq dipped below 3000.  From that point, Microsoft hasn’t
looked back, and held support at the 5-dma of $68.63 even
after the hawkish Federal Reserve statements.  Microsoft is
currently at the 10-dma of $69, and would almost certainly
be higher if it were not for the continuing election suspense.
Volume is slightly higher on up days, and many institutional
block trades are taking place.  Ultimately, Microsoft’s
underlying fundamental strength and superb financials may win,
even while we are waiting for an end to the litigation and
worries.  Retail and institutional investors are looking for
strength and profitability in this market environment, as
non profitable start up companies are dropping by the dozens.
With a P/E of 38, Microsoft may be more fairly valued than
it has been in many years.  Consider taking positions off a
move through $70 on strong volume, or a bounce off the 5-dma
of $68.63 in an up market.  Watch the market’s reaction to the
election, and set stops at $64 - a close below $64 would bring
an end to our play.

BUY CALL DEC-65 MSQ-LM OI=11036 at $6.50 SL=4.50
BUY CALL DEC-70*MSQ-LN OI=14855 at $3.25 SL=1.75
BUY CALL DEC-75 MSQ-LO OI=34833 at $1.56 SL=0.75
BUY CALL JAN-65 MSQ-AM OI=19505 at $8.13 SL=5.50
BUY CALL JAN-70 MSQ-AN OI=54441 at $5.25 SL=3.25


QCOM - Qualcomm Inc. $88.81 (+14.88 last week)

Qualcomm Incorporated is a leader in developing, delivering, and
enabling innovative digital wireless communications products and
services based on the Company's digital technologies.  As the
pioneer of Code Division Multiple Access (CDMA), the technology
of choice for next-generation wireless communications, Qualcomm
continues to lead the industry in the development of voice, data,
and wireless Internet products and solutions.  Qualcomm is also
transforming industries through its various satellite businesses
and technology partnerships.

Shares of the wireless giant QCOM have continued to climb
higher.  Despite uncertain conditions in the market, traders and
investors have certainly been bullish on the CDMA gatekeeper this
month, and for good reason.  The launch of a $500 million venture
capital unit, a successful judgment in QCOM's favor in Europe in
which the court upheld QCOM's patents and higher than expected
demand from upgrading by wireless companies worldwide have all
factored into the company's phoenix-like ascent from the ashes of
a five month base.   On Friday, First Union Securities reiterated
their Strong Buy rating on QCOM, with a 52-week target price
range of $200 to $220.  This was based on fundamental factors
affecting the company’s position in India.  A contract signed
with Hyundai Electronics could finally get QCOM's foot in the
door of that country.  While the contract at face value is worth
$120 million, if plans from the Indian government based on
Hyundai's estimates come to pass, it could generate business of
over $150 billion.  This is a large amount of revenue that if
factored into the stock price, could produce significant upside
potential.  Starting the month below all its major moving
averages, the stock has already left its 50 and 100-dma (now at
$72.79 and $67.20) far behind the rear-view mirror.  Now
positioned just below its last line of moving average resistance,
the 200-dma at $89.06, a break above this important moving
average resistance point, backed by strong buying volume could
allow for a conservative entry point.  If QCOM decides to take a
breather before moving higher, a pullback to support at $85 and
the 5-dma at $83.26 could give aggressive traders a target to
shoot for.  There is also support at $80 but be aware of our stop
price of $81.  A close below this point could be a signal to step

BUY CALL DEC-85 AAF-LQ OI=4132 at $ 9.75 SL=6.75
BUY CALL DEC-90*AAF-LR OI=4884 at $ 7.13 SL=5.00
BUY CALL DEC-95 AAF-LS OI=2652 at $ 5.00 SL=3.00
BUY CALL JAN-90 AAF-AR OI=8383 at $11.13 SL=8.25
BUY CALL JAN-95 AAF-AS OI=6214 at $ 8.88 SL=6.25

SELL PUT DEC-80 AAF-XP OI= 922 at $ 3.25 SL=5.25
(See risk of selling put in play legend)


AMGN - Amgen, Inc. $65.13 (+0.56 last week)

The biggest of the Biotech big guns, AMGN makes and markets
therapeutic products for hematology, oncology, bone and
inflammatory disorders, as well as neuroendocrine and
neurodegenerative diseases.  Anti-anemia drug Epogen and immune
system stimulator Neupogen account for about 95% of sales.  Its
Infergen has been commercialized as a treatment for hepatitis C,
and Stemgen is approved for stem cell therapy in Australia,
Canada, and New Zealand.  The company has a strong pipeline of
new drugs in various stages of development as well as research
and marketing alliances with Hoffman-La-Roche and
Johnson & Johnson.

Tossed about by the continuing election uncertainty, AMGN
weakened a bit more on Friday.  As the political situation
roiled the major indices, AMGN fell to $63.50 before finding
buying support.  The afternoon recovery helped our play recover
to close right on the ascending trendline (now at $65) that has
been in place for the past 3 weeks.  The strength seen in the
middle of the week has now faded, putting the Biotech giant
below both its 50-dma ($65.75) and 200-dma (65.38).  Below
Friday's low, our $62 stop is still intact, but getting closer
to being challenged.  Volume paints a rosier picture though.
Despite volume that has been less than the ADV, it was
encouraging to see buying volume pick up sharply at the end of
the day on Friday, as the price recovered into the close.  The
Biotechnology and Pharmaceutical sectors will likely be affected
by the outcome of the election process, so conservative
investors will want to wait for some sort of resolution to the
situation in Florida before initiating new positions.  Then look
for a decisive move through $67 resistance to trigger your
entry.  More aggressive traders can consider target shooting
intraday dips to the $63-64 area, but must remember to keep
their stops in place, should the market take a turn for the

BUY CALL DEC-65 YAA-LM OI=9195 at $5.38 SL=3.50
BUY CALL DEC-70*YAA-LN OI=2655 at $3.13 SL=1.50
BUY CALL DEC-75 YAA-LO OI=2824 at $1.63 SL=0.75
BUY CALL JAN-65 YAA-AM OI=3535 at $7.63 SL=5.25
BUY CALL JAN-70 YAA-AN OI=8535 at $5.25 SL=3.25

SELL PUT DEC-60 YAA-XL OI=4130 at $2.88 SL=4.75
(See risks of selling puts in play legend)


JBL - Jabil Circuit $48.31 (+4.06 last week)

Commonly referred to as a contract manufacturer, JBL is a
worldwide independent provider of electronic manufacturing
services (EMS).  The company designs and manufactures
electronic circuit board assemblies and systems for major
original equipment manufacturers in the communications,
computer peripherals, personal computer and consumer
products industries.  Its work cell business units are
capable of providing integrated design and engineering
services, component selection, sourcing and procurement,
automated assembly, product testing, parallel global
production, and direct order fulfillment services.

Despite the NASDAQ's continuing weakness on Friday, JBL managed
to overcome the negative sentiment and rally from the $45 level,
back above the 200-dma (currently $46.94).  Adding pressure on
Thursday were bearish comments about the Communications IC
stocks from Joe Osha at Merrill Lynch.  Citing concerns about
increasing inventory, he downgraded the entire basket of stocks
including BRCM, PMCS, AMCC, and TXCC.  The selloff was sharp
and severe, creating significant downside pressure in the
Semiconductor sector, with the SOX index giving up 5.5% on
Thursday.  The selling on contract manufacturing stocks like
JBL was short-lived however, even in light of the continuing
election uncertainty.  Our stop at $44 held up nicely this week,
and aggressive investors were handed an attractive entry point
as the stock bounced mid-day on Friday, confirming intraday
support at $46.  Volume continues to be anemic (running about
two-thirds of the ADV) in the face of the ongoing election
uncertainty.  Until the election is resolved, we are unlikely
to see convincing volume to propel the stock out of its
consolidation pattern.  Intraday rallies have been turned back
at $50 twice in the past week, so conservative investors will
want to wait for a convincing move through this level before
initiating new positions.  Aggressive investors can continue
to target shoot new entries at intraday support, but make sure
you keep your stops in place in this volatile and nervous

BUY CALL DEC-45 JBL-LI OI=1006 at $6.75 SL=4.75
BUY CALL DEC-50*JBL-LJ OI=2090 at $4.00 SL=2.50
BUY CALL DEC-55 JBL-LK OI=1439 at $2.31 SL=1.25
BUY CALL MAR-50 JBL-CJ OI= 367 at $8.50 SL=6.00
BUY CALL MAR-55 JBL-CK OI= 503 at $6.63 SL=4.50

SELL PUT DEC-40 JBL-XH OI= 916 at $1.38 SL=2.50
(See risks of selling puts in play legend)


TLAB - Tellabs Inc $55.88 (+2.63 last week)

Tellabs is an optical networking firm.  Its equipment is used
throughout the world to manage and transmit data, voice, and
voice signals.  Customers include telecommunication companies,
cable operators, corporations and government agencies.  Baby
Bells account for nearly one-third of sales with another third
generated outside the US.

News events, company announcements, and a jittery marketplace
all contributed to the mixed trading TLAB experienced last week.
The climax was TLAB's decisive break out of the narrow trading
range during Wednesday's session.  After a relatively long
period of consolidation between $52 and $56, TLAB shot up to
$57.06 and closed strong at $56.69.  The 2pm explosion
corresponded with the start of USB Warburg's 5th Annual Global
Telcom Conference, which Tellabs was a participant.  The bullish
move through the $56 resistance also came ahead of the company's
announcement that it had signed a multi-year agreement with
Beijing Bell Telecommunications Equipment Manufacturing to sell
its latest switching technology in China.  The deal was well
received by the Street on Thursday.  Gains immediately extended
and TLAB pushed through the $58 level on robust volume.
Although the break through the 200-dma ($57.48) was a technical
achievement, it was short-lived.  The uncertainty hanging over
the broader markets dragged TLAB backed down to shorter-term
support at the $54 level and the 10-dma line ($54.46).  More bad
news continued to hit the industry as Nortel (NT) set another
52-week low when Bank of America implied that it could lose
market share to rivals in the optical networking arena.
Overall, TLAB faired well throughout the week and presented a
variety of entry points, depending on your risk portfolio.
Currently, the $53 mark is serving as a safety net on the deeper
intraday dips, but consider taking a more conservative approach.
Cautious types might wait for momentum traders to take TLAB back
through the $56 and $58 levels on strong volume before beginning
new plays.  While the prospects for additional gains look good,
nevertheless, keep stops tight.  A close at $52 and we'll exit
the play for better opportunities.

BUY CALL DEC-50 TEQ-LJ OI= 725 at $7.63 SL=5.25
BUY CALL DEC-55*TEQ-LK OI=1570 at $4.50 SL=2.75
BUY CALL DEC-60 TEQ-LL OI=4196 at $2.38 SL=1.00
BUY CALL JAN-55 TEQ-AK OI=2474 at $6.63 SL=4.75
BUY CALL JAN-60 TEQ-AL OI=2618 at $4.38 SL=2.75


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!


Please read our disclaimer at:

The Option Investor Newsletter                   Sunday 11-19-2000
Sunday                                                      4 of 5

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

Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at Preferred Capital Markets
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with Preferred Capital

Anything else is too slow!



FCEL - Fuel Cell Energy $54.25 (-7.25 last week)

Fuel Cell Energy, formerly Energy Research Corporation, is a
world class leader in the development and commercialization of
clean, efficient fuel cell power plants for electric power
generation.  Fuel Cell Energy is headquartered in Danbury
Connecticut, and employs more than 150 people with scientific,
engineering, and manufacturing backgrounds.

Fuel Cell Energy had a superb ride up the charts from a low
of $19.41 in May to over $100 in October.  The market correction
in October helped to reverse the trend in FCEL, and in the
last few weeks, the stock has suffered what looks like a
severe reversal.  After dropping below the 50-dma  of $73.69 on
November 6th, FCEL has continued to drop precipitously on heavy
volume.  This may simply be a correction in a stock which moved
too far too fast and became overvalued.  FCEL is not
profitable, and filed a shelf registration on November 1st with
the SEC to offer up to $250 million in debt securities and
preferred and common stock.  The market did not like this news,
and FCEL dropped from $80 to its current level in two weeks.
Companies which are not profitable are having a very difficult
time in the current market conditions.  The cost of financing
is increasing, and it may be a few months before we see a rate
cut by the Federal Reserve.  In the mean time, it’s a long way
down for FCEL, and a key support level of $60 was broken Friday.
The 200-dma of $48.75 is the next major support level.  The
5-dma of $60.88 is sharply below the 10-dma of $67, and the
stock does not appear to have the strength to reach either
level and stay there.  Consider taking positions on a rollover
at $55.  Otherwise, consider entering new posiions on a failure
of support at $53.  Set stops at $61, as this could indicate a
reversal of the down trend.

BUY PUT DEC-60*FQG-XL OI=41 at $11.87 SL=8.87
BUY PUT DEC-55 FQG-XK OI= 0 at $ 8.63 SL=6.13  Wait for OI!!


HAND - Handspring Inc $62.44 (-12.69 last week)

Handspring manufactures the Visor handheld computer.  The Visor
is a personal organizer that is enhanced by an expansion slot
for extra memory.  This unique design accommodates such add-ons
like wireless modems, books, games and digital cameras.  The co-
founders of Palm Computers created Handspring in 1998.
Currently, Hawkins and Dubinsky retain a 51% stake in the

With the exception of a short-lived bit of fame above $80,
the $80 resistance has stymied HAND's upside potential.  This is
good considering our plan is to play HAND on the downside.  As
$80 limited the upside action, the $70 level buoyed the stock
during the hard times.  But this week, the share price
transgressed and showed signs of weakness.  A foreshadow of the
stock's ultimate breakdown came early on Monday as HAND saw the
$65 level before the bulls stepped in.  The BUY reiteration at
CSFB likely encouraged some of the buying.  A mild recovery
ensued until, once again, the $80 mark stopped the run short.
The cycling pattern followed true to the end, almost.  As the
NASDAQ bounced off its immediate opposition (3200) on Wednesday,
HAND followed with a decline of its own.  But this time, the $70
level fail to buoy the share price in the jittery market.  There
also were no buyers for the issue at $65.  HAND slipped to
$61.13 at its low on Friday, closing down $8.00, or 11.4%. If
HAND experiences an intraday move to the upside, the very
aggressive might enter on a rollover at the 50-day line
($69.02), but be aware of the higher risk.  On the other hand
(no pun intended), expect some immediate opposition if HAND
challenges $60.  The more cautious might want to wait for a
decisive breakdown before buying into the weakness.  If the
share price falls victim to the sellers at the $60 level,
there's essential no real support until the $50 level.  The
outlook next week is indeed bearish and HAND's volume was
respectable on the recent decline, but we're keeping our Stop
tight at $69.  Take a look at a chart and it's easy to see how
this issue is a rather "spikey" mover.

BUY PUT DEC-70 HQA-XN OI= 88 at $14.25 SL=10.50
BUY PUT DEC-65 HQA-XM OI= 80 at $11.00 SL= 8.25
BUY PUT DEC-60*HQA-XL OI=134 at $ 8.25 SL= 5.75



SLR - Solectron $34.44 (-1.56 last week)

Solectron is one of the world's largest supply chain
facilitators for customized electronics technology, manufacturing
and service solutions.  Founded in 1977, Solectron's integrated
technology solutions, materials, manufacturing and operations,
and global services offer customers competitive outsourcing
advantages, such as access to advanced manufacturing technologies,
shortened product time to market, and more effective asset

Solectron continues to make its pattern of lower highs.  After
holding support at the 5-dma of $35 on Thursday, Solectron made
a valiant attempt to rally above $35.50 on Friday morning, but
it was not to be.  By mid morning, support at $35 failed, and
the stock dropped below $34.50, its lowest level in several
months.  The sell-off started a couple of weeks ago when
Solectron announced that they would be purchasing NatSteel
for over $2 billion.  Since that time, all support levels have
slowly eroded, as SLR is now firmly below the 200-dma of
$41.69, the 50-dma of $44, and the 10-dma of $37.81, and the
5-dma of $35.  To compound Solectron’s problems, the
investment community did not respond well to news that they
raised $1.2 billion in a secondary stock offering priced at
$34.25, and planned to raise an additional $1.5 billion in
liquid yield option notes.  Solectron is a weak stock in a
weak market, and could conceivably drop to the 52-week low
of $28.  Consider taking positions on a failed rally attempt
past the 5-dma of $35, or on a breakdown below its intraday
low Friday at $34.  Continue to use the $37 level as a stop
and close positions should SLR settle above that level.

BUY PUT DEC-40 SLR-XH OI=2835 at $6.75 SL=4.75
BUY PUT DEC-35*SLR-XG OI= 640 at $3.25 SL=1.75


NEWP - Newport Corporation $69.56 (-16.19 last week)

In research laboratories, product development departments and on
production lines around the world, scientists and engineers
depend on Newport Corporation.  The company is the leading
worldwide manufacturer and distributor of precision components
and systems used for development and application of laser and
optical technologies, supporting not only advanced research, but
also sophisticated new technology and industrial applications.

It appears that what goes down is likely to continue heading
down.  That was the theme for NEWP this past week as it continued
deeper into negative territory.  Continued weakness in Tech
stocks and especially optical equipment manufacturers has made
this a highly profitable put play.  Trading lower in a
downward-trending regression channel since its highs in late
September, the stock has been more than cut in half.  Having
broken below its last line of moving average support last week,
the 200-dma at $90.50, the stock attempted to rally above this
point in the first half of the week but failing to do so, gave up
as the buyers were no match for the strong selling volume.  In
fact, NEWP's stock price has been falling so fast that the lowest
strike for December options is in the money at $75.  With the 5-
and 10-dma (now at $80.15 and $87.96 respectively) continuing to
weigh on the issue, the downtrend appears to be solidly intact.
On Friday, the selling continued unabated, with NEWP dropping
another $6.19 or 8.17% on over twice the ADV.  The continued
selling on strengthening volume is disconcerting for the stock
indeed.  But what is disconcerting in this case is great news for
us.  The stock did however, find support at the $60 level.  A
failed rally above $70 and our stop price at $75 could allow
aggressive traders to take a position but confirm the rollover
with volume.  For conservative traders, a break below $65 with
the continuation of increased selling could be the signal to
enter this play.

BUY PUT DEC-80 NZZ-XP OI= 8 at $18.25 SL=13.00
BUY PUT DEC-75*NZZ-XO OI=33 at $15.13 SL=11.00


ARBA - Ariba, Inc. $76.06 (-24.44 last week)

As a leading provider of B2B solutions and services to leading
companies around the world, including more than 20 of the FORTUNE
100, Ariba helps companies cut through the complexity of
opportunities presented by the new economy.  Ariba provides the
most comprehensive and open commerce platform to build B2B
marketplaces, manage corporate purchasing, and electronically
enable suppliers and commerce service providers on the Internet.
Made up of a complete set of integrated commerce solutions and
open network-based commerce services, the Ariba B2B Commerce
Platform offers a single system for managing buying, selling,
and marketplace eCommerce processes.

As mentioned on Thursday when we started this put play, there are
a number of concerns that have conspired to lead ARBA lower.  We
mentioned the unfulfilled potential of EDS CoNext, ARBA's joint
venture with Electronic Data Systems.  We also mentioned the
subtle (or not so subtle) shift that has been occurring in the
ever-changing B2B space, as the trend appears now to be leaning
towards supply-chain management.  This is bad news for ARBA since
its core competency is in the more narrow e-procurement space. In
addition to this, there are fears that the company's highly
publicized alliance with IBM and i2 Technologies may be failing.
There are also concerns that Andersen Consulting and ICG Commerce
may provide an electronic procurement package for free.  A no
cost product from two highly-respected companies with a large
corporate customer base could likely cut into ARBA's market share
and currently fat profit margins.  Add to all this valuation
concerns and rumors of weak sales from rival Commerce One (CMRC)
and its no wonder why ARBA has been adding to its losses.  On
Friday, ARBA was upgraded by First Analysis Securities from
Accumulate to a Strong Buy rating.  This did little to stop the
bleeding, as the stock dropped another $1.81 or 2.33% on almost 4
times the ADV. Now well below all its moving averages, a failure
to rally above the 5-dma at $87.27 as well as resistance at $85
and $80 could allow for an aggressive entry while a break below
$75 on continued selling would make for a more conservative
target.  We have moved our stop down to $84 so make sure ARBA
continues to close below this level.

BUY PUT DEC-80 IUR-XP OI=251 at $13.88 SL=10.50
BUY PUT DEC-75*IUR-XO OI=414 at $11.50 SL= 8.50
BUY PUT DEC-70 IUR-XN OI=347 at $ 9.00 SL= 6.25


VRSN - VeriSign, Inc. $113.75 (-0.56 last week)

VeriSign is the leading provider of Internet trust services
and digital certificate solutions needed by Web sites,
enterprises and individuals in order to conduct secure
electronic commerce and communications over IP networks.  VRSN
has used its secure online infrastructure to issue over 100,000
of its Website digital certificates and over 3.5 million of its
digital certificates for individuals.  The company also offers
the VeriSign Onsite service, which allows an organization to
leverage the company's trusted service infrastructure to develop
and deploy customized digital certificate services for use by an
organization's employees, customers and business partners.  To
date, over 300 enterprises have subscribed to the OnSite service
and VRSN has strategic relationships with industry leaders
including Cisco, Microsoft ,RSA, Security Dynamics, and VISA.

Continuing its 7-week bearish trend, VRSN put in another lower
high this week, providing agile day traders with plenty of
opportunities.  Monday saw the sellers come out in force,
driving the stock below $100 before buyers stepped in to help
the stock recover over the next two days.  Pushing the price up
to $124 several times mid-week was all the bulls could
accomplish before the bears retaliated, driving the price back
down to $102.50 Friday morning.  The bounce back was swift, as
buyers pushed up to $120 before the stock declined to close at
$113.75.  Needless to say, the stock has been volatile over the
past week, providing numerous entry points for aggressive
traders.  Driving the drop Friday morning was a dual threat to
the monopoly that VRSN's Network Solutions subsidiary currently
holds on domain name registrations.  First the Internet
Corporation for Assigned Names and Numbers (ICANN) ruled on
creating new top level domain names, with new extensions like
biz, .info, .name, .pro, and even .museum being issued by 2001.
Then China lobbed a grenade at VRSN, mandating that only a
handful of domestic firms may assign Chinese-language Internet
addresses, striking a blow to the registration service launched
last week by VRSN.  This calls the company's revenue stream
into question, an occurrence that is not being taken kindly by
the investing public.  New positions can still be considered as
VRSN rolls over from the $120 level, as long as volume continues
to favor the sellers over the buyers.  Our stop is still waiting
at $123, but unless market sentiment improves, it will be tough
for buyers to break the stock out of this bearish trend.

BUY PUT DEC-115 XVR-XC OI=383 at $16.25 SL=11.75
BUY PUT DEC-110*XVR-XB OI=532 at $13.63 SL=10.25
BUY PUT DEC-105 XVR-XA OI=114 at $10.88 SL= 8.00


RATL - Rational Software Corp $35.75 (-10.81 last week)

Rational Software develops, markets and supports a comprehensive
suite of solutions that automate the software development
process.  The Company's global products and services help
organizations develop and deploy Web, e-business, enterprise-
wide, technical, and mission-critical software.  It serves
customers in three principal categories: e-business, e-
infrastructure, and e-devices.  Blue chip clients include
Merrill Lynch, Microsoft, and Nokia.

The technical break through the 200-dma ($46.03) and the $45
level this week coupled with the eventful market environment,
provided the perfect synergy for RATL's downward momentum to
accelerate.  The share price quickly saw the underside of $45.
But once it fell through the more chronicled support at $40, it
was curtains for RATL.  The NASDAQ's continuing struggle at 3200
added more fuel to RATL's devastating breakdown this week.
While the stock received a vote of confidence from CSFB on
Monday, who reiterated a strong buy and issued a $69 price
target, it was Wit Soundview's downgrade that effected trading
later in the week.  With good volume taking RATL lower, it's
possible the issue could see the light support of $30, which it
hit during the March/April correction.  We have however, not
made any adjustments to our $44 Stop - that level still provides
a 2+ point cushion before LVT would challenge the 200-dma line
on a strong upswing.  But take heed, even an entry on a high-
volume rollover at the 5-dma ($39.99) is more risky than buying
into continued weakness.  In this wobbly market, we're looking
for RATL heads toward its historical lows at the $30 level.

BUY PUT DEC-45 RAQ-XI OI=315 at $10.63 SL=7.50
BUY PUT DEC-40 RAQ-XH OI=150 at $ 6.63 SL=4.75
BUY PUT DEC-35*RAQ-HG OI= 28 at $ 3.63 SL=1.75


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!


Don't Tell Me the Election Mess Isn't Hurting the Markets!
By Mark Phillips
Contact Support

It doesn't matter whether you are a Republican or Democrat,
you've got to be getting frustrated with the stalemate in
Florida.  Politicians are telling us that the current litigious
process isn't affecting our financial markets, but we know
better.  Just look at the behavior of the major indices on
Friday morning.  A sharp 100+ point rally on the DJIA and an 85
point rally on the NASDAQ were quickly reversed in the first 90
minutes of the session.  The culprit wasn't an economic report
or a surprise speech from Mr. Greenspan.  No, the rally and
subsequent decline both began within minutes of major political
developments in the Florida election.

As nice as it was to see the NASDAQ recover from its lows to
close back over 3000, the index is getting far too chummy with
this level for my comfort.  The slowing economy is having its
effect on even the most stellar technology companies, and this
week Communications chipmakers like BRCM, PMCS, and AMCC felt
the pinch.  Their losses bled into the broader Networking stocks
with continuing pressure being applied to our plays on NT, CSCO
and JDSU.  NT is causing us particular heartburn, as it is now
down more than 60% from its late-July high of $89.  The next
level of support sits at $30, and if the Canadian networker
can't hold this level, it will find itself on the Drop list
faster than you can say "recount".

There are a couple of other plays on the playlist that have been
put on probation this weekend.  CMRC broke its 6-month ascending
trendline Friday on a false rumor that the company was
circulating an internal memo pertaining to missing their revenue
targets for the current quarter.  The company refuted the rumors
and the stock put in a solid bounce at $43, but wasn't able to
recover all of the day's losses.  We are drawing our threshold
of pain at $40, and if CMRC falls below that, we'll drop it in a
hurry.  The other play that is skating on thin ice is COMS,
which has continued to deteriorate in this bearish Technology
market.  It has solid support at $14 and is sitting just above
its 200-dma ($13.81), and needs to bounce soon to prevent being
ejected from the play list.  Any close below the 200-dma and
COMS will be added to the casualty list.

Starting the week above 30 again, the VIX declined steadily
throughout the week, ending at 27.85, as investors continued to
move to the sidelines as they await some sort of political
resolution.  Speculation surfaced this week that the Fed would
have liked to change their bias to Neutral, but in the absence
of an election decision, chose to leave well enough alone until
the dust settles.  This disappointed investors as well, as they
watch the parade of daily earnings disappointments caused by the
slowing economy.

Don’t forget about Austin's pesky Commercial traders.  They are
still sitting on 10-year record net short positions in the
S&P 500 and it is unlikely the markets will be able to rally
without participation from this group of heavyweights.  Many of
our plays are at values we never dreamed we would see again, and
the temptation to buy has been almost overwhelming in recent
weeks.  Just remember that a stock that has declined to
amazingly cheap prices CAN go lower.  Until the election is
resolved and there is some sign that serious buying is returning
to the markets (stay tuned to Austin's Market Sentiment), be
very selective about initiating new positions.  Better to miss
an entry point, than enter a play before it is through shaking
out the sellers.

Take the time to enjoy the holiday-shortened week, and don't buy
too soon.

Current Plays


EMC    11/07/99  JAN-2002 $ 45  WUE-AI   $ 9.50   $47.50   400.00%
       09/17/00  JAN-2003 $100  VUE-AT   $32.75   $27.63   -15.65%
CSCO   11/14/99  JAN-2002 $ 45  WIV-AI   $11.00   $18.38    67.05%
NT     11/28/99  JAN-2002 $37.5 WNT-AU   $15.13   $10.25   -32.25%
       09/10/00  JAN-2003 $ 75  ODT-AO   $27.50   $ 5.13   -81.36%
SUNW   12/19/99  JAN-2002 $ 90  WJX-AR   $22.00   $25.63    16.48%
       11/05/00  JAN-2003 $120  VSU-AD   $39.50   $24.25   -38.61%
AOL    03/12/00  JAN-2002 $ 65  WAN-AM   $18.63   $ 6.40   -65.65%
       08/13/00  JAN-2003 $ 55  VAN-AK   $17.50   $13.90   -20.57%
AXP    03/12/00  JAN-2002 $46.6 WXP-AQ   $ 9.33   $16.63    78.19%
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   $20.63   -47.96%
       08/27/00  JAN-2003 $130  VEQ-AF   $55.25   $17.75   -67.87%
NOK    05/21/00  JAN-2002 $ 50  IWX-AJ   $17.25   $ 8.13   -52.90%
       07/30/00  JAN-2003 $ 50  VOK-AJ   $17.75   $11.88   -33.10%
C      06/18/00  JAN-2002 $48.8 YSV-AW   $10.31   $11.75    13.97%
       10/01/00  JAN-2003 $ 60  VRN-AL   $12.25   $10.38   -15.31%
GENZ   07/16/00  JAN-2002 $ 70  YGZ-AN   $17.13   $27.25    59.08%
                 JAN-2003 $ 70  OZG-AN   $23.13   $34.13    47.54%
EXDS   08/06/00  JAN-2002 $ 55  WZZ-AK   $20.75   $ 5.50   -73.49%
                 JAN-2003 $ 60  VTQ-AL   $25.38   $ 8.38   -67.00%
MFNX   08/06/00  JAN-2002 $ 40  WOF-AH   $13.75   $ 3.13   -77.27%
                 JAN-2003 $ 45  VKW-AI   $15.63   $ 4.75   -69.61%
FRX    08/13/00  JAN-2002 $ 95  WRT-AS   $31.38   $52.63    67.70%
                 JAN-2003 $100  VFB-AT   $37.38   $58.75    57.17%
BRCD   08/27/00  JAN-2002 $220  YNU-AD   $65.38   $69.25     5.92%
                 JAN-2003 $220  OMW-AD   $86.50   $90.25     4.34%
CMRC   09/10/00  JAN-2002 $ 80  YCU-AP   $30.13   $13.38   -55.61%
                 JAN-2003 $ 80  OCU-AP   $38.75   $21.00   -45.81%
QCOM   09/17/00  JAN-2002 $ 70  WBI-AN   $22.50   $37.38    66.11%
                 JAN-2003 $ 70  VLM-AN   $29.63   $45.50    53.56%
COMS   10/01/00  JAN-2002 $ 20  WTH-AD   $ 6.38   $ 3.38   -47.06%
                 JAN-2003 $ 25  VTH-AE   $ 7.13   $ 4.25   -40.35%
INTC   10/15/00  JAN-2002 $ 45  WNL-AI   $ 9.50   $ 9.75     2.63%
                 JAN-2003 $ 45  VNL-AI   $13.38   $13.75     2.80%
TXN    10/22/00  JAN-2002 $ 50  WTN-AJ   $13.75   $11.13   -19.09%
                 JAN-2003 $ 50  VXT-AJ   $18.38   $15.50   -15.65%
ADBE   10/29/00  JAN-2002 $ 80  YEJ-AP   $23.50   $28.13    19.68%
                 JAN-2003 $ 80  VAE-AP   $30.75   $36.63    19.11%
BGEN   11/05/00  JAN-2002 $ 70  WGN-AN   $17.25   $13.63   -21.01%
                 JAN-2003 $ 70  VNG-AN   $25.00   $20.63   -17.50%

Spotlight Play

ADBE - Adobe Systems $133.50

It's not often that we feature a play in our Spotlight less than
a month after adding it to the playlist, but ADBE has that
distinction this week.  As the Technology sector has continued
to melt down in the face of the election crisis and a slowing
economy, the Internet software company has continued to impress.
Adapting itself to the Internet economy over the past 2 years,
ADBE has managed to dodge the rampant selling by continuing to
accelerate its revenue growth.  The uptrend that has been in
place since the beginning of the year is still going strong, and
the trendline is now sitting at $71.  Major historical support
sits at this level as well, making it an ideal level to place
our stop for the play.  Even with the current election
uncertainty, ADBE recovered from Monday's tech slide and managed
to test the $85 resistance level on Friday.  The company is
currently scheduled to release its earnings report on December
14th, and in light of the current investor nervousness, prudent
investors will tighten up their stops before the announcement.
Milder support exists between $78-80, followed by $76.  As
investors search for technology stocks that have not cratered,
ADBE has seen heavy trading volume over the past two months, a
sure sign that there is plenty of interest for the stock.  While
target shooting intraday bounces at support can provide
attractive entry points for aggressive investors, those with a
more conservative approach will wait for a convincing move over
$85 before initiating new positions.

BUY LEAP JAN-2002 $85.00 YEJ-AQ at $26.25
BUY LEAP JAN-2003 $90.00 ODJ-AR at $33.50

New Plays

MSFT - Microsoft $69.06

Yes, that's right!  Mr. Softee is back, after visiting the
sub-$50 range and posting a 2-year low a last month.  Under
continuous pressure over the past year from the Justice
Department's antitrust case against the software giant, MSFT
fell sharply from its spring highs near $120.  Adding to the
downside pressure has been concern over a downturn in the PC
market, and the effect that would have on the company's
profitability.  MSFT took a big step towards allaying investor
concerns with its most recent earnings report, beating estimates
by a nickel.  The strong earnings were powered by shrinking
expenses, growing investment gains, and momentum in its
flagship product, the Windows 2000 operating system.  Based on
expected sequential revenue growth in the high teens, several
major brokerages came forward the next day, (among them CIBC
World Markets, Robertson Stephens, Chase H&Q and JP Morgan)
reiterating their Buy ratings on the stock.  After the sharp
post-earnings rise, MSFT has been consolidating between $67-70,
as investors await the outcome of the presidential election.
The best entry strategy will be to target shoot new entries on a
bounce from the $65-67 support level, as long as the bounce
comes on strong volume.  One word of caution though - wait for
the election results to be finalized before initiating new
positions.  Until that event comes to pass, it is unlikely that
the Technology market will be capable of supporting any
significant upside moves.

BUY LEAP JAN-2002 $75.00 WMF-AO at $12.63
BUY LEAP JAN-2003 $75.00 VMF-AO at $17.88


BRCD $220.19 Although it is one of the few Technology stocks
that has failed to sell off, it is looking particularly
vulnerable.  Unless you have been living in a cave lately, you
have seen one high-flying stock after another sell off,
frequently after forming either a double-top or a
head-and-shoulders formation.  BRCD has just completed its own
head-and-shoulders formation, and if it follows the pattern of
its high-valuation technology brethren, BRCD could have a
dramatic breakdown in the near future.  Support sits right at
the neckline of the formation ($214), and if our play violates
that level, it looks like an easy trip to $200, with a strong
possibility of falling to the 200-dma at $174.38.  Although our
play is still profitable, the risk associated with holding such
a high-premium LEAP in this bear market far outweighs the
potential reward.  We no longer feel comfortable adding new
positions in BRCD, and strongly recommend tightening up your
stops, and then exiting open positions on any strength.

MFNX $17.44 Despite continuing to accelerate its revenue growth,
MFNX is continuing to come under pressure.  Investors have been
merciless in their selling of any stock related to the Telecom
sector.  After falling below the $25 level, it has become clear
that the stock will have a hard time recovering in the current
market environment.  Although growing rapidly, the company is
still unprofitable, and investors have become exceedingly
intolerant of a lack of profits in their portfolio.  Resistance
has now formed near $22, and it looks increasingly likely that
MFNX will fall below its October low of $15.06.  Rather than
play the contrarian roll, we are dropping it this weekend.


The Election's Split, But What About Stocks?
By Matt Russ

Well, stocks prices have dropped to levels resembling split prices
but the shares haven't increased.  As a result, many previous
candidates have fallen from the list.  The election tug-o-war and
the legal maneuvering all over the media has crippled the market
into a call and response mode, where the Presidential camps speak
and the market ripples.  Today was a perfect example.  Early this
morning, a Florida court ruled that the Secretary of State did not
act arbitrarily in denying late recounted votes.  The market
spikes on the pro-Bush news, and quickly crumbles within an hour.
So until we can get a certified Presidential-Elect, and more
important, an end the legal wrangling, splits candidates look few
and far between.  On an upbeat note, MANU announced a 2-1 split
as predicted, so we're chalking it up to the Top 10 list.

Current Split Run Plays


Current Split Candidate Plays


Candidates That Are Not Current Plays


10 Most Recent Announcements We Predicted

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

Major Announcements So Far This Month = 19

TALX     SONC     AREA      AJG
 SYY      ILI      SGR

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

Symbol  Company Name                Splits  Payable    Executable

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
SONC - Sonic Corp                     3:2  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 Technology                  2:1  12/04/2000  12/05/2000
INOD - Innodata Corporation           2:1  12/01/2000  12/04/2000
TECH - Techne Corporation             2:1  12/01/2000  12/04/2000
SUNW - Sun Microsystems               2:1  12/05/2000  12/06/2000
SRDX - SurModics, Inc.                2:1  12/06/2000  12/07/2000
MANU - Manugistics Group              2:1  12/07/2000  12/08/2000
BEC  - Beckman Coulter, Inc.          2:1  12/07/2000  12/08/2000
CREE - Cree Research                  2:1  12/08/2000  12/11/2000
AREA - Area Bancshares Corp.          3:2  12/10/2000  12/11/2000
PENG - Prima Energy Corporation       3:2  12/11/2000  12/12/2000
ABK  - Ambac Financial                3:2  12/12/2000  12/13/2000
INFA - Informatica Corp.              2:1  12/13/2000  12/14/2000
SYY  - SYSCO Corporation              2:1  12/15/2000  12/18/2000
SGR  - Shaw Group                     2:1  12/15/2000  12/18/2000
COCO - Corinthian Colleges, Inc.      2:1  12/15/2000  12/17/2000
EMLX - Emulex Corp.                   2:1  12/15/2000  12/18/2000
SKYW - SkyWest, Inc.                  2:1  12/15/2000  12/18/2000
BARZ - BARRA, Inc.                    2:1  12/18/2000  12/19/2000
ILI  - Interlott Technologies         2:1  12/20/2000  12/21/2000
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
AJG  - Arthur J. Gallagher & Co.      2:1  01/18/2001  01/19/2001
SWWC - Southwest Water                5:4  01/19/2001  01/22/2000
TALX - TALX Corp.                     3:2  01/19/2001  01/22/2001

Get a NextCard Visa, in 30 seconds!
1. Fill in the brief application
2. Receive approval decision within 30 seconds
3. Get rates as low as 2.9% Intro or 9.9% Fixed APR


Please read our disclaimer at:

The Option Investor Newsletter                   Sunday 11-19-2000
Sunday                                                      5 of 5

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


Market Mentality: The Emotional Cycle of Investing
By Mark Wnetrzak

Over the past few weeks, we have received a number of questions
regarding a relatively new activity: buying and selling stocks
in a bearish market environment.

Successful investing requires observation, comprehension and
action.  Experienced traders learn to understand the facts, and
the reasons behind market-moving events, observe the trends, and
identify the early stages of a rally or decline.  But, it is not
enough to merely observe the activity and discern the movements.
You must also develop a sense of market emotion and learn to put
a range of indicators together in context, including the ability
to perceive when a trend is approaching an extreme.  Of course,
all that aptitude will be worthless if you take no useful action.
Acting upon your observations is without doubt the most difficult
skill to master, and when the market is overwhelmed by rampant
selling pressure, the task can be all the more daunting.  Unless
you are a seasoned investor, it is difficult to evaluate the
market's unusual behavior for lack of past experience.  However,
there is one condition that is easy to observe: the opinion of
the masses.  For example, when the majority of participants are
in agreement on the current outlook, there is a high probability
that a move in the opposite direction is forthcoming.  In simple
terms, stocks will rally when every seller has been accommodated.
In contrast, when everyone who wants to buy is fully invested,
there is little potential for further upside activity.  You have
all heard the phrase, "In the stock market, the public is right
during the trends but wrong at both ends," and that statement was
never more correct than in a bearish environment.

When the market is in a bullish trend, the emotion of the moment
generally dictates the issue, causing the majority of typical
traders to enter new positions near the top, when most stocks are
finishing the rally.  At that point, everybody who is bullish on
the issue already has it and there is no one left to support the
price.  The professionals are the first to exit, quietly closing
out their positions while the public is overwhelmed by glowing
earnings reports and bullish forecasts.  As the stock struggles
to hold its gains, trading volume drifts lower and the primary
groups trading the issue; the technicians, the fundamentalists
and the general public compete to determine the next trend.  When
the historical pattern exhibits the first signs of failure, the
technical traders begin to sell in earnest.  Analysts raise the
company's targets to support the inflated share value, but when
the issue no longer responds to good news, the outcome is clear.
Soon the public becomes nervous and as the correction takes shape,
closing orders increase in number.  The fundamentalist is the last
to go, generally after a full-scale downtrend is in effect.  With
this type of psychological analysis, it obvious how human nature
determines our actions in the stock market.  Hope leads to fear,
and then to panic, and the few that remain through it all (the
amateurs), eventually unload their positions for significant

After the market has endured a substantial decline, it's hard to
overcome the public's fear and loathing, and the widespread
disbelief that any recovery is forthcoming.  The general panic
propagated by dour doomsayers and the media's sensationalistic
coverage of every negative event often creates an apparently
insurmountable obstacle.  The act of buying into weakness, in
opposition of the crowd, will always feel uncomfortable and when
the time comes to make the trade, its unlikely you'll have all
the necessary information.  With that in mind, it's easy to see
why anticipating a change in the direction of the market is more
an art than a science.  In addition, those who hear your opposing
views and witness your contra-intuitive behavior will likely voice
their opinions, and they may eventually convince you to abandon
your independent line of thinking, at precisely the wrong time.
The important issue is to always consider the contrarian viewpoint,
even if the perspective leaves you alone in your outlook, without
confirmation from the masses.  Remember, the stock market moves
quickly from one extreme to the next, and success in investing
requires that you act as an individual during those times when
being part of the crowd simply contributes to the current market

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  20.63   NOV   7.50  2.81  *$  0.93  15.4%
MTSI   12.00  20.63   NOV  10.00  2.50  *$  0.50  11.4%
AVID   14.75  15.94   NOV  12.50  3.63  *$  1.38  10.8%
TSIX   16.75  13.06   NOV  12.50  5.00  *$  0.75   9.2%
SNWL   17.94  22.94   NOV  15.00  3.25  *$  0.31   9.2%
FFD    12.00  14.13   NOV  10.00  2.75  *$  0.75   8.8%
ANSR   17.00  14.13   NOV  12.50  5.13  *$  0.63   7.7%
ANSR   18.31  14.13   NOV  12.50  6.63  *$  0.82   7.6%
BCGI   23.13  25.94   NOV  20.00  4.00  *$  0.87   6.6%
ARDM   24.63  19.16   NOV  17.50  7.63  *$  0.50   6.4%
CTXS   21.44  30.88   NOV  17.50  4.88  *$  0.94   6.2%
GALT   28.13  22.56   NOV  22.50  6.25  *$  0.62   6.2%
VMSI   25.63  30.69   NOV  22.50  4.00  *$  0.87   5.8%
RDRT    7.94   5.81   NOV   5.00  3.25  *$  0.31   5.7%
FIBR   32.50  24.81   NOV  20.00 13.50  *$  1.00   5.7%
ACXM   40.75  39.81   NOV  35.00  6.63  *$  0.88   5.6%
BPUR   17.38  28.00   NOV  15.00  3.25  *$  0.87   5.4%
PROX   58.75  59.50   NOV  50.00 10.50  *$  1.75   5.3%
UAXS   15.31  13.13   NOV  12.50  3.38  *$  0.57   5.2%
ECLP   21.38  27.00   NOV  17.50  4.63  *$  0.75   4.9%
WDC     6.13   5.56   NOV   5.00  1.44  *$  0.31   4.8%
ENMD   32.56  27.13   NOV  25.00  8.25  *$  0.69   4.1%
ENTU   29.25  23.69   NOV  25.00  5.50   $ -0.06   0.0%
GOAM   11.63   8.56   NOV  10.00  2.06   $ -1.01   0.0%
HWP    46.25  35.63   NOV  40.00  7.25   $ -3.37   0.0%

MTIC    6.00   8.13   DEC   5.00  1.44  *$  0.44   7.0%
SUPG   21.47  19.56   DEC  17.50  5.25  *$  1.28   6.9%
BCGI   26.31  25.94   DEC  22.50  5.38  *$  1.57   6.5%
MME    17.75  20.63   DEC  17.50  1.31  *$  1.06   5.6%
MTSI   17.38  20.63   DEC  12.50  5.63  *$  0.75   5.5%
HPC    18.44  18.88   DEC  17.50  1.88  *$  0.94   4.9%

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


If you think the old support area in 1999 will hold, you may
consider rolling forward on Entrust(ENTU) - that is, if you
didn't already exit the position.  The end-of-September high
may yet hold for Goamerica (GOAM) - a key moment.  Hewlett-
Packard (HWP) disappointed investors with lower earnings and
the company's share value suffered the consequences.  Now you
must re-evaluate the long-term potential for the stock and
decide if it should remain in your portfolio.


Sequenced by Return

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

MTIC    8.13  DEC   7.50  QTX LU  1.38  333   6.75   28    12.1%
AVID   15.94  DEC  15.00  AQI LC  2.19  223  13.75   28     9.9%
ISIP   11.56  DEC  10.00  QIS LB  2.31  17    9.25   28     8.8%
LGTO   11.88  DEC  10.00  EQN LB  2.38  1086  9.51   28     5.7%
MU     33.75  DEC  27.50   MU LR  7.50  61   26.25   28     5.2%
TTN    20.94  DEC  17.50  TTN LW  4.13  57   16.81   28     4.5%
PLNR   24.00  DEC  20.00  PNQ LD  4.75  143  19.25   28     4.2%

Company Descriptions

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

AVID  - Avid Technology  $15.94  *** Pending Breakout?  ***

Avid Technology is an industry-leading provider of digital media
creation and distribution solutions.  The company gives customers
the power to communicate to multiple audiences with creativity
and ease.  Avid solutions, which span a wide range of markets and
price points, are used for Web, special effects, video, audio,
film, television, broadcast news, corporate communications, music,
the Internet and games.  Avid recently won an Emmy award for
pioneering development of full motion broadcast-quality PC video
and compression plug-in cards for the manufacture of non-linear
editing systems or video servers.  Avid recovered from a low in
June on increasing technical strength and has recently moved back
above a long-term (30 week) moving average.  The company's bullish
earnings also helped the outlook for its share value and this
position offers a reasonable entry point for investors who want
to own the stock.

DEC 15.00 AQI LC LB=2.19 OI=223 CB=13.75 DE=28 MR=9.9%

ISIP - Isis Pharmaceuticals  $11.56  *** Drug Speculation ***

Isis Pharmaceuticals is exploiting its expertise in RNA to
discover and develop novel human therapeutic drugs.  Isis has
commercialized its first product, Vitravene(TM) (fomivirsen),
to treat CMV-induced retinitis in patients with AIDS.  In
addition, Isis has 11 products in its development pipeline,
with two in late-stage development and four in Phase II human
clinical trials.  Isis' stock surged a few weeks ago when the
company announced the FDA has granted fast track review status
to ISIS 3521, the company's anti-sense drug to treat non-small
cell lung cancer.  The FDA's "fast track" reviews are typically
completed within 6 months, instead of the usual 10 to 12 months,
to address needs for life-threatening diseases.  Except for last
January's volatility, Isis has traded in a very narrow range
near $10.  This position offers a reasonable cost basis for those
wishing to speculate on the future results of Isis' drug trials.

DEC 10.00 QIS LB LB=2.31 OI=17 CB=9.25 DE=28 MR=8.8%

LGTO - Legato Systems  $11.88  *** Buyout Candidate? ***

Legato is a worldwide leader in enterprise storage management
and application availability.  Legato has become the recognized
industry standard for storage management software products,
currently shipping to 30 of the 50 Fortune "e-50" top businesses.
In late October, Legato disappointed investors after the company
missed analysts' 3rd-quarter estimates, which was attributed to
new licensing terms introduced at the beginning of the quarter.
The stock dropped quickly but appears to have made a successful
test of the August low as the company forges a Stage I base.
The recent rally appears to be on merger or buyout rumors with
VRTS as the likely target.  We believe in the bullish move (the
"tape doesn't lie" theory) and a cost basis near proven support
offers a reasonable entry point for speculators.

DEC 10.00 EQN LB LB=2.38 OI=1086 CB=9.51 DE=28 MR=5.7%

MTIC - MTI Technology  $8.13  *** Data Storage Systems! ***

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 growth in the
storage industry should help the company accomplish its goals.
MTI Tech is moving forward with product development and recently
introduced the new MTI Vivant S200, a Fibre Channel SAN based
storage appliance designed for use in UNIX and Windows NT/2000
environments.  The breakout above the August high is bullish and
this position establishes a conservative cost basis in the issue.

DEC 7.50 QTX LU LB=1.38 OI=333 CB=6.75 DE=28 MR=12.1%

MU - Micron  $33.75  *** Chip Sector Bottom Fishing! ***

Micron, and its subsidiaries manufacture and market DRAMs, very
fast SRAMs, Flash, other semiconductor components, memory modules,
graphic accelerators, and personal computer systems.  The battle
continues in the Semiconductor Industry with Prudential Securities
cutting Micron's fiscal 2001 earnings-per-share estimates from
$2.60 to $2.30 on Thursday.  The worry continues to be the weak
DRAM pricing and high OEM inventories.  What is interesting, is
when a stock doesn't drop on bad news.  It appears that Micron
has found support and several technical indicators have begun
to show a positive divergence.  A favorable cost basis for those
investors who have a long-term bullish outlook on the company.

DEC 27.50 MU LR LB=7.50 OI=61 CB=26.25 DE=28 MR=5.2%

PLNR - Planar Systems  $24.00  *** Blue Sky Territory? ***

Planar is a worldwide leader in the development and marketing of
high performance information display systems currently supplied to
more than 1,000 customers.  The company is at the leading edge in
providing customers in the medical, transportation and industrial
markets with value-added products that allow digital and video
information to be viewed in a wide range of applications.  The
company reported a strong 4th quarter with higher-than-expected
sales and net income before accounting for non-recurring charges.
Sales for the quarter rose to $47 million, up 42%, as Planar
benefited from a favorable product mix and improved yield in the
company's LCD and CRT operations.  Net income, excluding the non-
recurring charge, was $4 million or $0.32 per diluted share.  The
stock has rallied strongly on heavy volume breaking out to a new
multi-year high ($0.25 shy of a new all-time high).  Some "strong
buy" recommendations and a favorable cost basis make for excellent

DEC 20.00 PNQ LD LB=4.75 OI=143 CB=19.25 DE=28 MR=4.2%

TTN - Titan $20.94  *** On the Move! ***

The Titan Corporation is a leading-edge technology company that
creates, builds and launches technology-based businesses,
offering innovative technical solutions.  Titan markets the
leading technology for the electronic pasteurization of food
products.  The company's three other core businesses develop
and deploy communications and information technology solutions
and services.  Titan reported earnings at the beginning of
November, showing a revenue increase of 30%.  Its commercial
businesses also reported a strong quarter: Wireless revenue up
338%, SureBeam revenue up 164%, and Cayenta revenue up 97%.
Investors were pleased as the stock has rebounded strongly
off of its October low.  Several new contracts, alliances, and
new patents should bode well for the future.  We simply favor
the bullish change of character.

DEC 17.50 TTN LW LB=4.13 OI=57 CB=16.81 DE=28 MR=4.5%


The following group of issues is a list of additional candidates
to supplement your search for profitable trading positions.  As
with any investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
and positions are suitable for your experience level, risk-reward
tolerance and portfolio outlook.  They will not be included in
the weekly portfolio summary.

Sequenced by Return

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

PCTL    6.13  DEC   5.00  PTQ LA  1.69  53    4.44   28    13.7%
ELY    17.50  DEC  17.50  ELY LW  0.88  95   16.62   28     5.8%
MXTR    8.56  DEC   7.50  MQL LU  1.44  1020  7.12   28     5.8%
AEOS   39.31  DEC  35.00  AQU LG  5.75  68   33.56   28     4.7%
ROST   16.69  DEC  15.00  REQ LC  2.19  10   14.50   28     3.7%

Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at Preferred Capital Markets
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with Preferred Capital

Anything else is too slow!



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   82.75     75  AXX-XO    4.25   2069   21%      80
AETH  103.25     90  HIZ-XR    7.00   2581   27%     100
ALXN   90.25     80  XQN-WS    3.00   2256   13%      80
CIEN  104.50     95  UEE-XS    9.38   2613   36%      95
DGX   106.25     95  DGX-XS    4.25   2656   16%      98
EMLX  149.00    135  UEL-XG   10.75   3725   29%     133
FRX   133.63    125  FRX-XE    5.00   3341   15%     125
IDPH  170.50    160  IDX-XL   10.25   4263   24%     160
ISSX   89.81     85  ISU-XQ    5.75   2245   26%      85
ITWO  126.13    110  QYJ-XB    6.88   3153   22%     110
IWOV   85.38     80  IQG-XP    8.25   2135   39%      80
LH    148.88    135   LH-XG    4.13   3722   11%     135
MANU  115.44     95  ZUQ-XS    6.25   2886   22%      93
PHCM   87.75     80  UGE-XP    6.50   2194   30%      80
PKI   109.38    100  PKI-XT    4.13   2735   15%     100
QCOM   88.81     80  AAF-XP    3.25   2220   15%      80
RBAK   80.75     65  BUK-XM    4.13   2019   20%      65
SANM   97.94     85  SQN-XQ    4.25   2449   17%      85
SCMR   64.06     55  SMZ-XK    4.50   1602   28%      55
SDLI  245.00    210  QZL-XB    8.88   6125   14%     210
SEBL   95.06     80  SGW-XP    3.13   2377   13%      80
SUNW   89.31     80  SUX-XP    3.63   2233   16%      80
VTSS   67.13     60  VQT-XL    5.25   1678   31%      55
WEBM   89.00     80  OUW-XP    4.75   2225   21%      80


Success Basics: Systematic Trading
By Ray Cummins

Developing a reliable and effective trading system is the first
step in becoming successful in the stock market.  A precise,
well-defined plan of attack can help inexperienced investors
learn proper money management and the correct use of technical
analysis in identifying precise entry and exit points.  Trading
in a systematic manner is far more likely to produce consistent
profits than a scheme based on intuition, emotion or the trend
of the day.  The benefits to this approach are many but most
importantly, you can eliminate the guesswork that comes from
trying to manage an active position without realistic goals or
loss limits.  The targets and exit strategies are predefined,
leaving no doubt as to when and how to get out of a position if
the market moves against you.  Potential risk is identified prior
to beginning the trade, with a fixed limit on maximum losses and
a formula for taking profits.  There are no positions initiated
without a complete assessment of the capitalization necessary to
carry out the entire strategy, even in the worst case scenario.
A thorough study of the underlying issue's historical data is used
to provide objective goals for future movement, based on expected
volatility and technical indications.  With all of these elements
properly evaluated and arranged, you can develop an effective plan
that contains a suitable risk-reward outlook based on appropriate
strategies that are compatible with your personal trading style.

One of the most important steps in developing a profitable system
is identifying the appropriate level of complexity when selecting
trading techniques.  The simplest approach is most often the best
but every strategy has risk and it is impossible to classify any
particular technique as the absolute perfect method.  In most
cases, there is more than one favorable technique and even though
each strategy has different attributes, they can all be useful in
a trader's arsenal at the proper time.  The easiest way to become
successful is to completely understand the mechanics of any
technique that you are using and try to construct a group of
diverse positions based on the correct market outlook.  Of course
you must remember that the individual investment objectives are
far more important than the merits of the technique itself.  If a
specific strategy is not suitable for you or your trading style
then it should not be used, no matter how attractive it appears.
In addition to selecting the proper trading techniques, you must
also identify the appropriate time frame in which to participate
in the market.  Most investors are suited to longer-term plays as
they require less attention and are easy to manage for those who
have full-time commitments to work or family.  Traders who have
the temperament and resources to follow the markets at all hours
should consider short term techniques based on intraday data and
momentum-based trends.  Using the appropriate strategy when the
markets dictates action is the fundamental step in developing the
ability to trade in a disciplined manner.

After you have identified the characteristics of the market and
selected the correct technique to profit from future trends, the
next task is to determine specific entry and exit points for the
underlying instrument.  In most cases, technical analysis should
be used to ascertain the correct parameters for risk and reward.
With this approach, a simple mechanism for money management is
built into the initial position.  Entry timing can be based on a
number of different indicators and the criteria used to identify
a trading opportunity is a personal choice.  The great thing is,
you don't have to open any position until you are satisfied with
the probability of a profitable outcome.  You can search through
charts for the perfect pattern, perform extensive due-diligence,
and wait for the best combination of technical indicators and
favorable market conditions.  In short, you can forego any trade
until the number of reasons to participate becomes overwhelming.
Remember, the market does not care whether you play along or sit
on the sidelines.  In addition, when you trade without a system,
it's amazing how confusing the situation can become.  Once you
open a position, the market is in charge, but that doesn't mean
you have to play by its rules.

Good Luck!

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


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

ANSR   17.00  14.13   NOV  12.50  0.63  *$  0.63  22.6%
JDEC   28.00  28.06   NOV  22.50  0.50  *$  0.50  17.5%
BVSN   35.75  36.00   NOV  30.00  0.69  *$  0.69  16.2%
ATSN   45.38  42.50   NOV  40.00  0.88  *$  0.88  14.0%
ARQL   28.50  24.25   NOV  22.50  0.38  *$  0.38  13.6%
ECLP   25.31  27.00   NOV  20.00  0.50  *$  0.50  13.0%
CLTR   44.00  38.69   NOV  25.00  0.50  *$  0.50  11.7%
BCGI   23.94  25.94   NOV  17.50  0.56  *$  0.56  11.4%
CYTC   50.25  53.56   NOV  40.00  1.13  *$  1.13  11.0%
STAT   22.72  21.31   NOV  20.00  0.69  *$  0.69  10.6%
RNBO   23.50  20.06   NOV  17.50  0.44  *$  0.44   9.3% Adj 2-1 Split
ENTU   29.00  23.69   NOV  20.00  0.50  *$  0.50   8.6%
PATH   17.63  18.06   NOV  15.00  0.38  *$  0.38   8.6%
OCR    16.88  16.81   NOV  15.00  0.63  *$  0.63   8.3%
CERN   60.31  55.44   NOV  50.00  0.75  *$  0.75   7.5%
AMZN   35.63  27.44   NOV  22.50  0.38  *$  0.38   7.3%
ACXM   40.25  39.81   NOV  35.00  0.56  *$  0.56   7.1%
CHTR   19.38  21.38   NOV  17.50  0.63  *$  0.63   7.0%
ENMD   38.00  27.13   NOV  22.50  0.25  *$  0.25   6.9%
VICR   49.38  40.63   NOV  40.00  0.88  *$  0.88   6.8%
PLMD   57.50  51.16   NOV  45.00  0.50  *$  0.50   6.0%
HSIC   22.56  25.56   NOV  20.00  0.50  *$  0.50   5.2%
ICN    40.19  34.13   NOV  35.00  0.56   $ -0.31   0.0%
APWR   55.63  33.25   NOV  35.00  1.06   $ -0.69   0.0%

AVID   15.31  15.94   DEC  12.50  0.56  *$  0.56  12.6%
ECLP   22.75  27.00   DEC  17.50  0.63  *$  0.63  10.6%
IMG    27.63  25.25   DEC  22.50  0.81  *$  0.81  10.5%
IDXC   29.38  29.63   DEC  22.50  0.75  *$  0.75   9.8%
MTON   18.94  19.38   DEC  15.00  0.38  *$  0.38   7.9%
SMSC   25.00  23.88   DEC  20.00  0.44  *$  0.44   7.0%
OXHP   37.38  40.06   DEC  30.00  0.56  *$  0.56   6.0%

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


Unfortunately, there was no play on American Freightways (AFWY)
as the FedEx buyout was announced before Monday's open.  The
technical outlook on Astropower (APWR) is weakening and a move
towards $30 or lower seems probable.  ICN Pharma's (ICN) will
most likely be assigned (if you did not exit the issue), but
there may be a post-election rally to help the issue recover.
In any case, a retest of its 150 dma appears to be the path of
least resistance.

Positions Closed:

Vintage Petroleum (VPI) - Murphy's Law strikes again as our
hedge position rallied this week.  The play closed positive
for the November expiration period.  Osicom (FIBR) fell below
the break-even price, but the assignment will include shares of
the company's spin-off; Entrada Networks (ESAN).  That may help
ease the pain for those of you who did not exit the position
after last week's bearish comments.


Sequenced by Return

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

CTXS   30.88  DEC  25.00  XSQ XE  0.63  1799 24.38   28     9.6%
VLNC   17.31  DEC  12.50  VHQ XV  0.31  97   12.19   28     9.0%
PSUN   22.19  DEC  17.50  PVQ XW  0.38  7    17.12   28     8.6%
HNT    22.25  DEC  20.00  HNT XD  0.50  0    19.50   28     7.6%
BVSN   36.00  DEC  25.00  BDV XE  0.50  1043 24.50   28     7.1%
TLB    49.81  DEC  40.00  TLB XH  0.50  321  39.50   28     5.1%
KMI    43.25  DEC  40.00  KMI XH  0.56  1    39.44   28     4.2%

Company Descriptions

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

BVSN - BroadVision  $36.00  *** Entry Point! ***

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

DEC 25.00 BDV XE LB=0.50 OI=1043 CB=24.50 DE=28 MR=7.1%

CTXS - Citrix Systems  $30.88  *** On The Move! ***

Citrix Systems is a supplier of application server products and
technologies that enable the fast and effective enterprise-wide
deployment and management of applications designed for Microsoft
Windows operating systems.  The company's MetaFrame and WinFrame
product lines, developed under license and strategic alliance
agreements with Microsoft, permit organizations to deploy Windows
applications without regard to location, network connection, or
type of client hardware platforms. These products utilize CTXS's
Independent Computing Architecture, which allows an application's
graphical user interface to be displayed to a client while its
logic is executed on a server, thereby providing a manageable and
bandwidth-efficient solution.  CTXS rallied last week after Lehman
Brothers raised its price target to $30 a share on the software
developer.  The analyst reported that Citrix will likely launch a
significant upgrade to MetaFrame in the coming quarter and revenue
growth may approach 30%.  We favor the bullish technical outlook.

DEC 25.00 XSQ XE LB=0.63 OI=1799 CB=24.38 DE=28 MR=9.6%

HNT - Healthnet  $22.25  *** Portfolio Position ***

Health Net, formerly known as Foundation Health Systems, is an
integrated managed care organization that administers the delivery
of managed health care services.  The company's health maintenance
organizations, preferred provider organizations and government
contracts subsidiaries provide health benefits to millions of
individuals in 18 states through group, individual, Medicare risk,
Medicaid and TRICARE programs.  The company's subsidiaries also
offer managed health care products related to behavioral health,
dental, vision and prescription drugs, and offer managed health
care product coordination for multi-region employers and other
services for medical groups and self-funded benefits programs.
Foundation Health has always been an OIN favorite for long-term
stock portfolios and now that the company has a new name, it is
appropriate to add the issue to our "recommended" list.

DEC 20.00 HNT XD LB=0.50 OI=0 CB=19.50 DE=28 MR=7.6%

KMI - Kinder Morgan  $43.25  *** Hedge Play! ***

Kinder Morgan is a midstream energy company that operating more
than 30,000 miles of natural gas and products pipelines in 26
states.  It also has significant retail natural gas distribution,
electric generation and bulk terminal operations. Kinder Morgan,
through a general partner interest, operates Kinder Morgan Energy
Partners, a pipeline master limited partnership.  Kinder Morgan
also holds a significant limited partner interest in Kinder Morgan
Energy Partners.  KMI Morgan is this week's Energy sector "hedge
play" and based on recent analyst's comments and bullish technical
indications, this play may be a candidate for all of our readers.

DEC 40.00 KMI XH LB=0.56 OI=1 CB=39.44 DE=28 MR=4.2%

PSUN  - Pacific Sunwear  $22.19  *** Retailers Rally! ***

Pacific Sunwear of is a specialty retailer of everyday casual
apparel, accessories and footwear designed to meet the needs of
active teens and young adults.  The company operates nationwide,
primarily mall-based, chains of retail stores that specialize in
board-sport inspired casual-wear.  PSUN's Internet site markets
merchandise online and provides content and community for its
target customers.  Pacific Sunwear reported that third quarter
earnings increased 1.9% to $0.39 from $0.38 last year, $0.01
ahead of consensus estimates and in line with company guidance.
The results were respectable, if not outstanding, and with the
recent positive outlook for the industry, this position offers
favorable risk/reward potential for one month.

DEC 17.50 PVQ XW LB=0.38 OI=7 CB=17.12 DE=28 MR=8.6%

TLB - The Talbots  $49.81  ** Hot Sector! ***

The Talbots is a national specialty retailer and cataloger of
women's and children's classic apparel, accessories and shoes.
Talbots offers a distinctive collection of classic sportswear,
casual wear, dresses, coats, sweaters, accessories and shoes,
consisting almost exclusively of Talbots own private labels in
misses, petites and woman sizes.  Talbots stores, catalogs and
Internet site offer a variety of key basic and fashion items
and a complementary assortment of accessories and shoes which
enable customers to assemble complete wardrobes.  Last week,
the company announced outstanding third-quarter results, after
a blockbuster year that has seen investors rewarded by growth
in both earnings and market value.  Talbots' net income climbed
75% to $34.9 million over the past year's $20 million.  Earnings
per share increased 74% year-over-year and the company saw its
sales grow robustly.  Based on the sector outlook, there may be
further upside potential the issue.

DEC 40.00 TLB XH LB=0.50 OI=321 CB=39.50 DE=28 MR=5.1%

VLNC - Valence Technology  $17.31  *** Entry Point! ***

Valence Technology designs, develops, manufactures and markets
rechargeable lithium polymer batteries for portable communication
devices, also known as mobile communication products, including
notebook computers, personal digital assistants or PDAs, handheld
personal computers, or HPCs, and cellular telephones.  Valence
recently entered into an agreement to acquire all of the Bellcore
Lithium-Ion Polymer Battery intellectual property rights from
Telcordia.  The acquisition includes 42 U.S. patents, 15 existing
license agreements and the PLiON(TM) Trademark.  Valence is now
expected to become the dominant global licensor of lithium-ion
polymer technology and the company will eventually create separate
business units to launch a global technology transfer program.
We simply favor the opportunity to own the issue at a favorable
cost basis.  Target a higher premium initially, to allow for the
volatile movement of the underlying issue.

DEC 12.50 VHQ XV LB=0.31 OI=97 CB=12.19 DE=28 MR=9.0%



The following group of issues is a list of additional candidates
to supplement your search for profitable trading positions.  As
with any investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
and positions are suitable for your experience level, risk-reward
tolerance and portfolio outlook.  They will not be included in
the weekly portfolio summary.

Sequenced by Return

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

BCGI   25.94  DEC  20.00  QGB XD  0.63  0    19.38   28    11.7%
ATRX   17.75  DEC  15.00  OQF XC  0.44  50   14.56   28    10.0%
SNRZ   28.56  DEC  25.00  QSR XE  0.69  190  24.31   28     8.7%
GPSI   49.00  DEC  40.00  QGP XH  0.56  0    39.44   28     5.5%
CHCS   40.00  DEC  30.00  HNU XF  0.38  0    29.62   28     4.9%
INTC   41.50  DEC  32.50  INQ XZ  0.31  1081 32.19   28     3.9%

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!


Searching for a bottom...
By Ray Cummins

Friday, November 17

The market edged lower Friday amid concerns over the slowdown in
corporate earnings.  Uncertainty about the Presidential election
also weighed heavily on investors during the lackluster session.
The Nasdaq closed down 4 points at 3,027 and the Dow finished 26
points lower at 10,629.  The S&P 500 index ended down 4 points at
1,367.  Trading volume on the NYSE hit 1.06 billion shares, with
advances beating declines 1,503 to 1,331.  Activity on the Nasdaq
was average with 1.75 billion shares traded.  Technology declines
beat advances 2,089 to 1,731.  In the bond market, the 30-year
Treasury fell 16/32, pushing its yield up to 5.77%.

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

Cardinal Health  CAH    DEC85P/DEC90P   $0.81   credit   bull-put
Invitrogen       IVGN   DEC50P/DEC55P   $0.75   credit   bull-put
Quaker Oats      OAT    DEC75P/DEC80P   $0.50   credit   bull-put

Our new positions offered mixed opportunities during Friday's
volatile session.  Cardinal Health and Invitrogen both slumped,
providing favorable entry prices, but Quaker Oats survived the
market slump preventing any entry at the target credit.

Portfolio Plays:

The recent decline in equity markets continued today amid worries
about future corporate earnings and doubts that a U.S. President
would be named this weekend.  Stocks rallied early in the session
after a Florida judge said he would exclude hand-recounted votes
from the final presidential vote tally.  The news gave investors
new hope for a quick resolution to the election, but the optimism
quickly faded as reports that additional legal proceedings would
likely delay the outcome until next week.  After the market close,
a Florida Supreme Court justice blocked officials from certifying
the results until further litigation occurs next week, suggesting
the counting process is far from over.  In other news, a popular
economist noted that although earnings growth in the technology
sector will decline to roughly 20% next year, the group is still
expected to outperform broad-market companies by a 3-to-1 margin.
When then, is the Nasdaq testing 52-week lows and struggling to
maintain a positive long-term outlook?  Analysts say it's simply
a natural correction that must occur before the group can return
to a bullish bias.  Corporate earnings in technology companies
will certainly be lower, but a stable interest-rate environment
and industrial growth at a manageable 3%-5% are expected to help
ease the transition to more favorable rate of expansion; one that
ensures the economy will be stronger overall.

The market failed to generate much excitement today.  On the Dow,
J.P. Morgan (JPM), SBC Communications (SBC) and American Express
(AXP) led the losers while International Business Machines (IBM),
Procter & Gamble (PG) and Intel (INTC) were the strongest issues.
On the Nasdaq, classic technology stocks were active with Oracle
(ORCL), Cisco Systems (CSCO), and Sun Microsystems (SUNW) among
the best performers.  On the downside, telecommunications, chip
and biotechnology stocks retreated.  In broader sectors, drug
stocks performed well amid a growing belief that a slowing global
economy will undercut earnings in other sectors, including the
technology industry.  Transportation, utilities and retailers all
moved higher but financial stocks retreated, pressured by worries
about rising loan losses and bankruptcies, and a gloomy outlook.
Our portfolio enjoyed advances in a number of old economy groups
with shares in Johnson & Johnson (JNJ), Kellogg (K), and Safeway
(SWY) leading the way in consumer products issues.  The foremost
technology stocks were classic companies like Intel (INTC) and
Hewlett Packard (HWP), and Microsoft (MSFT) also finished the day
"in the black."  In the retail sector, Genesco (GCO) continued to
rally after a recent positive earnings report and Visx (EYE) led
our list of small-cap, health services stocks.  Overall, it was
a relatively painless session for "Expiration Friday" and if the
Florida legal system can simply make a decision on the outcome
of the Presidential election, we may finally begin to see some
sustained upside activity in the downtrodden technology group.

Questions & comments on spreads/combos to Contact Support
                         - NEW PLAYS -
INTC - Intel  $41.50  *** Reader's Request! ***

Intel Corporation, a semiconductor chip maker, supplies the
computing and communications industries with chips, boards,
systems and software that are integral in computers, servers
and networking and communications products.  The company's
major products include microprocessors, chipsets, flash memory
products, networking and communications products, embedded
processors and microcontrollers, and digital imaging and other
PC-peripheral products.  Intel's major component-level products
consist of integrated circuits used to process information.
Intel sells its products to original equipment manufacturers,
PC and computing appliance users, industrial and communications
equipment manufacturers, and businesses, schools and state and
local governments.  Intel also provides data center services to
businesses needing e-Commerce services.

One of our readers pointed out that Intel is showing technical
signs of bottoming near the current trading range and he asked
for some suggestions on how to profit from an eventual recovery
in the blue-chip technology issue.  In our opinion, Intel is an
industry leader and a technology stock we would love to have in
our long-term portfolio, at the right price.  But, instead of
buying the issue outright, we will use LEAPS to participate in
any bullish movement in the company's share value.  To offset
the potential for downside losses, we will initiate the spread
as a diagonal position and continue to sell calls against the
LEAPS in future months.

PLAY (bullish/diagonal spread - Covered-Calls/LEAPS):

BUY  CALL  JAN02-30  WNL-AF  OI=16030  A=$17.12
SELL CALL  JAN01-45  INQ-AI  OI=30878  B=$3.12
INITIAL NET DEBIT TARGET=$14.00  TARGET ROI=100% (14 months)


The diagonal spread is a combination of price and time (calendar)
spreads.  The most common version of this strategy requires the
purchase of a long-term call and the sale of a short-term call at
a higher strike price.  In most cases, the initial debit of the
position should be less than the spread between the two options,
eliminating the possibility of loss in an upside break-out.  The
primary advantage of this strategy is the cost basis of the long
position is reduced by the sale of the short-term option.  The
spread achieves maximum profit (at expiration) if the stock price
remains above the sold option's strike price.  The position can
also profit (before expiration) if the underlying issue advances
significantly after the play is opened.

In most cases, a diagonal position is an improvement over the
standard price spread.  If the stock price remains relatively
unchanged or falls slightly, the long option will retain more
value because of its extended maturity.  If the near-term (sold)
call expires, the position can be reestablished with the sale of
a new call.  If the long option is current month, the position can
be converted to a normal price spread.  If the underlying issue
rises above the sold strike price, the spread will be profitable.
With longer-term options, the character of the spread can be
adjusted to match the outlook of the underlying issue.  A neutral
or bearish position can be established with the sale of an ATM
option or the original spread can be duplicated (at a lower cost
basis) with the sale of a new OTM option.  In either scenario, the
long-term diagonal spread benefits from the sale of additional
options throughout the life of the (long) position.

The majority of advantages in a diagonal spread are obvious but
there is one characteristic that most traders overlook.  In a
debit spread, if the stock advances substantially and the options
trade at parity, the maximum potential profit will be limited to
the difference between the strike prices.  With a diagonal spread,
the long option has more time premium.  Thus, when the underlying
issue trades near the strike price at expiration, the value of the
position will grow beyond the theoretical profit range.  With that
in mind, it's easy to see why the maximum potential for profit (at
expiration) occurs at the strike price of the sold option.

U - U.S. Airways  $38.69  *** Merger Outcome Approaching! ***

US Airways Group owns the common stock of US Airways, Shuttle,
Allegheny Airlines, Piedmont Airlines, PSA Airlines, US Airways
Leasing and Sales, Material Services Company, USLM Corporation
and Airways Assurance Limited. In addition, US Airways owns all
of the common stock of US Airways Investment Management Company.
US Airways, the company's principal operating subsidiary is a
certificated air carrier engaged primarily in the business of
transporting passengers, property and mail.  US Airways provides
regularly scheduled service at 107 airports in the continental
United States, Canada, Mexico, France, Germany, Italy, Spain,
the United Kingdom and the Caribbean.

Earlier this year, United Airlines proposed to buy US Airways,
the sixth-ranked U.S. carrier, for about $4.3 billion.  However,
some key remaining steps in the merger process still remain,
including approvals by the U.S. Department of Justice and the
European Commission.  Despite involving two U.S. companies, the
unification must still be approved by the European Commission,
as the group has the power to review all mergers involving
companies with combined global turnover of five billion Euros
($4.27 billion) as long as at least two of the firms involved
have sales within the EU of at least 250 million Euros.  Both
companies are optimistic that an approval will eventually occur
and upon completion of the merger, US Airways shareholders will
receive $60 for each share of US Airways stock.

Based on the recent activity in U's shares, investors believe
the merger will be approved.  This position offers a relatively
conservative manner in which to speculate on that outcome.

PLAY (speculative - bullish/credit spread):

BUY  PUT  DEC-30  U-XF  OI=615   A=$0.93
SELL PUT  DEC-35  U-XG  OI=2045  B=$1.93
INITIAL NET CREDIT TARGET=$1.00-$1.12  ROI(max)=25% B/E=$34.00


These plays are based on the current price or trading range of
the underlying issue and the recent technical history or trend.
The probability of profit from these positions is also higher
than other plays in the same strategy based on disparities in
option pricing.  Current news and market sentiment will have an
effect on these issues.  Review each play individually and make
your own decision about the future outcome of the position.

MDP - Meridith Corporation  $31.19  *** On The Move! ***

Meredith Corporation is a diversified media company primarily
focused on the home and family marketplace.  Based on products
and services, the company has two business segments, publishing
and broadcasting.  The publishing segment includes magazine and
book publishing, brand licensing, integrated marketing and other
related operations.  The broadcasting segment includes the main
operations of 12 network-affiliated television stations and the
syndicated television program marketing and development group.

Media companies have been popular in recent weeks and Meridith
appears to be one of the more attractive issues in the unique
group.  Technically, Meredith's recent breakout above its 150
dma was confirmed by Friday's heavy volume rally beyond the
early November high.  A test of the June high is now likely as
the bullish crossover of the 30 dma above the 150 is a strong
"buy" signal and traders who favor the Media group can use this
position to speculate on the future movement of the issue.

PLAY (aggressive - bullish/credit spread):

BUY  PUT  DEC-25  MDP-XE  OI=0   A=$0.31
SELL PUT  DEC-30  MDP-XF  OI=20  B=$1.25
INITIAL NET CREDIT TARGET=$1.00  ROI(max)=25% B/E=$29.00

P - Phillips  $61.69  *** Trading Range? ***

Phillips Petroleum is engaged in the exploration, production,
marketing, and transportation of petroleum products and other
petrochemicals.  Phillips operates in four business segments:
Exploration and Production, which explores for and produces
crude oil, natural gas and natural gas liquids on a worldwide
basis; Gas Gathering, Processing and Marketing, which gathers
and processes both natural gas produced by others and natural
gas produced from the company's own reserves, primarily in
Oklahoma, Texas and New Mexico; Refining, Marketing and
Transportation, which fractionates natural gas liquids and
refines, markets and transports crude oil and petroleum
products, primarily in the United States; and Chemicals,
which manufactures and markets petrochemicals and plastics on
a worldwide basis.  In addition, the company's support staff
provides technical, professional and other services to the
business segments.

Analysts say companies in the Oil and Gas Refining group are
trading at a premium and with difficult conditions expected to
continue for the chemicals industry, Philips Petroleum may
have a rough road ahead.  P's technical strength continues to
wane and the failure to rally above the $65 range (several
times) raises the probability of a move lower.  Friday's
action is worrisome as the stock has closed at both its 50 and
30 dma's.  The next support area is near the 150 dma and the
June highs and that appears to be the direction P is heading.

PLAY (aggressive - bearish/credit spread):

BUY  CALL  DEC-70  P-LM  OI=61   A=$0.50
SELL CALL  DEC-65  P-LN  OI=103  B=$1.38
INITIAL NET CREDIT TARGET=$1.00  ROI(max)=25% B/E=$56.00

This position was discovered with one of our primary scan/sort
techniques; identifying potentially failed rallies on issues
with bullish options activity.  In this case, the premiums for
the (OTM) call options are slightly inflated and the potential
for a successful (technical) recovery is significantly affected
by the resistance at the sold strike price; a perfect condition
for a bearish credit spread.


Get a NextCard Visa, in 30 seconds!
1. Fill in the brief application
2. Receive approval decision within 30 seconds
3. Get rates as low as 2.9% Intro or 9.9% Fixed APR


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.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives