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Daily Newsletter, Sunday, 12/10/2000

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The Option Investor Newsletter                   Sunday 12-10-2000
Copyright 2000, All rights reserved.                        1 of 5
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******************************************************************
MARKET STATS FOR LAST WEEK AND PRIOR WEEKS
******************************************************************
       WE 12-8          WE 12-01         WE 11-24         WE 11-17
DOW    10712.91 +339.37 10373.54 - 96.69 10470.23 -159.64  + 26.92
Nasdaq  2917.43 +272.14  2645.29 -259.09  2904.38 -122.81  -  1.80
S&P-100  727.06 + 31.07   695.99 - 15.17   711.16 - 13.93  +  5.98
S&P-500 1369.89 + 54.66  1315.23 - 26.54  1341.77 - 25.95  +  1.74
W5000  12666.50 +629.10 12037.40 -316.20 12353.60 -306.30  - 28.90
RUT      479.07 + 22.23   456.84 - 15.03   471.87 - 10.74  +  1.71
TRAN    2879.95 +116.80  2763.15 - 86.74  2849.89 + 32.59  +113.08
VIX       26.13 -  5.46    31.59 +  2.01    29.58 +  1.73  -  4.65
Put/Call    .59              .61              .59              .89
******************************************************************

I would like to use my lifeline please!
By Jim Brown

What a terrible way to end a really good week! Just when everything
appeared to be turning up roses for the markets the Florida Supreme
court elected not to use their lifeline and, in an opinion from hell,
turned our market world upside down again. Why such strong wording?
Because the dissenting opinions will almost guarantee another review
and remand from the U.S. Supreme Court and three more wasted days.
The Florida Supremes appeared to the world like kids in a sandbox
fighting over control. The bad news is the market will suffer three
more days until the final dust settles. At this point it does not
matter who wins the race, other than the market had already factored
in a Bush win, but just that the race NEEDS TO BE OVER! The grave
words on international news on Friday night will echo worldwide. The
terms "constitutional crisis", "cannot be justified under any law" and
"kangaroo courts" could start a crisis of confidence among foreign
investors. International investors are used to shoddy or rigged
elections in most of the world and they invest in the U.S. for safety
as well as returns. Several very well placed talking heads like Bill
Seidman and Lawrence Kudlow were expressing serious concern over the
possible fall out from the election brinkmanship. I personally think
the greed motive will prevent this! Sorry, that is enough venting for
one day but I, like you are getting tired of trying to invest in this
yoyo market for over a month now. I will get off my soapbox now!







Regardless of who you want to win the election the markets voted with
an instant rally at 2:30 when Bush was named the winner of the absentee
cases. When the news came that the Supreme Court was going to rule the
rally on the Nasdaq dropped -70 points from the high of the day. After
struggling back to close at 2917 the bottom fell out immediately when
the ruling was announced. The only yardstick we have to gauge the
reaction is in the futures. The S&P Futures closed at 1393 and dropped
to 1350 when they reopened, a -43 point drop. The Nasdaq futures were
even worse closing at 2950 and reopening at 2769 for a drop of -181
points. The Dow futures dropped from 10880 to 10600, a -280 point loss!
The QQQs dropped from a close over 72 to 67.63 for almost a $5 drop.
Like I said, regardless of your choice for candidate the market has a
one candidate it prefers over the other. What will happen on Monday
after a weekend of head clearing and hundreds of hours of sound bites
has yet to be seen. Doubtless there will be those who will view it just
another buying opportunity now that the "bottom" appears to have passed
and others that will be wringing their hands in agony over the problem.










I never cease to be amazed by the market reaction and lack of reaction
to major events. For the last three weeks major and minor stocks have
been hammered for even hinting at earnings problems. Thursday after the
close investors finally said enough is enough and bought the Intel
warning as though they had raised estimates instead of lowered them!
A true market bottom appears when investors are not moved by bad news.
It is truly factored in when there are no more sellers on bad earnings
or soft economy news. That was the message of the markets today and
investors expecting another buying opportunity dip at the open were met
with a strong gap up and no look back. Now let the short covering
begin!

With 646 pre-earnings announcements so far this quarter, 46% have
been negative warnings. This is +50% ahead of last year according
to First Call. Now unless you live in a cave it would be hard not
to already understand that the Goldilocks economy has a serious
case of the earnings flu. The Nasdaq has dropped -50% from the
year's high as investors learned the bitter earnings decompression
lesson the hard way.

Now, finally, the worm has turned. There is light at the end of
the Fed tunnel and we have the head cheerleader on our side. What
more could we ask for? Today Ed Kelly joined Greenspan in singing
the Christmas carol of Fed easing. Ed said the Fed must remain
vigilant that they do not allow the economy to fall too far or too
fast. Don't you love it when all the elves start singing the same
tune? Up until 4:PM the markets had put in a miraculous recovery
for the week with the Dow gaining +339 points, the Nasdaq +272
points and the Wilshire-5000 a stunning +629 points. The Santa
Claus rally was alive and well! Just when fund managers were
actually starting to plan buys for Monday the bottom fell out.
Well at least the bottom in after hours trading for Friday.

Now here is where the sentiment changes. Yes, it was bad. The futures
dropped very dramatically and scared the heck out of anybody not yet
at the malls Christmas shopping. But I think traders are going to wake
up Monday morning and say, "what is the big deal?" Gore has been there
for eight years, there is gridlock in the houses, nothing is really
going to change and WE HAVE A MARKET BOTTOM! Party on! They will get
the election resolved eventually. There will be a president. While they
sort it out there are stocks to buy and stocks to sell. Why worry, be
happy! At least that is one scenario and when you compare the strength
of the greed emotion to the emotion of politics, greed will win
whenever there is lots of money at stake. It is very easy to be very
politically reactionary and take stands on principle if principle is
all you have.Put a few hundred thousand dollars in a trading account
with retirement looming several years ahead and I will bet on greed
every time. There are exceptions to this rule of course. You can be
politically active and still invest in the markets. You just have to be
smarter about your investments. Gore wins, sell MSFT, tobacco and
drugs, buy techs and stocks that will do better in a strong
environmentalist economy. Stocks are stocks, buy the ones that will do
well based on the future president. So where is the beef?

I think the entire deal has taken on a life of its own and the last
month it has helped wring every last dollar out of many of our favorite
stocks while we waited for resolution. Now traders are ready to take
control of the market again. The Fed is on our side and should the
election situation turn even more serious then the Fed may choose to
step in the gap and cut rates in December to hold up the markets. This
looks like a win-win situation. The market is at or near a value
bottom.  The risk is minimal. Money is still piling up on the sidelines
in record amounts. Last week almost $19 billion in new cash came into
money market and equity funds. This is a huge amount compared with the
drought we have been seeing the last two months.  Investors are not
stupid. They saw the bottom forming and saw the election winding down.
They were preparing to vote with cash for the Fed induced Santa Claus
rally. With cash on the sidelines burning a whole in their accounts and
more coming in from year end retirement contributions every day, what
do you think is going to happen?

Do you think investors that are still in cash are kicking themselves
that they did not buy the dips this week? You bet. Do you think they
saw the Nasdaq close at 2918 at 4:PM and then saw the futures fall
back to 2769 and they are thinking, please, please let it open at 2700
just one more time on Monday so I can get in? Of course they are. They
saw JNPR close at the high of the day up +15 at over $166 only to see
it drop back -10 points to $155 and change in after hours. A last
buying
opportunity?  BRCM dropped from $128 +17 back to only $119. BRCD from
$223 back to $213. A pure knee jerk reaction and nobody knows when it
will stop. The news over the weekend will determine the follow through
or lack of it on Monday. Did the U.S. Supreme Court take the case? Did
the Florida legislature overrule the court? We will not know the
answers until Monday but rest assured capitalism is still alive and
well. Earnings warnings will continue. Analysts will continue to
downgrade Internets.Fiber optic companies are still leading the way.
Networkers and B2B companies are showing promising uptrends again. Oil
is falling again.  Chip stocks are in rally mode only one day after the
biggest chip warns.  But best of all the Fed is finally on our side.
The employment report was benign and did not show any smoking inflation
gun. My bet for next week? Buy the dip and hold on for the ride. Fund
managers are just like individual investors.

The next dip makes sense. There is no guarantee of anything in life
but the risk at Nasdaq 2700 is very small and after the bounce this
week they will be throwing money at any weakness. We could still see
a very choppy week but stocks are cheap and everybody knows it. If
your bank was having a -50% off sale on $100 bills on Monday would you
stay home and watch the election on MSNBC and whine or be the first in
line at the bank with hands full of money? That is a no brainer! Get
in line, the market will open Monday, ready or not!

If you have been reading OIN all week then you should have been very
profitable. We have had some incredible winners this week. By spotting
the bottoms on many of the fast movers we were able to reap some
serious rewards. Look at these gains from this weeks leaders!

Company        Symbol      Date Picked Price   Friday   Change  Percent
Brocade Comm. (NASDAQ:BRCD) 11/30/00  $167.94  $219.75  $51.81    31%
Juniper Netw. (NASDAQ:JNPR) 11/30/00  $124.63  $166.13  $41.50    33%
Micromuse     (NASDAQ:MUSE) 12/03/00  $ 94.13  $135.63  $41.50    44%
Network Appl. (NASDAQ:NTAP) 12/03/00  $ 53.94  $ 87.19  $33.25    62%
Broadcom      (NASDAQ:BRCM) 11/30/00  $ 97.50  $128.19  $30.69    31%

How much you made depended on which options you played but +$30 to +$50
moves are very profitable.

If you liked these returns then you won't want to miss our annual
December renewal offer which begins this weekend. We have gone
overboard this year and are offering even more than before in the
way of added value and free gifts if you renew by December 31st.
Two OIN Option Expiration Mousepads, the expanded 2001 Stock Traders
Almanac and free subscriptions to two of our other top newsletters.
Check it out, renew today, you will be glad you did!

Click here for more info:
http://secure.sungrp.com/01renewal.asp

Trade smart, don't buy too soon.

Jim Brown
Editor


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

I am going to deviate from the regular game plan today because
I think we are going to get our last chance to catch the Nasdaq
this coming week. The verdict is in and not in election terms.
The bottom has been found at 2500 or so and it is not likely
we will see it again this year. The cash is piled so high on
the sidelines that fund managers and individual investors alike
are on the verge of buying Lilly stock just to capitalize on
the Prozac surge. They are like gamblers walking through a casino
with pockets full of thousand dollar bills. Eventually the urge
to play will overcome the earnings worry and the real rally will
begin. Add in the fact that the Fed FOMC meeting is now only
seven trading days away and the urge to load up before the now
50/50 chance of a rate cut is growing.

The election hysteria will take a backseat to the markets next
week as traders hyped to a climax a dozen times by a handful of
networks and hundreds of talking heads, only to have their hopes
dashed over and over again, are going to ignore the election
and buy stocks. Period! The rally on the Intel warning was the
start and the momentum is building.

Our problem is now deciding what to buy and when. Some of the
fast gainers have now added +$50 in the last week. Does that
mean they are now over valued? Should we chase them? Will they
pull back on profit taking on the election news? No, yes, maybe!




With the Nasdaq poised to breakout over resistance at 2900 at
the close the prospect of a drop back to 2700 as indicated by
the futures would be an early Christmas present. Remember the
Fed is the controlling market influence next week, not the
election. With history proving that the week before any FOMC
meeting with the possibility of a rate cut being very bullish
investors will be opening new positions. While we may be
drooling over the prospect of another dip on the Nasdaq the
drops on individual stocks may be less easy to come by.

Take BRCM, anything under $120 would be an entry point for me.




Sure it is up strong since the $85 low from two weeks ago but
BRCM has the potential to be $160 if not $200 within the next
two weeks. The concept here is not pinching pennies but grabbing
rockets before they take off. How many times have you looked
at a stock that was up +$20 or +$30 and said that is really
spikey and I will wait for it to pull back? Did it? Maybe
some did but I am sure we have all watched as those same
stocks continued on up for another +$20, +$40, +$60 while
we sat on the sidelines or picked some other stock that may
not have moved so fast.

I am not a chaser. If you have been reading this newsletter for
very long you know I am a dip buyer and a quick seller. Normally
that is a winning combination. Low risk, quick profits, wait for
the next cycle. Using that concept will also cost you money in
some situations.




Take the monster market rally on the Nasdaq last winter. The
Nasdaq gained over +2000 points in only ten weeks and only had
two real pull backs in the entire run. Many traders were making
millions while others were sitting on the sidelines waiting for
the pull back that never came.

I believe, and it is just my opinion, that we are near another
monster rally. I do not think it will be as big as last year
because the earnings are not there to propel prices. However
with the Fed obviously going to change the rate environment
soon and with stocks already -50% off their highs there is no
real reason not to buy. Risk is low, reward could be high. The
election news may be a wild card but the Fed is our trump card.

Very seldom do I come out with a strong buy on the market. I can
only remember a dozen or so recommendations in the last four years.
This is one of those times. However, my risk profile is much
higher than many of our readers. You must decide what your risk
profile is before buying any Monday dip. Conservative investors
would still be advised to wait for the Nasdaq to move back over
2900 on strong volume before opening new long positions. You
might enter the same stocks +$10 to +$12 higher than more
aggressive traders but that may be a small price to pay for the
comparative safety of a rally confirmation. Remember, it does
not matter how long it stays under 2900. It does not cost any
money to wait. It can cost money to buy the first dip and then
have another appear on negative news.

My point here is that the market has already digested almost all
the bad news possible short of a blowout of some economic report
that would change the Fed bias back to tighten. The big reports
for next week are Import/Export Prices and Retail Sales on
Wednesday, PPI on Thursday and CPI on Friday. Not exactly a light
week but if the reports come in weak like everyone expects then
the Fed will be pressured to stop the bleeding the following
Tuesday. The qualifier here is BENIGN reports. If the reports
surprise to the upside then all bets are off.

If you are going to buy calls next week then you need to be
prepared to ride the rapids because volatility could still be
very high. There is no such thing as risk free investing but
I think we are within a day or two of very high profit potential.

Contrary to my normal conservative suggestions of buying on
a dip, I am suggesting that you may actually benefit from
chasing some of these high flyers on any bounce next week.
These options are not going to be cheap but then again
sometimes you get what you pay for.

Don't get me wrong. You do not have to buy calls on BRCD,
BRCM, JNPR, EMLX, SDLI to profit on the expected rally.
Almost every stock we looked at this weekend was showing
a rally trend. There are cheap stocks like VIGN, GILD and
RE that have good trends but the options are not $20 either.
Check out the low volatility call plays in Sunday's newsletter
for possibilities. Granted there are not a lot of cheap plays
when the market bias has changed so dramatically in only a
week. Still the change in bias is what is producing the
profit opportunity.

Now that earnings results for the 4Q have pretty much hit
bottom analysts are taking a guess for 2001. Guess what?
They are coming in very cautious. Music to my ears. Low
earnings estimates makes it easy for companies to beat the
estimates and then recreate the 1999 rally all over again.
No one expects the magnitude of 1999 since the Internet
bubble has burst but there will always be a hot sector or
two to go for a ride. Biotech, fiber, B2B are not dead and
cancer cures will eventually be worth much more than a PCLN
or CMGI.

In a nutshell, buy the dip if we get one. The weekend news
will govern how much we will dip, if at all, and then how
quickly we rebound. It is entirely possible that the entire
futures drop will disappear before the open on Monday and
any dip will only be wish full thinking. You simply need
to focus on the fact that it is not the election that will
eventually control our fate next week but the Fed and the
economic reports.

I think it will be worth your while this weekend to spend
a few extra minutes planning some entry points for Monday.
Pick a lower price than the close as a target for a dip
entry but also pick a higher price than the close should
the dip turn into a figment of our imagination. Plan your
trade then execute your trade. Right or wrong, do something.
Even if you are not comfortable enough to make a big bet
you can always scale into each play. Try to buy 25% of what
you would normally spend on a play by target shooting the
dip. If you get filled then great! Fill the next 25% as
the play starts to turn profitable or average down once
if it goes against you. Don't add to the position at this
point until you are profitable then add another 25%. The
final 25% can be added on any pullback after you are
profitable or used on another play. Using this strategy
you can profit from a dip but risk less than normal by
scaling in as news and market movements dictate your play.
Spread this out over multiple stocks and your risk is reduced
substantially but your profits are not restricted. There is
no such thing as risk free trading but next week may be as
close as we can get. Next Friday is a triple witching option
expiration event. This almost always guarantees volatility
as well as a bullish bias. With millions of options contracts
needing to be settled and many of these possibly deep in the
money there will be a lot of stock trading. Add to this flurry
the dozen or so stocks added to the S&P-500 and volume should
remain high. All of these factors should combine for a week
we will not soon forget. Hopefully we will be counting profits
for weeks to come. I for one am planning on it!

Good Luck, good trading

Jim Brown


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

Justice?
By Austin Passamonte

Can U.S. constitutional and regional laws be such an interwoven
mess that clear decision lies undecipherable? How many verdicts
must be issued before a final decision stands?

These are questions non-U.S. citizens and foreign traders ask as
their confused dollars continue to leave our markets with a giant
sucking sound. Yes, record levels of cash have poured onto the
"sidelines" waiting for the annual fall rally to ensue. And
that's where it just may sit, stagnant & growing mold for the
week to come.

No one can give hard dates when a president-elect will prevail.
Nor can we tell what the markets will do if Gore pulls off an
11th hour surprise upset. Early indications are it might not
spawn the Christmas rally if recent market reactions carry forth.

These markets would like to rally but timing is everything. The
same court verdict from 2:30pm Friday would have likely spurred
another record intraday session read at 10:30am instead. By the
time 2:30 rolled around, retail buying momentum had already
waned.

No president-elect, more tax-loss selling ahead, fringe traders
walking away from the non-rally table in frustration, foreign
money scared, triple-witch expiration Friday - another volatile
week lies ahead.

When the favorable Gore verdict was read, S&P futures plunged 30
points straight down. Is this due to mere uncertainty or market
bias towards Bush instead? Market Sentiment poses nor holds any
political or market bias. We merely attempt to quantify what we
see.

MSFT, MO, MRK and others have rallied in the hopes of a favorable
political climate. What could a surprise disappointment do to
them and the Dow, OEX and SPX in the process? We will find out
soon enough.

COT SP00S continue to go shorter as they smell blood, further
weakness and high-odds decline. We will heed their sentiment and
favor the downside for now. As always we stand ready to trade
calls or puts with equal amplitude but suggest that an eye kept
on short-term rallies and long-term weakness may be a profitable
market view!

*****

VIX
Friday 12/08 close: 26.13

30-yr Bonds
Friday 12/08 close: 5.57%

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.

                                   Saturday
                                 (12/09/2000)
  (Open Interest)       Calls        Puts          Ratio
S&P 100 Index (OEX)
Resistance:
765 - 750               13,234          915        14.46***
745 - 730               20,201        3,036         6.65

OEX close: 727.06

Support:
725 - 710               14,975       15,875         1.06
705 - 690                3,499       10,115         2.89
Maximum calls: 730/7,872
Maximum puts : 710/6,593

Moving Averages
 10 DMA  711
 20 DMA  714
 50 DMA  729
200 DMA  773


NASDAQ 100 Index (NDX/QQQ)
Resistance:
 77 - 75                40,305        34,361         1.17
 74 - 72                41,535        23,319         1.78
 71 - 69               117,753        34,512         3.41

QQQ(NDX)close: 68.00

Support:

 67 - 65                30,215        49,830          1.65
 64 - 62                15,987        21,317          1.33
 61 - 59                 9,653        28,950          3.00

Maximum calls: 70/57,061
Maximum puts : 80/33,498
Moving Averages
 10 DMA 66
 20 DMA 68
 50 DMA 76
200 DMA 90


S&P 500 (SPX)
Resistance:
1425                   28,842        14,837          1.93
1400                   52,369        50,154          1.04
1375                   22,086        23,316           .95

SPX close: 1369.89

Support:
1350                   35,762        44,750          1.25
1325                    6,545        15,877          2.43
1300                    7,082        17,087          2.41


Maximum calls: 1400/52,369
Maximum puts : 1400/50,154
Moving Averages
 10 DMA 1342
 20 DMA 1350
 50 DMA 1379
200 DMA 1437

*****

CBOT Commitment Of Traders Report: Friday 12/08
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         -283        +103            -770       -3136
Total Open
Interest %       (-3.13%)    (+1.14%)        (-2.64%)   (-11.59%)
                 net-short   net-long        net-short  net-short

NASDAQ 100
Open Interest
Net Value        -3324        -1888           +2120       +673
Total Open
Interest %       (-13.52%)    (-8.21%)       (+3.23%)    (+1.17%)
                 net-short    net-short      net-long    net-long

S&P 500
Open Interest
Net Value        +76502        +70473        -86468       -81,194
Total Open
Interest %      (+42.45%)      (+31.99)      (-12.36)    (-12.00%)
                 net-long     net-long       net-short   net-short

What COT Data Tells Us: The disparity remains between Commercial
positions and Small Specs on the S&P 500. The Commercials are
showing a gradual increase in their net-long positions on the
NASDAQ 100 while Small Specs have advanced their net-short
positions.

Data compiled as of Tuesday 12/05 by the CFTC.


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

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***************
ASK THE ANALYST
***************

Pretty Windows
By Eric Utley

Tis the season for retailers to garnish their windows for the
conspicuous consumer and Wall Street to dress its windows with
salient motives.  The posturing by portfolio managers at the
end of the year offers traders opportunities to profit.

The Wall Street phenomenon known as "window dressing" takes
place at the end of each quarter (March, June, September,
December) and is especially blatant at the end of the year.
The philosophy behind the money managers motives is to make
their portfolios look as good as possible when they send out
their end-of-year performance reports and holdings to
institutional clients and sophisticated individual investors.
These money managers dress their portfolios with the recent
quarter's big winners in an attempt to make their funds look
better positioned.  At the same time, the fund managers clean
their portfolios by unloading their worst performers for the
quarter.  The posturing by these portfolio managers results
in extended and artificial gains by the quarter's recent
winners.  Savvy traders can get ahead of the big institutional
money managers and reap profits from their bulky buying.

As the faithful readers of this column know, I failed to mention
the window dressing-effect during the end of the third-quarter in
late September.  My pathetic response in late September was the
following: "I failed to mention the window dressing-effect...
and regret not doing so. I'm sorry.  Believe me, I'll remember to
mention it in the second week of December in an attempt to help
OIN readers make money."

Well, I've delivered on my promise and have compiled a list of
the fourth-quarter's best performing stocks, which are likely
targets of window dressing.  But before you jump into any
positions in the following names, remember, there's no free
lunch on Wall Street.  The end-of-quarter window dressing
phenomenon is just one of infinite possibilities to take money
out of the market.  It's by no means a secret, and the usual
risks associated with any market operation are still very
real.  Past performance is never a guarantee of future
results and I'm NOT recommending a purchase of any of the
following stocks.  Overall market direction is still the most
important variable, along with changing fundamentals, and
monetary policy.  The following list of names is merely a
place to start looking for potential beneficiaries of window
dressing.

In researching the fourth-quarter winners, I tried to stick with
liquid and familiar names.  The stocks are in no particular order.

IGT    GENZ   GELX   MYGN   HAND   RFMD
UHS    OSIP   SAWS   EMLX   LNCR   SCIO
DNB    QCOM   SEIC   NTIQ   GPSI   FILE


Send your stock requests to Contact Support.
Please put the symbol of your requests in the subject line of
the e-mail.

----------------------------

QLogic - QLGC

It looks like this stock may break to the downside and a price of
60 or less is in the works.  Please let me know what you think. -
Christine

I think I would have agreed with your premise two weeks ago,
Christine.  However, the action in the tech sector last week
definitely rattled the bears and shifted sentiment more to the
bulls.  Shares of QLGC opened last week at $83, dipped down to
touch their long-term support line at $76, and subsequently
exploded to the upside to finish the week with a 40% gain!
That's the type of move that can shift sentiment rather
quickly.  What's more, QLogic has operations in one of the sexiest
and fastest growing segments of technology - storage area networks
(SAN).  QLogic is an infrastructure play on the SAN market as the
company makes components and chips used by the likes of Brocade.
In the SAN area, the company competes with the likes of Emulex
and Agilent, whose shares rallied in tandem last week.

Also worth noting is that shares of QLogic will be added to the
S&P 500 after the close of trading this Monday, December 11th.
As I've written before, gaming the S&P additions can be tricky
but highly profitable with momentum favorites such as QLogic.
Index fund managers will have to purchase shares of the stock
before, or after the close of trading Monday in order to mirror
the performance of the S&P 500, which they desperately strive to
do.  QLogic will be a stock to watch on Monday as it enters the
S&P 500 club.

Sorry for the distraction, back to the chart.  You'll notice on
the chart below that shares of QLogic have traced a bullish
wedge since getting whacked last spring.  There are several ways
to play such a pattern as I've detailed on the chart below.  All
things considered, I'd opine that shares of QLogic have held up
very well this year - shares are up almost 48% in 2000.




----------------------------

Integrated Device Technology - IDTI

Could this be a long term value play with a single digit PE or is
it just filling a gap?  IDTI held up quite well during the Apr -
May fall and then rallied nicely.  Could it be one of the last to
fall first to rise if it doesn't get killed by TAX LOSS selling?
As always your opinion is greatly valued. - Thanks, Bill

Thank you, Bill, for the words of encouragement and support!

Last week, I wrote without any mention of the underlying
fundamentals for the companies I reviewed.  At the risk of
destroying any credibility I might have, I cannot review
Integrated Device without writing about the company's underlying
situation.  It's just too compelling.  Integrated Device
serves major networkes such as Cisco Systems with its high-
performance semiconductors.  The company has an enviably
earnings growth history and an equally promising outlook.
Integrated Device grew its profits by over 200% during its
three fiscal quarters thus far in 2000, and is expected to
grow the bottom-line by at least 30% over the next several
years.  The company has about $850 million in cash, or $8 per
share, and zero debt!  The stock trades with a trailing PE
ratio of around 10, and a forward-looking PE in single digits.
Those fundamentals are the making of a long-term winner.

In the short-term, though, shares of Integrated Device have run
into trouble in the form of inventory buildups among its key
customers, including the aforementioned Cisco, who accounts for
about 15% of sales.  The concern is that Cisco, among others,
won't need to purchase as much product from Integrated Device
as they have over the previous year.  However, officials from
Integrated Device recently publicly stated that they weren't
seeing a slowdown in orders and were very comfortable with
future earnings estimates.  If that's the case, then shares of
Integrated Device are trading at a deep discount relative to
future earnings.  However, whether or not the stock rebounds
in the near-term depends a lot on the sentiment surrounding
the chip sector.  And, last week's action in the semis, in
spite of the Intel warning, and preceding Xilinx and Motorola
warnings, may very well indicate we've reached a bottom in that
sector.  But, the semi sector has displayed similar patterns
recently as was witnessed in late 1996, when the group enjoyed
a sharp rally for a few weeks but later fell apart in the
following months.  In short, the chip sector and Integrated
Device are hard to game, and may be difficult to trade in the
short-term.  I still think it's a little too early to tell if
the semis have turned the corner.

For the long-term investor, who doesn't mind riding out the
bumps and bruises in the chip sector, I do think Integrated
Device warrants a close look.  Once this inventory glut is
absorbed, as they always are, the stock should rebound rather
nicely.  The tax-loss selling that Bill mentioned may come
into play in the coming weeks, in which case it would be
prudent to stand aside until the new year begins.




----------------------------

Nortel Networks - NT

Please provide your technical analysis of these three techs
(NT, INTC, HWP) which have all suffered recent drops. - Thank
you, Barry

I know it's somewhat old hat, but I'm looking for an update on
your view of Nortel. - Thanks, Mike

Of your three requests, Barry, I thought it relevant to review
Nortel in light of the fact OI added it to the call list this
weekend.  And, Mike, an old hat is better than no hat, so I'd
be happy to revisit Nortel.

Since we last reviewed Nortel, several of its rivals have
announced quarterly profits.  Most notably and recently,
Nortel's nemesis, Ciena, reported quarterly numbers last week
that were rather bullish.  Although Ciena fell a little short
of revenue estimates, the overall tone of its report was just
what the tech bulls needed.

For Nortel's part, the company may still be seeing some
weakness in sales of the older telecom equipment it sells to
the major carriers, but I think its stock has seen the worst
and is in the process of rebounding.  A glance over the chart
below reveals the bottoming process.  With cooperation from
the NASDAQ, shares of Nortel trade higher into year's end.



----------------------------

DISCLAIMER:
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.


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

For the week of December 11, 2000

Monday
======

Wholesale Inventories  Oct  Forecast:   0.50%    Previous:  0.20%


Tuesday
=======

None Scheduled


Wednesday
=========

Retail Sales           Nov  Forecast:   0.20%   Previous:   0.10%
Retail Sales ex-auto   Nov  Forecast:   0.30%   Previous:   0.40%
Export Prices ex-ag.   Nov  Forecast:     NA    Previous:  -0.20%
Import Prices ex-oil   Nov  Forecast:     NA    Previous:   0.00%


Thursday
========

PPI                    Nov  Forecast:   0.10%   Previous:   0.40%
Core PPI               Nov  Forecast:   0.10%   Previous:  -0.10%
Initial Claims       9-Dec  Forecast:     NA    Previous:    352K
Business Inventories   Oct  Forecast:   0.30%   Previous:   0.10%
Current Account         Q3  Forecast:-$113.7B   Previous:-$106.1B


Friday
======

CPI                    Nov  Forecast:   0.20%   Previous:   0.20%
Core CPI               Nov  Forecast:   0.20%   Previous:   0.20%
Industrial Production  Nov  Forecast:   0.20%   Previous:  -0.10%
Capacity Utilization   Nov  Forecast:  81.90%   Previous:  82.10%


Week of December 25th
====================

Dec 19  Trade Balance
Dec 20  Housing Starts
Dec 20  Building Permits
Dec 20  Treasury Budget
Dec 21  GDP-Final
Dec 21  GDP Chain Deflator
Dec 21  Initial Claims
Dec 21  Philadelphia Fed
Dec 22  Durable Orders
Dec 22  Personal Income
Dec 22  PCE


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The Option Investor Newsletter                   Sunday 12-10-2000
                                                            2 of 5

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

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

NT - Nortel Networks $42.94 (+5.69 last week)

See details in sector list




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

ABT - Abbott Laboratories $49.69 (-3.19 last week)

See details in sector list




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

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


CALLS

No dropped calls this weekend

PUTS

PAYX $46.88 (-5.69) While PAYX offered day traders a few
opportunities to profit on Wednesday and Thursday, the stock
exhibited enough strength on Friday to break the short-term
descending trend.  PAYX closed above the 5-dma of $45.23, and
held its strength toward the end of the day, which does not bode
well for put players.  Despite the fact that it closed below our
stop of $48, buyers responded to positive news released from
the company, as well as a strong market.  While it may very well
rollover again next week, PAYX did not exhibit heavy enough
selling to merit our continuing the play.

AES $48.25 (-3.44) AES wasn't on our put list for very long, but
it no doubt provided the opportunity for aggressive traders to
lock in some quick profits.  However, after Thursday's slide to
$45, our concern was an impending bottom.  As it turned out, the
advancing market on Friday and AES's bargain price attracted the
buyers.  The bulls swept AES upward to $49.25 on almost double
the normal volume, clearly warning of a reversal.  And as it
was, we weren't rewarded with a rollover at this higher price
level.  AES maintained a firm stance above the $48 mark into the
late afternoon trading.  This discouraging predicament warrants
us to remove AES from our put list this weekend.  Keep in mind
that another bullish move could easily take AES through the
critical level at the 200-dma ($50.55).  So if by chance stop
losses didn't take you out of the play, exit on any intraday
weakness in Monday's session.

RMBS $54.53 (+11.09) In a strange twist of fate, INTC led a
Semiconductor recovery immediately after releasing its much
expected earnings warning.  It appears that investors felt the
news in the Semiconductor sector couldn't possibly get any
worse as they went on a buying spree.  Friday's session began
with RMBS following the technology sector higher, and gapping
open at $51.50.  The gains continued throughout the day, as the
bulls pushed right through our stop at $52, ending the regular
session at the high of the day.  It appears the bulls may
have gotten ahead of themselves though, as the election news
after the close dropped RMBS as low as $48.75 in the after
hours session.  We never got an entry point on our play, so we
will abide by our violated stop and drop RMBS from the play list
this weekend

CTIC $38.75 (-4.63) Sometimes we get caught on the wrong side
of a trade, and this was a perfect example.  The relief bounce
in shares of CTIC that began late on Thursday ended up being a
preview of more to come.  Closely mirroring the Biotech Index
(BTK.X), CTIC gapped up at the open on Friday, consolidated
until the noon hour and then rallied strongly right through our
$37 stop.  Closing at the high of the day with volume more than
double the ADV is not what we want to see in a healthy put play.
The only bright spot is that the rally kept us from getting a
decent entry signal, so at least we don't have to worry about
closing out a losing position as we drop CTIC this weekend.

INTC $33.88 (-0.25) The highly anticipated and telegraphed Intel
profit warning we had been gaming came to light late last week
when the chip giant announced that its fourth-quarter results
would fall short of previous expectations.  Intel said sales
would come in unchanged from its previous quarter, making its
fourth-quarter one its worst in history.  The weakness seen in
shares of Intel early last week offered traders with plenty of
profit opportunities.  However, the fact that Intel warned and
its shares actually traded higher reveals that all the bad news
has already been discounted into the stock.  As such, we're
dropping coverage on Intel and would exit positions on any
weakness provided early next week as a result of the election
uncertainty.

MMM $116.94 (+17.31) The simple fact that a highly-coveted
General Electric (GE) executive will be joining 3M led to an
explosive rally in shares of the latter's stock last week.  We
felt MMM was overbought, and our suspicions came to light when
the stock pulled back after the GE executive announcement was
made early last week.  However, MMM managed to gain ground
Friday amid a broad market rally.  Although MMM may encounter
weakness in the coming sessions as the news-related effects
wear off, we're dropping coverage on the lottery put play this
weekend.  Consider exiting existing positions on any further
weakness early next week.

IMGN $25.44 (-0.56) IMGN's weak technical position improved
late last week when the stock gained over 15% on strong volume.
The gap higher Friday morning and subsequent heavy accumulation
should have prevented any new short positions from being
entered, not to mention the strong showing of the overall
biotech sector.  Although IMGN closed right at the top of its
range and could very well rollover early next week, we're
dropping coverage on the play as shares closed above our
protective upside stop at $25.  If the violation of the stop
didn't trigger an exit, use any weakness early next week to
close existing positions.


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

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.

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


**************
NEW CALL PLAYS
**************

NT - Nortel Networks $42.94 (+5.69 last week)

Nortel Networks is a global internet and communications leader
with capabilities spanning Optical, Wireless, Local Internet,
and eBusiness.  Today, Nortel Networks is creating a high
performance internet that is more reliable and faster than ever
before.  It is redefining the economics and quality of networking
and the Internet, promising a new era of collaboration,
communications, and commerce.  Nortel Networks serves the
existing and emerging needs of service providers, carriers,
dot coms, small and medium sized businesses, and large
corporations in more than 100 territories and countries around
the world with more than 75,000 employees worldwide.

It appears that one of Wall Street's downtrodden stars is
coming back with a vengeance.  After falling out of favor after
its last earnings report, which just met analysts expectations,
NT exhibited strength last week, as the networking sector
rebounded from an oversold level.  After dropping from over $70
in late October, the stock has been consolidating in the last
month and a half.  NT hit a 52-week low of $31 on November 17th,
and since then, a bullish wedge pattern has been developing
with a series of higher lows, and resistance at $40.  On Friday,
NT broke above resistance, and closed at its high of the day.
The bullish behavior of the networking sector was helped by an
excellent earnings report from Ciena on Thursday, as well as
bullish guidance from the CEO of Cisco.  NT generally moves more
slowly than the other stocks in this sector, and one or two point
daily moves are the normal pattern.  The company has stated that
their earnings should be on target with analysts expectations
for the coming quarter, and that their earnings should grow
in the range of 35% for 2001.  An aggressive entry point would be
taken on a bounce off support at the 10-dma of $38.60, particularly
if it's accompanied by a positive move in the networking sector
(NWX.X) and an upward trending market.  A more conservative entry
could be found at a breakout above resistance at $45, which
could easily lead NT above its 50-dma of $47.13.  Watch NT's
competitors for strength before initiating positions.  If CSCO
is above $50, and JDSU, CIEN, and GLW are moving up, NT will
most likely move up in tandem.  As a precautionary step, we've set
our stop at $36 and would close positions if NT settled below that
level.

BUY CALL JAN-40 NT-AH OI=13668 at $6.00 SL=4.00
BUY CALL JAN-45*NT-AI OI=14339 at $3.50 SL=1.75
BUY CALL JAN-50 NT-AJ OI=11824 at $2.00 SL=1.00
BUY CALL MAR-40 NT-CH OI= 5000 at $8.38 SL=6.00
BUY CALL MAR-45 NT-CI OI= 3782 at $6.00 SL=4.00

http://www.premierinvestor.net/oi/profile.asp?ticker=NT


ARBA - Ariba Inc $82.50 (+21.56 last week)

Ariba is a leading provider of business-to-business (B2B) e-
commerce network solutions for operating resources.  Their Web-
based procurement software helps manufacturers, retailers, and
distributors to track and manage supply purchases over the
Internet.  Blue chip clients include Dupont, Federal Express,
and Hewlett-Packard.

The mammoth move in the NASDAQ last Tuesday lit the B2B stocks
on fire.  The sector, battered in recent weeks, showed some of
the strongest gains during the broad market rally that day.
ARBA catapulted off the $60 level and finished up a whopping
$17.75, or 29% on heavy trade.  B2B competitors like Commerce
One (+29%), FreeMarket (+25%), and PurchasePro.com (+22%) made
significant gains that day and importantly, stretched higher
throughout the week.  Although Wednesday's triple digit pullback
threatened the sector's resurgence, the B2Bs demonstrated
amazing strength amid the adversity.  While it's true that
profit takers took a big bite out of ARBA's stellar gains on
Wednesday, the share price stabilized at $70.  The $70 level has
since served as a solid support during the market's recent
tribulations.  Therefore, we've set our protective stop at that
$70 mark, too.  Friday's big jump through the $80 resistance,
and subsequent flirting with $85, attracted our attention.  The
advancing market (a key factor) and new coverage from analyst
Thomas Berquist at Goldman Sachs the previous day surely incited
the breakout.  We're looking for ARBA's share price to maintain
a respectable level (above $70) in the midst of a declining
market and to move through the next point of contention at
the $90 mark and the corresponding 30-dma line ($90.88) in an
advancing market.  If profit taking does resume in coming
sessions, aggressive entries might be found if ARBA bounces off
$70 or the rising 5-dma, which is currently at $73.69, but make
sure the buyers step in with volume before entering on a
pullback.  If you like to enter on a high-volume breakout, then
wait for ARBA to build momentum and move through $85 before
taking new positions.  Don’t fight the NASDAQ's direction, play
the trend.

BUY CALL JAN-80 IUR-AP OI=655 at $14.38 SL=10.75
BUY CALL JAN-85*IUR-AQ OI=696 at $12.25 SL= 9.00
BUY CALL JAN-90 IUR-AR OI=894 at $10.38 SL= 7.50
BUY CALL FEB-85 IUR-BQ OI=134 at $14.88 SL=11.00
BUY CALL FEB-90 IUR-BR OI=274 at $13.13 SL= 9.75

http://www.premierinvestor.net/oi/profile.asp?ticker=ARBA


PALM - Palm, Inc. $54.19 (+13.50 last week)

Known for its ubiquitous Palm-branded handheld devices, PALM
brought handheld computing to the masses.  Although Apple
pioneered the concept of the Personal Digital Assistant (PDA)
with its ill-fated Newton series, PALM, which was spun off from
3Com (COMS) in March, has managed to convince consumers they
can't live without these little electronic gadgets. These
pocket-sized PDAs allow users to use pen-based input and to copy
and synchronize information between the device and a personal
computer.

It's no secret that there has been a dramatic slowdown in PC
sales, with AAPL, DELL, HWP and GTW all either warning or guiding
estimates lower.  Most likely, there will be a lot less PCs under
the tree this holiday season.  But it appears that portable
computing devices have been on the wish lists of people
everywhere.  More than just mere stocking-stuffers, portable
computing is where the growth is.  In fact, PALM can't make
them fast enough, as their PDAs are flying off the shelves.
People no longer want to be bound by their PCs and even laptops
are considered too bulky.  While consumer sales have accounted
for most of market, the prospect of enterprise computing on a
Palm device has traders excited.  PALM will be hosting its annual
developer conference starting this Monday, which could add
further interest in the stock.  This combined with a strong
NASDAQ on Friday helped PALM to break through its 50-dma near
$50, closing up $7.31 or over 15 percent on over 120% of ADV.
With earnings set for December 20th, this could further drive the
stock to higher levels.  In entering this play, we would only
do so with a strong NASDAQ, confirming sector sympathy with
HAND and RIMM.  With Election worries a possible theme for Monday
trading, a bounce off support from the 50-dma as well as the
5-dma at $48 could allow aggressive traders to enter this play.
We have set our stop price at $47, so make sure that PALM closes
above this point.  Continued strength in PALM and the handheld
sector leading to a break through $55 is another possible entry
point but confirm with volume before taking a position.

BUY CALL JAN-50 UPY-AJ OI=3517 at $9.88 SL=7.00
BUY CALL JAN-55*UPY-AK OI=1075 at $7.50 SL=5.25
BUY CALL JAN-60 UPY-AL OI= 876 at $5.38 SL=3.50
BUY CALL FEB-55 UPY-BK OI=2581 at $8.88 SL=6.25
BUY CALL FEB-60 UPY-BL OI=3884 at $6.88 SL=5.00

SELL PUT JAN-45 UPY-MI OI= 526 at $3.00 SL=5.00
(See risks of selling puts in play legend)

http://www.premierinvestor.net/oi/profile.asp?ticker=PALM


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


**********
DISCLAIMER
**********

Please read our disclaimer at:
http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html

The Option Investor Newsletter                   Sunday 12-10-2000
                                                            3 of 5

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

IDPH - IDEC Pharmaceuticals $213.31 (+34.31 this week)

IDEC Pharmaceuticals focuses on the commercialization and
development of targeted therapies for the treatment of cancer
and autoimmune diseases.  IDEC's antibody products act chiefly
through immune system mechanisms, exerting their effect by
binding to specific, readily targeted immune cells in the
patient's blood or lymphatic systems.

Right on cue, IDPH continued its rally on Friday.  Granted,
it does help when the Nasdaq soars to triple-digit gains, but
IDPH has been resilient in all types of markets.  This should
continue as IDPH approaches their 3-for-1 split on Jan 17th.
The other catalyst for IDPH is the number of positive press
releases concerning trial drugs.  They have many in the
pipeline and all seem to be cruising through the clinical
trial phase.  It is always appropriate to keep on eye on the
IDPH news wire to stay current on such fundamental news as it
typically has a big impact on the stock.  But until such
announcements, we will focus on the technical pattern
occurring.  The stock's move up from $195 support late
Thursday continued into Friday and right up to resistance
near $220.  This was the level we noted for some
profit-taking.  IDPH did back off from this level, but still
closed up over $10 on the day.  IDPH now has a strong pattern
of higher-lows in place and volume is rising.  Even the DEC-230
through 250 call strikes saw an unusually high level of buying
interest.  Cautious investors may want to wait for a close over
resistance at $220 before entering.  More aggressive buyers may
want to target-shoot any dip to about $205.  Any price action
lower than that would be worrisome so we will move our stop up
to $200 on a closing basis.

***December contracts expire this week***

BUY CALL DEC-210 IHD-LB OI=1501 at $12.13 SL= 9.00  High Risk!
BUY CALL DEC-220 IHD-LD OI=1965 at $ 6.88 SL= 5.00  High Risk!
BUY CALL JAN-210*IHD-AB OI= 628 at $26.50 SL=20.00
BUY CALL JAN-220 IHD-AD OI= 498 at $21.38 SL=15.75
BUY CALL JAN-230 IHD-AE OI= 543 at $17.25 SL=13.00

SELL PUT DEC-200 IHD-XT OI=259 at $ 4.38 SL=6.75
(See risk of selling put in play legend)

http://www.premierinvestor.net/oi/profile.asp?ticker=IDPH


MEDX - Medarex Inc $48.25 (+5.63 last week)

Medarex is a human monoclonal antibody-based company with
integrated discovery, development and manufacturing
capabilities, utilizing the Company's genetically engineered
mice to create fully human monoclonal antibodies.  Several of
their therapeutic products, which target cancers, tumors, and
leukemia, are in clinical trials.  Major clients include
Centacor, Merck, and Aventis Behring.

MEDX opened the week's trading with news that its experimental
drug, MDX-33, was found to boost levels of key blood cells in a
small trial of patients suffering from a life threatening blood
disorder called Idiopathic Thrombocytopenia Purpura, or ITP.
MEDX initially peaked at $43.88 during Monday's amateur hour,
but the glum market conditions kept MEDX in check under the $40
resistance.  Our bearish radar went on full-alert Tuesday when
the stock continued to consolidate amid the stellar rally of
the broad markets.  In hindsight, our concerns were uncalled-
for, but nevertheless, profitable trading requires keeping
those rose-colored glasses in our pockets.  On Wednesday, a
positive conference call and a new Buy rating coupled with a
lofty $81 price target by CSFB initiated a breakout through the
first line of opposition at $40.  The building momentum and the
advancing marketplace resulted in a significant technical
development on Friday.  MEDX made a clean break of the
ascending wedge, capped by the formidable 200-dma ($44.48), and
is currently poised to move higher with the rest of the biotech
sector.  Keep an eye on the other biotech companies like Biogen
(BGEN), Human Genome Sciences (HGSI), and Immunex (IMNX), who
also saw significant moves in this week's volatile marketplace.
It's essential to not only play the trend of the specific
stock, but also to keep close tabs on the corresponding
sector's sentiment, which can forecast gloom and doom or
bullish intentions.  In coming sessions, we're looking for more
volatile trading and uncertainty to rock the Street in light of
Florida's pivotal decision to have an immediate manual recount
of "undervotes" ballots.  The turmoil in after-hours trading
following the news flash on Friday warns of what next week may
have in store for traders.  If you're more risk-adverse, then
wait for a bullish charge to move MEDX through the overhead
resistance at the 30 and 50-dmas at $49.34 and $51.51,
respectively, before beginning a new momentum play.  If the
biotechs pull back, watch for the converged 5 & 10-dmas, just
below our raised stop at $41, to buoy the share price.  If your
trading style is more aggressive, consider an entry at the
lower end of trading channel, but only if the overall
disposition portends an advancing market.

BUY CALL JAN-45 MZU-AI OI= 65 at $10.63 SL=7.75
BUY CALL JAN-50*MZU-AJ OI=217 at $ 7.38 SL=5.25
BUY CALL JAN-55 MZU-AK OI= 77 at $ 5.75 SL=3.75
BUY CALL FEB-50 MZU-BJ OI=328 at $ 9.38 SL=6.25
BUY CALL FEB-55 MZU-BK OI=312 at $ 7.75 SL=5.50
BUY CALL FEB-60 MZU-BL OI=446 at $ 6.38 SL=4.50

http://www.premierinvestor.net/oi/profile.asp?ticker=MEDX


MUSE - Micromuse Inc $135.63 (+41.50 last week)

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

What a week!  The phrase, "the early bird caught the worm",
clearly defines the rewards many aggressive traders reaped
playing this combustible stock play.  The tech explosion on
Tuesday incited this networker to shoot up 38% as well as its
comrades Agile Software (AGIL), TIBCO Software (TIBX),
Interwoven (IWOV), and Macromedia (MACR) to move through major
technical obstacles.  While the sector is running strong and
geared up to make additional advances, Friday's election drama
signals a downward bias going into next week.  This can be good
if you're adventurous and preening for a lower entry point,
however, let's keep our heads on straight.  The huge gains MUSE
recently accumulated lend for a big bout of profit taking,
particularly in a descending market.  Although MUSE demonstrated
credible soundness during the NASDAQ's pullback midweek, the
issue typically swings violently with the overall market.  While
volatility makes for great option trading and we want to leave
enough room for MUSE to operate during turbulent times, we've
decided to raise our stop to $118 from $105.  The higher exit
point reflects the elevated near-term support level at $118 and
$120, which is currently bolstered by the advancing 5-dma line,
now at $115.34.  In another positive turn of events, the BoD
finalized the dates for Micromuse's previously announced 2:1
stock dividend.  MUSE will begin trading on a split-adjusted
basis on December 20th.  So mark your calendars!  We're
anticipating lots of investor excitement to generate more
momentum as the split date approaches; however, it'll take an
advancing market to back the climb.  At this point in the play,
the more prudent traders should look for MUSE to break the
overhead shackles at the $140 level on strong volume and to
develop strength above the 200-dma ($139.92) before jumping
into the momentum.

BUY CALL JAN-130 UZQ-AF OI= 19 at $27.00 SL=21.00
BUY CALL JAN-135 UZQ-AG OI= 31 at $24.63 SL=19.25
BUY CALL JAN-140*UZQ-AH OI= 37 at $22.63 SL=17.75
BUY CALL JAN-145 UZQ-AI OI=  0 at $20.38 SL=16.00  Wait for OI!
BUY CALL JAN-150 UZQ-AJ OI=146 at $18.88 SL=13.75

http://www.premierinvestor.net/oi/profile.asp?ticker=MUSE


QCOM - Qualcomm Inc. $103.25 (+20.25 this 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.

Ever since news that the China's Ministry of Information Industry
had signed a Memorandum of Understanding to partner with QCOM in
developing CDMA-based technologies as well as the deployment of a
nation-wide CDMA network, shares of the wireless giant have moved
sharply higher.  Add to that news of a cross-licensing deal with
Texas Instruments and positive comments from First Union
Securities and its no wonder traders are excited.  Bouncing off
its 50-dma ($78.16) recently, shares of the CDMA giant have been
in demand as trading volume has increased during QCOM's rise.
Starting the week off with a break through its 200-dma ($85.90),
the stock proceeded to rally above strong resistance at $90,
advancing on the back of the 5-dma.  From there, it was a quick
trip to the psychologically important $100 level.  On Friday,
QCOM succumbed to some profit taking, as the stock eased back
$1.19 or 1.14 percent.  While trading volume was higher than the
ADV, it was considerably lower than the recent volume on up days.
The bounce off the 5-dma, now at $99.33 was a good sign as well.
In light of the Florida Supreme Court's judgment on Friday's
close, QCOM pulled back in after-hours trading.  This suggests
that aggressive traders could get a buying opportunity on Monday
but in doing so, we would recommend only doing so if strength
returns to the NASDAQ.  Support at the psychological $100, the
5-dma and our stop price at $95 are possible targets to shoot
for, but confirm the bounce with volume.  A more conservative
strategy would be to wait for buying momentum to carry QCOM above
$105 resistance before making a play.

BUY CALL JAN-100 AAF-AT OI=33337 at $13.38 SL= 9.75
BUY CALL JAN-105*AAF-AA OI= 3566 at $11.13 SL= 8.25
BUY CALL JAN-110 AAF-AB OI= 8188 at $ 8.75 SL= 6.25
BUY CALL APR-105 AAF-DA OI=  751 at $20.00 SL=14.50
BUY CALL APR-110 AAF-DB OI= 1694 at $18.00 SL=13.00

SELL PUT JAN- 95 AAF-MS OI= 1837 at $ 6.50 SL= 9.50
(See risks of selling puts in play legend)

http://www.premierinvestor.net/oi/profile.asp?ticker=QCOM


RSAS - RSA Security Inc. $49.88 (+3.75 last week)

RSA Security Inc. helps organizations build secure, trusted
foundations for e-businesses through its RSA SecurID two-factor
authentication, RSA BSAFE encryption and RSA Keon public key
management systems.  With nearly a half billion RSA BSAFE-enabled
applications in use worldwide, more than seven million RSA
SecurID users and almost 20 years of industry experience, RSA
Security has the proven leadership and innovative technology to
address the changing security needs of e-business and bring trust
to the new, online economy.

Slow and steady has been the theme this past week for shares of
RSAS, as the stock has been digesting its most recent gains.
Trading volume has been light as of late but good news has helped
the stock to drift higher.  News that SAGA Software would use
RSAS' security systems in their e-commerce solution and EZOS'
inclusion of the RSA BSAFE encryption technology into their
browser for wireless handheld devices was well-received, further
extending the company's reach in the network security domain.
What's more, the company announced on Wednesday that NOK had
selected their RSA SecurID authentication software to be used in
their Nokia 9210 Communicator platform, which will be shipped
with every Nokia-branded phone.  On Friday, thanks to a rallying
NASDAQ, RSAS closed the day up $1.63 or 3.37 percent on higher
than average volume.  While the stock closed just below the
psychological $50 level, it managed to stay above the 50-dma.
Over the past few trading sessions, it appears that RSAS has been
trading in a narrow range, with support at $49 and resistance at
$52.  With the 5-dma (now at $48.66) moving higher and the 50-dma
at $49.13, we are tightening our stop price, moving it up from
$46 to $48.  Monday's trading will be important, in light of
Election concerns from Friday's Florida Supreme Court decision.
While RSAS held up well after-hours, peers CHKP and VRSN fell
sharply.  For aggressive traders looking for a bounce off
support, make sure that there is buying volume to support a
bounce and confirm sentiment with RSAS' peers and a rebounding
NASDAQ.  A safer bet would be to wait for upward momentum to
carry the stock over $52 before scaling in.

BUY CALL JAN-45 QSD-AI OI=325 at $7.88 SL=5.57
BUY CALL JAN-50*QSD-AJ OI=403 at $5.00 SL=3.00
BUY CALL JAN-55 QSD-AK OI= 93 at $3.00 SL=1.50
BUY CALL APR-50 QSD-DJ OI= 75 at $8.88 SL=6.25
BUY CALL APR-55 QSD-DK OI= 21 at $6.88 SL=5.00

http://www.premierinvestor.net/oi/profile.asp?ticker=RSAS


BRCM - Broadcom Corporation $128.19 (+23.44 last week)

Broadcom Corporation is a provider of highly integrated silicon
solutions that enable broadband digital transmission of voice,
video and data to and throughout the home and within the business
enterprise.  These integrated circuits permit the cost-effective
delivery of high-speed, high-bandwidth networking using existing
communications infrastructures that were not originally designed
for the transmission of broadband digital content.  Using unique
proprietary technologies and advanced design methodologies, the
company designs, develops and supplies integrated circuits for a
number of the most significant broadband communications markets.

Despite warnings from Intel, Motorola and Xilinx this past week,
Chip stocks for the most part have traded higher, suggesting the
possibility that the Semiconductor sector may have found a
bottom.  With that, BRCM continued to rally, closing near its
highs for the week.  There has been heavy buying volume in the
stock recently, as advances have been backed by as much as twice
the ADV while any pullbacks have been on light volume, with
support holding firmly at the 5 and 10-dma.  Even a downgrade by
Prudential, from a Strong Buy rating to Accumulate, did little to
halt the stock's advance.  With the next moving average, the
50-dma, all the way up at $180, and light resistance in
increments of $5 overhead, there is plenty of room for a
sustained intermediate-term rally.  Support can be also found in
increments of $5 at $125, $120 and our stop price, adjusted from
$108 up to $115.  This level is reinforced by the 5-dma, now at
$116.87.  A bounce off the 10-dma, currently at $106.42 is also
possible, but make sure BRCM closes above our stop price.  After
Friday's close, the Florida Supreme Court's ruling brought new
uncertainty to the Election situation, causing shares of many
NASDAQ companies to fall in after-hours trading.  As a large cap
NASDAQ 100 (QQQ) stock, we would recommend entering this play
only with an advancing NASDAQ, confirmed by positive sentiment in
the Chip sector (SOX).  A pullback on Monday morning is quite
possible but if sentiment changes from now until the opening bell,
look for a break through $130 with conviction as a conservative
entry point.

BUY CALL JAN-125 RDW-AE OI=484 at $22.75 SL=16.50
BUY CALL JAN-130*RDW-AF OI=435 at $20.13 SL=14.50
BUY CALL JAN-135 RDW-AG OI=567 at $18.13 SL=13.00
BUY CALL FEB-130 RDW-BF OI=261 at $24.50 SL=17.75
BUY CALL FEB-135 RDW-BG OI=136 at $22.63 SL=16.50

SELL PUT JAN-120 RDW-MD OI= 174 at $15.00 SL=20.75
(See risk of selling put in play legend)

http://www.premierinvestor.net/oi/profile.asp?ticker=BRCM


NTAP - Network Appliance, Inc. $87.19 (+33.25 last week)

The idea was inspired, yet simple.  Separate storage from an
application server and put all that data on a special "appliance"
tasked with serving data at high speeds.  In 1992, Network
Appliance originated this high-performance network appliance
concept.  Today, they are a recognized leader in data storage and
access.  Corporations and ISPs use their solutions to reduce the
cost and complexity of managing their mission-critical data.
With a network-centric economy pushing along expanding volumes of
information, an easily scaleable appliance solution couldn't have
come at a better time.

Anyone who initiated a play this past week on NTAP has much to be
happy about.  Closing near its highs of the week, shares of the
Network Attached Storage (NAS) leader have rebounded over 60
percent in the past five trading sessions.  There were a number
of factors that helped the stock to trade higher.  When we
started this play, we mentioned that a strong NASDAQ would likely
see shares of NTAP leading the way.  That is exactly what
happened, thanks to a gentle Fed speech earlier in the week as
well news that perhaps Election uncertainties were finally coming
to an end.  As well, it appears that fears of competition with
the introduction of EMC's Chameleon were largely overdone, with a
number of analysts coming to the defense of NTAP, suggesting that
the fear of competition was greater than the competition itself,
especially since EMC's new product won't be as cost-effective as
NTAP's solutions.  The addition of Oracle as a customer also
brought investor dollars to NTAP's stock.  Looking ahead, there
are some major moving averages that NTAP will need to overcome,
with the 200-dma at $91.10 and the 50 and 100-dma near the
psychological $100.  A break through the 200-dma on volume would
allow conservative traders to make an entry but considering the
Florida Supreme Court ruling on Friday after the bell, a pullback
is quite likely.  We have moved our stop up, from $65 to $75
(near the 5-dma) to protect our substantial profits in this play.
There is also support at $85 and $80 but when entering on a
pullback, make sure that buying volume supports the bounce.  We
would suggest entering only on strength in the NASDAQ as well as
with peers such as BRCD, EMC and VRTS.

BUY CALL JAN-85 NUL-AQ OI=217 at $14.13 SL=10.50
BUY CALL JAN-90*ULM-AR OI=779 at $12.38 SL= 9.00
BUY CALL JAN-95 ULM-AS OI=516 at $10.38 SL= 7.50
BUY CALL MAR-90 NUL-CQ OI=365 at $19.88 SL=14.50
BUY CALL MAR-95 ULM-CR OI=906 at $17.63 SL=12.75

SELL PUT JAN-75 NUL-MO OI= 80 at $ 6.38 SL= 8.75
(See risk of selling put in play legend)

http://www.premierinvestor.net/oi/profile.asp?ticker=NTAP


A - Agilent Technologies Inc $59.44 (+6.44 last week)

Agilent is a diversified technology company that provides
solutions to high growth markets within the communications,
electronics, healthcare and life sciences industries.  They're a
leading maker of analysis equipment with 51% of sales deriving
from its Test and Measurement Unit.  Recently Philips
Electronics agreed to buy Agilent's Healthcare Solutions for
$1.7 bln.  Customers include AT&T, Cisco, and Pharmacia.

Rising steadily and building a stream of steadfast momentum amid
a shaky marketplace is no easy feat!  Agilent Technologies'
recent stock behavior champions the "Little Engine That Could"
mentality.  After releasing a solid earnings report on November
16th, A attracted lots of investor and analyst attention.  The
successive announcements of acquisitions and deals revolving
around Objective Systems integrated, privately-held Verano, and
most recently, ATN Microwave further encouraged investors to
take a stake in this diversified technology company.  The
respectable volume continued to drive A higher this week, but it
wasn't until Friday's dramatic 10% move that A surpassed
Wednesday's early morning crown of $56.94.  And despite of
the DOW's inability to crack 10800 on Friday, the market's
positive sentiment and the stock's improving technical
conditions propelled it to $59.88 - just shy of the $60
objective!  The unwavering accumulation of shares coupled with
the strong upward chart pattern indicate a likelihood of more
upside action over the short-term.  With the exception of
Solectron (SLR), who recently hit a new 52-week low as a result
revenue issues linked to Cisco and UBS Warburg's downgrade, the
rest of the sector is faring well and showing signs of recovery.
For example, Ballard Power Systems (BLDP), Sanima (SANM), and
Plexus (PLXS) all made headway this week.  All looks good for
continued advances, but a couple of factors are nonetheless
pertinent for continued success.  First, the stock needs to
break through the crucial $60 level with conviction (lots of
volume) and second, a rallying marketplace is essential to make
profits on calls.  Without further ado, let's talk entry points.
A conservative approach is for traders to stay on the sidelines
while the election saga unfolds next week.  The more
enterprising and risk-oriented traders might target shoot amidst
the volatility and find entries on solid bounces off our new
protective stop at $53 or the correlating 10-dma ($53.18).  If
there's only a mild pullback, then consider entries at the 5-dma
($54.30) or Friday's intraday support around $57 and $58, but
remember to expect resistance at the $60 level.  Keep stops
tight in these uncertain times.

BUY CALL JAN-55 A-AK OI=2135 at $8.63 SL=6.00
BUY CALL JAN-60*A-AL OI=3896 at $6.00 SL=4.00
BUY CALL JAN-65 A-AM OI=2162 at $4.00 SL=2.50
BUY CALL FEB-60 A-BL OI= 821 at $7.88 SL=5.75
BUY CALL FEB-65 A-BM OI= 382 at $5.88 SL=4.00

http://www.OptionInvestor.com/oi/profile.asp?ticker=A


BRCD - Brocade Communications $219.75 (+51.87 last week)

Brocade Communications Systems is a supplier of open Fibre
Channel Fabric solutions that provide the intelligent backbone
for Storage Area Networks (SANs).  Brocade's family of SilkWorm
switches enables a company to manage growth of its data storage
requirements, improve the data transfer performance, and
increase the size of its SAN.  Brocade's products are primarily
sold in the US with 70% of sales derived from Compaq, Data
General, Dell, McDATA, and Sequent.

How many ways can you say "Huge Profits?"  Our play on BRCD is
producing tremendous gains in view of the volatile nature of the
broader markets.  BRCD led the charge among the networking
infrastructure stocks this week with rivals Network Appliance
(NTAP) and CacheFlow (CFLO) also setting a fervent pace upward.
The stock's rather impressive performance during the NASDAQ's
triple digit losses on Wednesday further validated BRCD's
relative strength.  In an effort to remain competitive in the
expanding Internet world, BRCD was pleased to announce it added
23 new partners to sell and support its switches and software as
well as a master reseller partnership with Bell Microproducts
(BELM).  The monumental move through the $200 level on Friday
however, marked a critical point of passage for BRCD.  The
forecast for more bullish action is indeed welcoming, however we
must respect the overall market direction.  Plain and simple,
play calls in an ascending market and puts in a descending
market.  Of course your entry strategy will vary depending on
your risk portfolio, but you get the general gist of things --
don’t' fight the market, the sector, or the stock's trend line!
Now let's get back to BRCD and what's forthcoming next week.
From the choppy and downward bias exhibited in after-hours
trading amongst the techs, it appears the Election drama may put
a bit of a damper on trading.  But who knows, perhaps Santa
Greenspan will touch down his sleigh and offer some uplifting
affirmations.  Whatever transpires, one thing's a given - the
markets are expected to be unsettled and potentially, eruptive.
Plus, Brocade has a 2:1 stock split approaching and this event
may create some excitement of its own.  The stock will begin
trading on a split-adjusted basis on December 22nd, so keep that
date in mind when planning your strategies.  Our current stop is
now set higher at the former resistance mark of $200.  Although,
taking entries off this level on a pullback are considered quite
risky; especially if all hell breaks loose next week!  A more
cautious approach to playing the momentum is to have some
patience and see where the markets take BRCD next week BEFORE
beginning new plays.  If we're blessed with a rallying NASDAQ
and BRCD's gains extend, then consider taking entries on
intraday pullbacks at the 50-dma ($218.10) or buying into
strength as BRCD moves through the $225 mark.


BUY CALL JAN-200 GUF-AT OI=10523 at $36.63 SL=28.50
BUY CALL JAN-210 GUF-AB OI= 6050 at $30.63 SL=24.00
BUY CALL JAN-220*GUF-AD OI= 5099 at $25.88 SL=20.25
BUY CALL JAN-230 GUF-AF OI=  263 at $21.13 SL=16.25
BUY CALL JAN-240 GUF-AH OI=  873 at $17.00 SL=12.25

http://www.premierinvestor.net/oi/profile.asp?ticker=BRCD


***********************************
LOW VOLATILITY CALL PLAYS - UPDATES
***********************************

RE - Everest Re Group $66.69 (+5.38 last week)

Everest Re group is engaged in the underwriting of property and
casualty reinsurance on a treaty basis.  The company's products
include the full range of property and casualty coverage,
including marine, aviation, surety, errors & omissions
liability, medical malpractice, and other specialty lines.  The
company operates extensively in both international and domestic
markets.

Since we initially started coverage on RE as a low volatility
call play the stock has continued to trace one new all-time high
after another.  In fact, shares of RE settled at a new all-time
high last Friday at $66.69.  We like the relative strength and
momentum the stock has displayed over the past two weeks since
breaking out its base around the $59 area.  As the fundamental
picture remains rosy for the major insurance players, we're
looking for shares of RE to continue to steadily climb into
the coming month.  Since the stock has put together a string of
four consecutive winning sessions a little pullback may be in
order.  If RE does come in, watch for a bounce off the pivotal
point at $62, which is the site of its 10-dma and also the
location of our protective stop.  If RE settles below $62 we'd
drop coverage and take profits.  On the other hand, if the
insurance sector continues to trade higher new positions in
RE can be taken at current levels or on a breakout above its
intraday high last Friday at $67.44.  Before entering on
strength confirm direction in RE's counterparts by monitoring
CB, AFC, BRK.A.  Although RE is a slow moving stock, if it
continues to steadily climb like it has all year, it will
produce profits for options traders.

BUY CALL JAN-60 RE-AL OI=159 at $ 8.50 SL=6.00
BUY CALL JAN-65*RE-AM OI=152 at $ 4.25 SL=2.50
BUY CALL APR-60 RE-DL OI= 10 at $11.38 SL=8.50
BUY CALL APR-65 RE-DM OI=  0 at $ 8.38 SL=6.00




AIG - American International Group $103.69 (+6.25 last week)

AIG is the largest underwriter of commercial and industrial
insurance in the United States.  Its member companies write a
wide range of commercial and personal insurance products through
a variety of distribution channels in approximately 130 countries.
AIG's global businesses also include financial services and asset
management.

Akin to its counterpart, RE, AIG continues to trace new highs as
investors buy into the insurance sector with fervor.  Add to the
fact the likelihood of the Fed easing its bias and possibly
lowering interest rates in the near future, and AIG, with its
financial services unit, is positioned to continue trading higher.
What's more, trading at all-time highs, AIG is also a candidate
for a 2-for-1 stock split, which could add additional profits and
momentum to our low volatility call play.  New positions can be
added if AIG breaks out above the $104 level, en route to new
highs.  Additional entries can be had on pullbacks to support
levels.  First look for the buyers to step in at $101, next
near the $100 level, or lower near the 10-dma at $99.  Make note
that we have move our protective stop up to $96 and would exit
positions upon a close below that level.

BUY CALL JAN-100 AIG-AT OI=4214 at $7.00 SL=5.00
BUY CALL JAN-105*AIG-AA OI=1372 at $4.00 SL=2.50
BUY CALL JAN-110 AIG-AB OI= 555 at $1.94 SL=1.00
BUY CALL FEB-100 AIG-BT OI=2103 at $8.75 SL=6.25
BUY CALL FEB-105 AIG-BA OI=1144 at $6.00 SL=4.00
BUY CALL FEB-110 AIG-BB OI= 796 at $3.25 SL=1.75

http://www.premierinvestor.net/oi/profile.asp?ticker=AIG


TERN - Terayon Communications $16.25 (+2.75 last week)

Terayon Communications provides innovative broadband systems and
solutions for the delivery of advanced, carrier-class voice,
data and video services, which are deployed by the world's
leading cable, telco and satellite network operators and
carriers.

With telecom stocks and telecom-related companies as beaten down
as they are, a bottom may be near.  TERN is a broadband play that
is one of those related companies.  The stock has spent the past
week climbing from its recently traced 52-week low at $11, and
has appeared to built a solid base.  We're looking for TERN to
emerge from its base, with help from the broader networking sector.
New positions could be initiated if TERN breaks out above the $17
level on strong volume, which proved to be resistance again on
Friday.  But before entering on a breakout, make sure to confirm
direction in the NASDAQ and other networkers including CIEN, CMVT,
and LVLT.  TERN's aforementioned bottom will be strengthened as
the NASDAQ solidifies its own.  If TERN pulls back, consider
entering on a bounce off intraday support at $15 or lower near
$14, which is a stronger level.  We are upping our stop on this
Low Volatility call play from $13 to $14.  A close below $14 and
we would not initiate any new positions.

BUY CALL JAN-15   TUN-AC OI= 607 at $4.00 SL=2.50
BUY CALL JAN-17.5*TUN-AM OI= 333 at $3.00 SL=1.50
BUY CALL JAN-20   TUN-AD OI= 907 at $1.50 SL=0.75
BUY CALL APR-17.5 TUN-DM OI=  37 at $5.13 SL=3.00
BUY CALL APR-20   TUN-DD OI=1382 at $4.25 SL=2.75

http://www.premierinvestor.net/oi/profile.asp?ticker=TERN


******************************
LONG TERM CALL PLAYS - UPDATES
******************************

ORCL - Oracle $30.06 (+3.63 last week)

Oracle is the world's leading supplier of software for
information management, and the world's second largest
independent software company.  With annual revenues of more than
$10 billion, the company offers its database, tools and
application products, along with related consulting, education,
and support services, in more than 145 countries around the
world.

ORCL's recent V-bottom rebound has created plenty of opportunities
from which to profit.  Last week's 13% rebound in shares of Oracle
might portend higher prices ahead for the database software giant
as it's slated to report fiscal first-quarter results on Thursday,
December 14th.  The First Call consensus estimate is for Oracle
to earn 10 cents per share.  The earnings announcement is key for
both Oracle (obviously) and the tech sector as a whole.  As such,
Oracle's profit report will be widely anticipated and could
provide for further profits in our long-term call play.  New
positions can be entered ahead of the announcement at current
levels on bounces off support at $30.  If ORCL pulls back early
next week, watch for buyers to step in at support near the $28
level, with the 10-dma at $27.94 providing backup.  Make note,
we have raised our stop up to $26 and would close all positions
if ORCL violated that level.  Conservative traders might wait for
the NASDAQ to rally and look to enter new call positions if ORCL
trades above resistance at $31, or higher above its near-term
high at $31.50.  OI normally doesn't suggest holding over an
earnings announcement, but considering that ORCL is a long-term
trade, we will continue coverage on the play over the profit
report.  However, consider risk tolerance and use discretion as
news related events can cause for volatile moves in share price.

BUY CALL JAN-25 ORQ-AE OI=23409 at $7.00 SL=5.00
BUY CALL JAN-30 ORY-AF OI=17542 at $3.75 SL=2.25
BUY CALL JAN-35 ORY-AG OI=33928 at $1.94 SL=1.00
BUY CALL MAR-30 ORY-CF OI= 7179 at $5.63 SL=3.50
BUY CALL MAR-35 ORY-CG OI= 8639 at $3.63 SL=1.75
BUY CALL MAR-40 ORY-CH OI= 7527 at $2.25 SL=1.25  High Risk!

http://www.premierinvestor.net/oi/profile.asp?ticker=ORCL


QQQ - NASDAQ 100 Index Trust $68.00 (+4.00 last week)

The NASDAQ 100 Index reflects NASDAQ's largest companies across
major industry groups, including computer hardware and software,
telecommunications, retail/wholesale and biotechnology.  Launched
in January 1985, the NASDAQ 100 represents the largest and most
active non-financial domestic and international issues listed on
The NASDAQ Stock Market based on market capitalization.

The NASDAQ showed great resilience this past week.  We are
beginning to be more optimistic about its bottoming process,
encouraged by INTC's ability to withstand is second earnings
warning in a row.  It even managed to post a gain on Friday after
the news.  XLNX and MOT also fared well in the wake of their own
warnings.  The QQQ had a spectacular week, fueled by pro-Bush
rulings in the lower courts and Greenspan's acknowledgement of the
slowing economy.  They appreciated 6.25% this week and trading in
the NASDAQ is giving traders hope.  However, the QQQs sold off
in after-hours Friday, along with many NASDAQ stocks, when the
Florida Supreme Court overturned the Leon Cty Court decision to
not recount the undervote.  Then, Saturday afternoon, the U.S.
Supreme Court issued a stay, blocking the recount temporarily.
Be aware that the Election mayhem will continue to affect the
markets.  Remember though that this is a Long Term call play
designed to take advantage of the recovering NASDAQ.  To gain
entry into the QQQs, look for bounces from $66 which has provided
intraday support throughout the week.  Below, support can be found
at $65.  Also, a break above resistance at $73 would warrant entry
as well.  Watch the NASDAQ for guidance in this play, especially
near the key resistance level of 3000.  Our stop remains at $65.

BUY CALL JAN-67 QUE-AO OI= 1086 at $6.38 SL=4.50
BUY CALL JAN-68 QUE-AP OI= 8569 at $5.88 SL=4.00
BUY CALL JAN-69*QUE-AQ OI= 5330 at $5.38 SL=3.50
BUY CALL JAN-70 QUE-AR OI=29768 at $4.88 SL=3.00
BUY CALL MAR-70 QUE-CR OI= 7908 at $7.75 SL=5.50

http://www.premierinvestor.net/oi/profile.asp?ticker=QQQ


AOL - America Online $46.90 (+5.39 last week)

Founded in 1985, America Online is the world's leader in
interactive services, Web brands, Internet technologies, and
e-commerce services.  Through its strategic alliance with Sun
Microsystems, the company develops and offers easy-to-deploy,
end-to-end e-commerce and enterprise solutions for companies
operating in the Net Economy.

We initiated AOL as a Lottery Play based on an anticipated recovery
in the Internet sector.  Today we are migrating this play to the
Long Term category due to the longevity potential of AOL once the
merger with TWX is completed.  The AOL-TWX mega-merger is expected
to be completed either late this month or in early 2001.  We
believe that as the deal draws closer to being completed, AOL's
share price has the ability to move back to $50,  where it traded
Friday Nov. 17th.  AOL had a nice trend throughout this past week,
climbing consistently from $41 on Monday to a high near $47 on
Friday.  Like we mentioned in the initial write-up, this AOL play
had a good chance of success.  And this week proved just that.  As
a result, we have increased the stop loss to $42 from $39.  Look to
gain entry into this call play on bounces from intraday support at
$44.  Below, support lies at $43 and $42.  Overhead, resistance
will be encountered at $48 and $50.  A break of these levels with
strong volume could also provide a nice entry point.  Options on
AOL are relatively low priced, making the play more attractive.

BUY CALL JAN-45 AOE-AI OI=10676 at $5.60 SL=3.50
BUY CALL JAN-50*AOO-AJ OI=32165 at $3.00 SL=1.50
BUY CALL JAN-55 AOO-AK OI=22335 at $1.65 SL=0.75
BUY CALL APR-50 AOO-DJ OI= 5937 at $5.80 SL=4.00
BUY CALL APR-55 AOO-DK OI= 6268 at $4.20 SL=2.50

http://www.premierinvestor.net/oi/profile.asp?ticker=AOL



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The Option Investor Newsletter                   Sunday 12-10-2000
                                                            4 of 5

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*************
NEW PUT PLAYS
*************

SBC - SBC Communications $51.69 (-0.50 this week)

BellSouth Corporation is an integrated communications services
company headquartered in Atlanta, GA serving more than 41
million customers in the United States and 16 other countries.
BellSouth, consistently recognized for customer satisfaction,
provides residential, business and wholesale customers with
integrated voice, video and data services to meet their
communications needs.  BellSouth is a Fortune 100 company
with total revenues exceeding $26 billion.

When a struggling stock meets a struggling sector, it typically
winds up on our put list.  That is the case for SBC.  If you
throw in a Presidential election that will now remain unresolved
for a little while longer and you now have an environment to
play puts.  After a decent rise for SBC from July to October,
SBC has clearly rolled over.  This should come as no surprise
given the weakness in Telecom.  All aspects of this group have
suffered, from the regional bells to national long distance
carriers to equipment suppliers.  Price competition is the
culprit and there are little signs that relief is coming.  This
is no longer a hidden fact to investors either and they are
quick to sell on any weakness.  SBC had already begun to trade
lower after-hours on Friday based on the Florida Supreme Court
decision.  That may just be a consequence of all stocks trading
lower on the decision, but it will make for losses early in the
week for the major averages, barring any new developments.  One
interesting note is that SBC is still trending lower even after
reiterating their earnings guidance for the fourth quarter.
Warnings have not been uncommon in this group during recent
quarters and they had been floating over SBC's head.  The Texas-
based SBC said it still expects its fourth-quarter profits to
be in the range of 56 cents to 58 cents a share.  Wall Street
analysts expect the company to earn 58 cents a share, according
to research firm First Call/Thomson Financial.  So what may be
happening is a lack of interest now that investors essentially
know what the number will be.  The old sell-on-the-news trick.
We would expect this recent downtrend to continue until SBC
hits support at $48.  At that time we will reevaluate the play
and adjust our stop lower.  Right now our stop loss will be
set at $55.

BUY PUT JAN-55 SBC-MK OI=7635 at $5.25 SL=3.50
BUY PUT JAN-50*SBC-MJ OI=7204 at $2.56 SL=1.25
BUY PUT JAN-45 SBC-MI OI=7004 at $1.25 SL=0.00

http://www.premierinvestor.net/oi/profile.asp?ticker=SBC


BBOX - Black Box Corporation $52.69 (-2.17 last week)

In April 1976, Black Box was started with a gem of an idea.  The
company began selling connectivity devices, the "little black
boxes" that customers need to connect their primary data
communications products.  The idea was to sell a range of
products from a single source and to provide the technical help
needed to solve customers' interface problems.  Today, Black Box
is a leading worldwide provider of network services and related
products to businesses of all sizes in 132 countries.

Tough times appear to be in store for BBOX, as the continuing
slowdown in the economy and capital expenditures could mean
weakness for revenues going forward.  When the company posted
record earnings in mid-October, the stock rallied on the news,
leaving in its wake a gap between $44 to $47.  Failing to break
through resistance from the 200-dma (now at $65.32), the stock
has been trading sideways until recently.  On Friday, counter to
a strong day for the NASDAQ, the stock fell $6.06 or over 10
percent on almost 400% of ADV.  The news to explain the sell-off,
was counterpart CDWC's earnings warning the night prior.  While
the stock closed above the $52.50 level, a support level that has
held up a number of times previously, the intra-day dip below
this point suggests that a weak NASDAQ could lead to support
being taken out.  From there, it could be a quick trip to $44,
as the stock attempts to fill its post-earnings gap.  At this
point, there is heavy resistance in the $57-58 area, with the 5,
10 and 50-dmas all sitting at that level.  We are placing our
stop price at $58.  A failed attempt to break through resistance
could allow aggressive traders to take a position but make sure
that selling volume supports the rollover.  For the more risk
adverse, wait for the bears to take out $52.50 support on
volume.  For the even more conservative, look for a break
through $50.  In entering this play, make sure to confirm
direction of the stock with the NASDAQ, entering only
on weakness in the tech-heavy index.

BUY PUT JAN-55 QBX-MK OI= 0 at $6.75 SL=4.75  Wait for OI!
BUY PUT JAN-50*QBX-MJ OI=10 at $4.13 SL=2.50

http://www.premierinvestor.net/oi/profile.asp?ticker=BBOX


EMC - EMC Corporation $86.94 (+8.69 last week)

EMC wants to be your storage solution.  The company designs,
manufactures and markets a wide range of enterprise storage
systems, software, networks, and services.  The company’s
products store, retrieve, manage, protect and share information
from all major computing environments including mainframe, UNIX,
and Windows NT.  With offices around the world and a 35% growth
rate for the first 9 months of the year, EMC is effectively
filling its role as the worldwide storage leader.

Widely accepted as the leader in enterprise storage systems, EMC
has recently taken aim at the Network Attached Storage (NAS)
market.  With more competition emerging in the storage field,
EMC has to find new ways to maintain its hefty 57% margins.
With higher margins on the software side of its business, EMC
has committed to spending 80% of its $1 billion research budget
in this arena next year.  At a press conference last Tuesday,
the company unveiled its newest product, a software package
called HighRoad.  The software, which costs about $10,000 per
server, gives users greater file-sharing capabilities in
bandwith-intensive environments by automatically selecting the
fastest route to the data.  Enthusiasm for the positive
development, along with assertions from the company that sales
will nearly double to $12 billion next year, enabled the stock
to bounce $11 from its recent bout of selling, ending the day
back at the $90 resistance level.  The excitement didn't last
though, and EMC fell lower for the rest of the week, pushing it
back into the descending channel that has been in place since
the stock traced new all-time highs in mid-September.  The
200-dma (currently $79) has been a sacred cow, untouched for
over 2 years, but the selling pressure at the end of November
violated it big time, as EMC fell as low as $69.25.  While the
recovery was swift, the stock appears to be rolling over from
the top of the channel again, and with the negative election
news Friday night, it looks likely that the 200-dma will fail
again.  The unsettling election news that broke after the close
on Friday caused heavy selling in the stock and we expect this
to continue on Monday.  Consider new positions as the stock
falls through resistance near $85, provided the NASDAQ continues
to be under pressure.  More aggressive traders may want to wait
for a rollover from the top of the channel (near $87) before
playing.  We have set our stop at $92, near the top of the
stock's range from last week.  Any close above that level will
break EMC out of its bearish trend and move the stock to our
drop list faster than you can say "recount".

BUY PUT JAN-90 EMC-MR OI= 4492 at $9.25 SL=6.50
BUY PUT JAN-85*EMC-MQ OI=27680 at $7.00 SL=5.00
BUY PUT JAN-80 EMC-MP OI= 6017 at $5.00 SL=3.00
BUY PUT JAN-75 EMB-MO OI= 4803 at $3.63 SL=2.00

http://www.premierinvestor.net/oi/profile.asp?ticker=EMC


ABT - Abbott Laboratories $49.69 (-3.19 last week)

Abbott Laboratories is engaged in the discovery, development,
manufacture and sale of healthcare products and services.
ABT's pharmaceuticals and hospital products (accounting for
more than 40% of sales) include antibiotics, synthetic hormones,
and drugs such as Norvir, which is used to treat HIV.  Its
products are sold directly to retailers, wholesalers,
healthcare facilities, laboratories, and government agencies
throughout the world.

Unless you have had your head buried in the sand, you couldn't
help noticing the dramatic rally in Drug and Healthcare stocks
since Labor Day.  ABT has been on a tear along with the Drug
Index (DRG.X), gaining over 35% by the end of November, and
trading as high as $55.  This rally in defensive stocks began
to show signs of weakening by early December, and since then,
the stock has fallen through the 10-dma ($53.13), 30-dma
($52.81) and 50-dma ($51.38).  Closing the week below $50 for
the first time since mid-October, ABT is now poking through the
lower Bollinger band, making it possible that the stock will
have a short-term bounce in the next few days.  Daily
Stochastics have now entered the oversold range, but the
weekly Stochastics have just barely started to fall out of the
overbought range.  With the strong rise over the last 4 months,
there isn't any strong support until $44, with much stronger
support at $40.  There is some mild support near $48, but unless
both the sector and the broader market can firm in the near
future, it is unlikely to serve as anything more than a brief
resting point as ABT retraces its recent gains.  With strong
overhead resistance at $52, this is a logical level to place
our stop.  While aggressive traders can target shoot new entries
on a failed rally near this level, any close above $52 will be
cause for expulsion from the play list.  More conservative
traders will want to enter on continued weakness, specifically,
falling below $49 with further declines on the Drug Index.

BUY PUT JAN-50*ABT-MJ OI=1922 at $2.63 SL=1.25
BUY PUT JAN-45 ABT-MI OI=1545 at $0.81 SL=0.00

http://www.premierinvestor.net/oi/profile.asp?ticker=ABT


*****************
CURRENT PUT PLAYS
*****************

No current put updates this weekend


************************
LOW VOLATILITY PUT PLAYS
************************

KMB - Kimberly Clark $66.46 (-4.35 last week)

Kimberly Clark is a leading consumer and medical products company.
Its global tissue, personal care and health care brands include
Huggies, Pull-Ups, Kotex, Depend, Kleenex, Scott, Safeskin, and
Kimwipes, among others.  Other brands well known outside the U.S.
include Andrex, Scottex, Page, Popee, and Kimbies.  Kimberly Clark
also is a major producer of premium business, correspondence and
technical papers.

After adding KMB as a low volatility put play after the stock's
precipitous decline last Tuesday, we noted that short covering
and an ensuing relief rally were likely.  Sure enough, KMB
rebounded in the two consecutive sessions following its sell-off
and subsequently rolled over near resistance at $69.  The stock's
rollover and subsequent weakness can be directly linked to the
rebound in the NASDAQ.  Going forward, we'll want to see
continued strength in the tech-sector before entering any new
put positions in KMB.  As long as the NASDAQ continues to recover,
capital will leave the defensive names such as KMB and cause
weakness from which we can profit.  New positions can be entered
in KMB if the stock falls below support at $66 on heavy volume.
The aggressive traders might continue to target shoot failed
rally attempts.  Look for KMB to rollover near resistance at $68
if any additional short covering takes place.  Our upside stop
is still in place at $70, and we would drop coverage on KMB if
it closed above that level.

BUY PUT JAN-70 KMB-MN OI= 97 at $5.10 SL=3.00
BUY PUT JAN-65*KMB-MM OI=271 at $2.50 SL=1.25
BUY PUT JAN-60 KMB-ML OI=689 at $1.20 SL=0.50

http://www.premierinvestor.net/oi/profile.asp?ticker=KMB


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*****
LEAPS
*****

It's Time For A Change Of Pace!
By Mark Phillips
Contact Support

If you are a bull at heart, I know you can relate to that
statement after the last 3 months of consistent market declines.
The bears are still being well fed by the never-ending election
saga, a continuous stream of high-profile earnings warnings and
indications of economic weakness around the globe.  It does look
like we are approaching a bottom on the NASDAQ, but we need the
clouds to clear before we can say it is clear for the bulls to
come charging back onto the stage.

The late-breaking election news on Friday is almost certain to
result in a negative open in the markets on Monday, but
investors are getting tired of the seemingly never-ending
election battle and are likely to begin focusing on more
important issues like earnings and interest rates.  While
earnings warnings are rampant, it is beginning to appear that
the bad news has already been factored into stock prices.  INTC
gave us our first peek at this as the stock rebounded
immediately after the company issued their earnings warning.

This seems like a great time to review where we are and what we
think the future holds for the residents of our LEAPS playlist.
Rather than take up space rehashing the fundamental factors that
are affecting the broader markets, I want to revisit each of our
plays and make some brief comments as to what our expectations
are for each of them.  Due to space limitations, I can't go into
specific entry strategies for each play.  Use support/resistance
levels and your favorite oscillators (Stochastics, MACD, RSI,
etc.) to select entry points and enter new plays ONLY AFTER
seeing a return of buying interest.

Get a cup of coffee and find a comfortable chair, because here
we go...

EMC - Still the undisputed enterprise storage leader, the recent
weakness has been a result of weakness in the broader market.
Recent comments by the company have been unequivocally bullish,
and with revenue growing at greater than 30%, the future is
bright.  Any near term weakness looks like an opportunity to
pick up LEAPS at a bargain.

CSCO - Still a Networking powerhouse, CSCO is one of the most
consistent economic machines in the Technology sector and it is
amazing to see revenue growth continuing to grow, hitting 66% in
the most recent quarter.  After rangebound trading throughout
the summer, CSCO has come under renewed selling pressure in
recent months.  Now the bulls and bears are battling over the
$50 support/resistance level.  Last week saw a new low at $45,
and as long as this level is not violated, the stock should have
a great year in 2001.

NT - See Spotlight Play below.

SUNW - We have been disappointed by SUNW's inability to sustain
any upward moves recently, but that criticism can be levied at
just about any large cap Technology stock in recent weeks.  Part
of the weakness this past week may be due to the execution of
the company's 2-for-1 split on December 6th.  Earnings and
revenue growth continue to be stellar and once the broader
market kicks back into rally mode, SUNW should benefit nicely
from the rising tide.  We would look for long-term support at
$35-37 to halt any further declines and provide attractive entry
points as the buyers return.

AOL - AOL has been beaten up lately with the other Internet
stocks, but we are still hanging tough on this play.  We think
the merger with Time Warner (TWX) will be a positive for both
companies, and once the market comes to the same conclusion, we
expect to see the stock run at least to the $65 level.  It has
been encouraging to see the stock begin to rally off the $40
level twice in as many months.  Just look out for the major
support level of $40, which looks like a great aggressive entry
point.  If for some reason, it fails to hold, we will likely
drop AOL from our play list.

AXP - Although it isn't known for daily double-digit gains, AXP
is a consistent performer, providing conservative players with
attractive entry points on pullbacks to support.  AXP has a nice
looking chart with a consistent pattern of higher highs and
higher lows since the bottom that was put in place this past
spring.  With a decrease in interest rates almost a certainty
in the coming months, the bias for Financial stocks looks
positive.  Use support at $55, as a good support level for
target shooting new entries for the next leg of the stock's run.

WM - This has been a stellar play, returning more than 300% as
the Financial stocks have rallied over recent months.  With
falling interest rates on the horizon, it looks like the picture
could get even rosier.  Even after an increase of more than 100%
since the March lows, WM only sports a PE ratio of 14.5, and
earnings continue to be strong.  The stairstep pattern has been
amazingly consistent.  Use pullbacks to support (prior highs)
as an opportunity to enter the play as the stock continues to
charge to new highs.

JDSU - Despite the short-term arguments of the bears, JDSU is
growing like a weed and that growth is likely to accelerate once
the SDLI merger is completed.  Earnings continue to beat
consensus estimates, and revenue growth is accelerating, if
anything.  The recent weakness has been a byproduct of the
bearish sentiment in the NASDAQ and the Telecom Equipment
(Networking) sector.  With a solid bottom in place near $50,
JDSU looks primed to charge higher with its Networking brethren
in the year ahead.

NOK - See the Spotlight Play from 12/03.

C - Our outlook for C is similar to that of AXP, where we are
expecting falling interest rates in coming months to propel
Financial stocks higher.  C has held up rather well during the
recent market turmoil, refusing to spend any time below the $47
support level.  The bulls repeatedly push the stock back up
above the 200-dma (currently $49.19), and once this congestion
zone is cleared to the upside, C should lead the rally in
Financial stocks.

GENZ - If you have been looking for a solid Biotech play, it has
been hard to argue with the stellar performance of GENZ.  It is
currently charging to new highs...again.  The uptrend has been
virtually unbroken since the spring lows, and it is showing now
signs of slowing its ascent.  Use pullbacks to support (near
$87) or the ascending trendline (near $82) to initiate new
positions, as this Biotech winner continues to run.

EXDS - Anything Internet related has come under significant
selling pressure, as the valuation compression hit companies
without profits the hardest.  EXDS is the leader in Web-hosting
and with their acquisition of Global Crossing's (GX) Web-hosting
unit, they have further solidified their leadership position.
Support seems to have solidified near $20-22, but any violation
of this level will be cause for expulsion of the play from the
LEAPS section.  A bounce at the $25 support level looks
attractive for new long term entries as we expect the strongest
players in the Internet space to profit handsomely in the year
ahead.

FRX - While we have been entirely pleased with the performance
of FRX in the recent market environment, we cannot advocate new
positions at this time.  There doesn't appear to be anything
wrong with the stock, but apparently the LEAPS do not have a lot
of support from the trading community.  Use the ascending
trendline, in place since early September to keep you in the
play during minor retracements.  When the stock fails to bounce
at this trendline, we will drop FRX from the playlist.

QCOM - The first 10 months of the year were not kind to the
darling stock of 1999, but the tide has turned again with QCOM
charging through one resistance level after another.  Prompting
recent gains has been China's official adoption of CDMA
technology for the China Unicom network build out.  Like they
really had a choice?  Use near-term weakness as an opportunity
to get back into this play on bounces at support near $90,
backed up by the 200-dma at $$86.

TXN - As we referred to in the NOK Spotlight Play last weekend,
concerns about a slowdown in the Wireless Handset market appear
to have been overblown.  The weakness experienced by MOT and
ERICY has resulted in captured growth opportunity for NOK.  TXN
doesn't care who it sells its DSP chips to, as long as demand is
strong, and that appears to be the case.  The stock seems to
have put in a solid bottom near $35, and the recovery seems to
be well underway.

ADBE - Since I am running out of time, I will cheat a little bit
on this one.  Let me refer you to the Call play write-up in the
newsletter this weekend.  Since I wrote it, it seems silly to
give you a trimmed down version here.

BGEN - Of all the stocks in our playlist, this Biotech is having
the hardest time getting moving in either direction.  Earnings
have been solid, slowing revenue GROWTH has made it hard for the
bulls to get excited.  $50 looks like solid support, with
resistance being created by the descending 5-month trendline
(bearish wedge formation).  Aggressive traders can target shoot
new entries on bounces from support at either $52 or $50, while
a more conservative approach will be to wait for a volume-backed
move through the descending trendline (currently $60).  A
failure to hold support at $50 will move BGEN to our drop list,
so keep that in mind when playing.

MU - See the New Play write-up from 11/26/00.

A - See the New Play write-up from 12/3/00.

Whew!!  Now that's a mouthful!  I know it was a lot, but
hopefully this gives you a starting point for planning out your
strategy for the entry points that undoubtedly lie in the weeks
ahead.

Have a Profitable Week!


Current Plays

SYMBOL  SINCE     LEAPS         SYMBOL   PICKED   CURRENT  RETURN

EMC    11/07/99  JAN-2002 $ 45  WUE-AI   $ 9.50   $49.00   415.79%
       09/17/00  JAN-2003 $100  VUE-AT   $32.75   $28.00   -14.50%
CSCO   11/14/99  JAN-2002 $ 45  WIV-AI   $11.00   $16.88    53.41%
       11/26/00  JAN-2003 $ 60  VYC-AL   $16.63   $15.63   - 6.02%
NT     11/28/99  JAN-2002 $37.5 WNT-AU   $15.13   $15.50     2.45%
       09/10/00  JAN-2003 $ 75  ODT-AO   $27.50   $ 8.63   -68.64%
SUNW   12/19/99  JAN-2002 $ 90  WJX-AR   $22.00   $15.38   -30.11%
       11/05/00  JAN-2003 $120  VSU-AD   $39.50   $ 7.88   -80.06%
AOL    03/12/00  JAN-2002 $ 65  WAN-AM   $18.63   $ 5.50   -70.48%
       08/13/00  JAN-2003 $ 55  VAN-AK   $17.50   $11.80   -32.57%
AXP    03/12/00  JAN-2002 $46.6 WXP-AQ   $ 9.33   $15.63    67.47%
WM     03/19/00  JAN-2002 $ 30  WWI-AF   $ 5.38   $21.75   304.28%
       10/22/00  JAN-2003 $ 45  VWI-AI   $ 7.88   $14.00    77.78%
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   $18.50   -66.52%
NOK    05/21/00  JAN-2002 $ 50  IWX-AJ   $17.25   $13.00   -24.64%
       07/30/00  JAN-2003 $ 50  VOK-AJ   $17.75   $17.50   - 1.41%
C      06/18/00  JAN-2002 $48.8 YSV-AW   $10.31   $11.88    15.18%
       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   $45.75   167.08%
                 JAN-2003 $ 70  OZG-AN   $23.13   $52.75   128.06%
EXDS   08/06/00  JAN-2002 $ 55  WZZ-AK   $20.75   $ 6.25   -69.88%
                 JAN-2003 $ 60  VTQ-AL   $25.38   $ 9.13   -64.05%
FRX    08/13/00  JAN-2002 $ 95  WRT-AS   $31.38   $52.38    68.50%
                 JAN-2003 $100  VFB-AT   $37.38   $57.88    56.50%
QCOM   09/17/00  JAN-2002 $ 70  WBI-AN   $22.50   $47.63   111.67%
                 JAN-2003 $ 70  VLM-AN   $29.63   $56.63    91.11%
COMS   10/01/00  JAN-2002 $ 20  WTH-AD   $ 6.38   $ 1.38   -78.43%
                 JAN-2003 $ 25  VTH-AE   $ 7.13   $ 1.94   -72.81%
TXN    10/22/00  JAN-2002 $ 50  WTN-AJ   $13.75   $14.50     5.45%
                 JAN-2003 $ 50  VXT-AJ   $18.38   $19.63     6.80%
ADBE   10/29/00  JAN-2002 $ 80  YEJ-AP   $23.50   $19.00   -19.15%
                 JAN-2003 $ 80  VAE-AP   $30.75   $26.63   -13.41%
BGEN   11/05/00  JAN-2002 $ 70  WGN-AN   $17.25   $14.38   -16.67%
                 JAN-2003 $ 70  VNG-AN   $25.00   $21.13   -15.50%
MU     11/26/00  JAN-2002 $ 45  WGY-AI   $13.13   $ 9.25   -29.52%
                 JAN-2003 $ 45  VGY-AI   $17.25   $13.25   -23.19%
A      12/03/00  JAN-2002 $ 55  YA -AK   $16.88   $21.13    25.19%
                 JAN-2003 $ 60  OAE-AL   $19.88   $24.50    23.27%


Spotlight Play

NT - Nortel Networks $42.94

After kicking off the decline in Networking stocks in late
October, the situation has improved significantly for NT.  In
all fairness, the comments made in the companies conference call
came in an environment that was ripe for a sell off.  Despite
reporting earnings a penny ahead of consensus estimates and
revenue growth above 40%, NT provided a catalyst for the bears,
by reporting growth in the Optical business of "only" 90%, which
was less than investor expectations.  Fear of a dramatic
downturn in future business led analysts to downgrade shares of
the Canadian Networking powerhouse, and this prompted a sell off
that didn't really come to an end until NT traced a low of
$31.38 on November 17th.  Since then, the buyers have been
coming back, sensing a rare buying opportunity, and the effect
can be clearly seen on the daily chart.  A series of higher
highs and higher lows is emerging and on Friday the stock
cleared the $40 resistance level.  Market weakness on Monday is
likely to provide aggressive investors with their last chance to
enter new positions with the stock trading in the $30s.  Support
also exists between $37-38, and then $34; target shoot new
entries to your level of risk tolerance, but wait for the stock,
and the Networking Index (NWK.X) to turn positive before jumping
into the fray.

BUY LEAP JAN-2002 $45.00 WNT-AI at $12.50
BUY LEAP JAN-2003 $45.00 ODT-AJ at $14.75


New Plays

ORCL - Oracle $30.06

We almost added ORCL as a new play last weekend, but due to the
sharp upward move on the prior Thursday, decided to wait for
some consolidation, before taking the leap (pun intended).  As
a supplier of software for information management, ORCL is a
major player in both the systems software and the business
applications software markets.  Systems software is a complete
Internet platform to develop and deploy applications for
computing on the Internet and corporate Intranets.  Business
applications software automates the performance of specific
business data processing functions for customer relationship
management, supply chain management, financial management,
procurement, project management, and human resources management.
The stock has been under pressure since Labor Day, falling under
the relentless selling targeted at any stock remotely tied to
the Technology sector.  This selling intensified as executive VP
Gary Bloom left the company to take the helm at Veritas
Software.  CEO Larry Ellison downplayed the significance of the
departure, and refuted rumors that he had met with an early
demise flying his Marchetti jet airplane.  Beginning with the
sharp upward move a little over a week ago, it appears that
investors are beginning to focus on the company's business,
which looks very strong.  We'll get a good idea of how strong it
really is when the company announces its earnings on December
14th after the close.  With the negative bias expected in the
markets on Monday due to the continuing election crisis, we
would look to initiate new positions on any bounce at either the
$28 or $26 support levels.  There is much stronger support at
$22, but we would be surprised to see such an attractive entry
point materialize, and if it were to be violated would call into
question the validity of our new play.  More conservative
players may want to wait until after the earnings results are
released and ORCL trades solidly above the $30 resistance level
before initiating new positions.

BUY LEAP JAN-2002 $35.00 WOK-AG at $ 7.75
BUY LEAP JAN-2003 $35.00 VOR-AG at $11.13

QQQ - NASDAQ 100 Trust $68.00

Have you been looking for a way to profit from the inevitable
recovery in Technology stocks without having to pick the right
stock or sector?  The QQQ may just be the solution you are
looking for.  Representing the NASDAQ 100 (NDX.X), QQQ will
capture gains in the overall Technology sector, without
subjecting you to the inordinate risk of a single company
releasing negative news, dropping the value of your position
30-50% overnight.  With major tech bellwethers like MSFT, CSCO,
DELL, INTC, ORCL, JDSU, and SUNW (making up over 30% of the
index) trading at or near 52-week lows, the upside potential is
huge.  Once the election uncertainty comes to an end, the NASDAQ
is poised for a strong recovery in the year ahead, and the next
major catalyst will be the FOMC meeting on December 19th.  The
Fed is widely expected to relax its bias, and speculation is
increasing that they will cut interest rates at the end of
January, if not at the December meeting.  Major support on the
QQQ is found at $60, with near-term support between $65-66.  The
NDX.X weekly chart shows the Stochastics on the verge of turning
up out of its most oversold condition since late 1995,
underscoring the magnitude of the long-term upside potential of
the QQQ.  Target shoot new entries on a bounce at support, as we
await the inevitable return of the Technology bulls.

BUY LEAP JAN-2002 $70.00 WNQ-AR at $15.13
BUY LEAP JAN-2003 $75.00 VZQ-AW at $19.25


Drops

COMS $9.63 Ok, I dropped the ball on this one.  There should
have been a drop written on COMS 2 weeks ago when it fell below
the $14 support level and violated the 200-dma ($13.81).  Recall
my comments from November 19th, "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."
The company confirmed the bearish investor sentiment early last
week, when they issued their earnings warning, more than
doubling their expected loss for the current quarter.  Goldman
Sachs and Lehman Brothers led the exodus by downgrading the
stock on Tuesday, resulting in a drop below the critical $10
level.  The future does not look bright, and although belated,
I think you can see that we have no choice but to eject COMS
from the playlist this weekend.


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

Stocks Heating Up To Split Levels Again
By Matt Russ

After the Split list got a spark from BRCD's announcement in late
November, the market has started to show life once again.  This
past week's unprecedented Election developments and a little
Greenspan talk gave the market reason to rally.  Current OI plays
that are on Split Runs posted incredible weekly gains:
BRCD(+51.88), MUSE(+41.50), and IDPH(+34.31).  Both splits for
BRCD and MUSE are just around the corner, and closer than we think.
MUSE trades ex-div on 12/20, and BRCD on 12/22.  With less than
two weeks to go before that time, we are expecting nice runs for
both stocks.  Sentiment has improved in the market throughout the
week, yet the Florida Supreme Court's ruling in favor of Gore
after Friday's close just might loom overhead.

Current Split Run Plays

BRCD
MUSE
IDPH


Current Split Candidate Plays

JNPR
BRCM
QCOM


Candidates That Are Not Current Plays

ALXN
CHKP
CMVT
GENZ
PMCS
VRTS
FRX
LH


10 Most Recent Announcements We Predicted

BRCD - 11/29 (most recent announcement)
MANU - 11/08
MUSE - 10/25
AMCC - 10/11
DNA  - 10/05
LEH  - 09/20
ORCL - 09/14
SUNW - 08/17
GLW  - 08/16
HWP  - 08/16


Major Announcements So Far This Month = 6

HWEN     GMCR     GGG     EAT
FSCR     HOTT

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

Symbol  Company Name                Splits  Payable    Executable

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
MUSE - Micromuse, Inc.                2:1  12/19/2000  12/20/2000
ILI  - Interlott Technologies         2:1  12/20/2000  12/21/2000
BRCD - Brocade Comm                   2:1  12/21/2000  12/22/2000
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
CRY  - CryoLife                       3:2  12/27/2000  12/28/2000
HOTT - Hot Topic Inc.                 2:1  12/27/2000  12/28/2000
HWEN - Home Financial Bancorp         2:1  01/10/2001  01/11/2001
GMCR - Green Mountain Coffee          2:1  01/11/2001  01/12/2001
EAT  - Brinker International          3:2  01/16/2001  01/17/2001
IDPH - IDEC Phamaceuticals            3:1  01/17/2001  01/18/2001
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
GGG  - Graco Inc.                     3:2  02/06/2001  02/07/2001


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**********
DISCLAIMER
**********

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http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html

The Option Investor Newsletter                   Sunday 12-10-2000
                                                            5 of 5

To view this email newsletter in HTML format with embedded
charts and graphs, click here:
http://www.OptionInvestor.com/htmlemail/121000_5.asp

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

Success Basics: Rules to live by...
By Mark Wnetrzak

We often receive requests for a list of rules or guidelines that
new traders can follow to make their venture in the market more
profitable.  While it is impractical to provide every possible
idea or methodology that might be beneficial, we have listed a
number of the most common principles used by successful traders.
We can't take credit for these rules, but it's important to use
this knowledge to improve your mastery in this vicious game that
is "The Stock Market."

First, you should always be mentally and physically prepared to
participate.  The decision-making ability and emotional control
necessary to be successful is so great that it is impossible to
manage a portfolio during periods of serious health or personal
problems.  Having achieved a keen and enthusiastic state of mind,
the next step is to assume full responsibility for all actions.
A well-known characteristic of professional money managers is
their willingness to assume personal accountability for any and
all trading decisions.  Those who habitually blame their losses
on unexpected events or failures by other entities, such as the
broker for bad fills, are never successful.  It's also important
to have realistic expectations.  When one anticipates results
that are far too optimistic, objective decision-making becomes
impossible, eventually resulting in emotionally driven "reaction"
trading.  If it seems like that might be a problem, ask yourself
what you really want.  Is your goal well defined and achievable
and are you serious about devoting the necessary time and effort
to become a successful trader?  Can you overcome the urgency to
always be "in the market" and totally eliminate the destructive
compulsion that that dooms novice players long before they have
time to learn (and absorb!) the various techniques required for
profitable trading.

Once you begin to explore trading strategies, keep it simple and
consistent.  Be sure that you clearly understand the risk/reward
ratio of any potential position and use only those methods that
conform to your portfolio outlook and personal trading style.
Always check the overall market indicators for primary direction.
Analyze the sector and industry in which your issue resides and
study the performance of similar groups to make sure it coincides
with your forecast.  Before making any trade, check the trend and
character of the issue against other time periods.  In some cases,
this extra step will identify areas of support or resistance that
were not previously apparent, substantially changing the outlook
for the position.  Understand that new investors often study too
many indicators and they listen to such a variety of differing
opinions that "information overload" ultimately paralyses their
judgment.  The incessant deluge of facts and figures (financial
fodder) by the media, whose true goals are to simultaneously hype,
shock, and entertain, often leave traders unable to make sensible
and unbiased decisions.  In fact, few people realize that most of
the top fund managers focus primarily on two or three fundamental
indicators and they rarely listen to the opinions of the popular
market "gurus."

Timing is everything and there is much to be said for the ability
to wait for the correct entry opportunity.  For most investors,
profit comes from the successful participation in specific plays
and as with any investment or speculative venture, the key is to
remain alert for signs of changes in character or direction, and
respond promptly and decisively, when and if such events occur.
Professional traders know they will encounter very few clear-cut
opportunities in a lifetime and yet they train themselves to wait
for the absolute best conditions before committing any funds to
a prospective position.  In this manner, they can identify the most
important elements of technical analysis and market signals that
afford the highest possible probability of a successful outcome.
When it comes to specific trading axioms, one important guideline
that new traders should adhere to is the need to outline an exit
strategy, before initiating any position, to eliminate emotional
decisions.  Using predetermined targets for profit (and potential
loss) addresses a number of problems.  First, it eliminates the
need for "judgment under fire."  Second, it keeps one from selling
too soon, thus eliminating potential upside profits.  Finally, an
sound exit strategy will help you lock-in previous gains, rather
than exposing the position to a possible loss.

Next week, we will focus on position management and recovering
from losing plays; when to "add-to" and when to "average down."

Good Luck!


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

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

MPPP    6.13   6.28   DEC   5.00  1.44  *$  0.31  14.4%
BSTE   40.00  36.06   DEC  35.00  6.75  *$  1.75  11.4%
AVID   15.94  19.06   DEC  15.00  2.19  *$  1.25   9.9%
DZTK    8.13   7.63   DEC   7.50  1.06  *$  0.43   8.8%
ISIP   11.56  10.06   DEC  10.00  2.31  *$  0.75   8.8%
CPRT   18.00  17.50   DEC  17.50  1.06   $  0.56   7.2%
MTIC    6.00   6.25   DEC   5.00  1.44  *$  0.44   7.0%
MRVT   16.88  17.94   DEC  15.00  2.56  *$  0.68   6.9%
SUPG   21.47  20.13   DEC  17.50  5.25  *$  1.28   6.9%
BCGI   26.31  25.88   DEC  22.50  5.38  *$  1.57   6.5%
PSUN   20.94  25.38   DEC  17.50  4.13  *$  0.69   5.9%
LNCR   45.25  49.63   DEC  42.50  3.88  *$  1.13   5.9%
LGTO   11.88  11.38   DEC  10.00  2.38  *$  0.50   5.7%
ADSK   27.00  28.06   DEC  25.00  2.63  *$  0.63   5.6%
MME    17.75  20.63   DEC  17.50  1.31  *$  1.06   5.6%
MTSI   17.38  20.81   DEC  12.50  5.63  *$  0.75   5.5%
MU     33.75  34.69   DEC  27.50  7.50  *$  1.25   5.2%
JDEC   29.00  26.38   DEC  22.50  7.25  *$  0.75   5.0%
HPC    18.44  19.13   DEC  17.50  1.88  *$  0.94   4.9%
PLNR   24.00  27.88   DEC  20.00  4.75  *$  0.75   4.2%
TTN    20.94  17.25   DEC  17.50  4.13   $  0.44   2.8%
WATR   36.31  30.06   DEC  35.00  2.56   $ -3.69   0.0%

MRVT   17.94  17.94   JAN  15.00  4.13  *$  1.19   5.3%

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

Comments:

Tetra Tech (WATR) has dropped mysteriously this week on no news
though it did hold up at its long-term trend line; a key moment.
With one week left until expiration, it is time to re-evaluate
the long-term potential for any stock that may not be called
away and decide if it should remain in your portfolio.

Positions Closed:

VRTA, MU (DEC-$35 Call), SNWL, MTIC

Murphy's Law is alive and well as all but one of the previously
closed positions have rallied into profitable territory.


NEW PICKS
*********

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

GLGC   21.25  JAN  17.50  CYV AW  5.25  30   16.00   42     6.8%
EXFO   32.00  JAN  22.50  FQO AX 11.25  0    20.75   42     6.1%
EDGW    5.63  JAN   5.00  FVQ AA  1.00  576   4.63   42     5.8%
RFMD   36.38  JAN  30.00  RFZ AF  8.50  1468 27.88   42     5.5%
QTRN   18.38  JAN  17.50  QRT AW  2.06  393  16.32   42     5.2%
CVD    11.38  JAN  10.00  CVD AB  2.00  55    9.38   42     4.8%
ARQL   33.75  JAN  25.00  ARQ AE 10.00  5    23.75   42     3.8%


Company Descriptions

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

*****
ARQL - ArQule  $33.75  *** Conservative Entry Point! ***

ArQule designs and produces molecules for the medicines of the
future.  ArQule offers chemistry-based products and services
that improve the efficiency and effectiveness of the discovery
process including accelerated lead optimization services, novel,
diverse screening libraries and access to its high-throughput
parallel synthesis platform technology.  In addition, ArQule
ArQule seeks to bridge the gap between genomic and clinical
development by applying its proprietary technology platform and
world class chemistry capabilities to drug discovery.  ArQule
recently announced that it has entered into a drug discovery
collaboration with SmithKline Beecham which will utilize certain
technologies of ArQule's new Parallel Track (TM) Drug Discovery
program.  UBS Warburg and Legg Mason have started coverage on
ArQule with "Strong Buy" recommendations.  With a $10 rally in
seven days we prefer to remain conservative and desire a cost
basis within proven support.  Target shoot a lower net-debit
(cost basis) for a higher return.

JAN 25.00 ARQ AE LB=10.00 OI=5 CB=23.75 DE=42 MR=3.8%


*****
CVD - Covance  $11.38  *** What's Up? ***

Covance is a leading contract research organization providing
a wide range of integrated product development services on a
worldwide basis to the pharmaceutical, biotechnology and medical
device industries.  Covance also provides services such as health
economics and outcomes for managed care organizations, hospitals
and other health care providers and laboratory testing to the
chemical, agrochemical and food industries.  No news to explain
Covance's recent rally, which has broken a 2-year trend line.
Speculation on a possible change of character as the "Tape"
rarely lies.  The next test is the July high near $13.

JAN 10.00 CVD AB LB=2.00 OI=55 CB=9.38 DE=42 MR=4.8%


*****
EDGW - Edgewater Technology  $5.63  *** Cheap Speculation! ***

Edgewater is an award-winning e-business consulting and systems
integration firm that specializes in providing middle-market
companies with tailored solutions for today's Internet-centric
environment.  Edgewater services its client base by leveraging a
combination of leading-edge technologies and proven reengineering
techniques provided by its network of national solutions centers
strategically positioned across the U.S.   A recent alliance
with Marten Transport, a premium supplier of time-and-temperature
sensitive transportation services, should bode well for future
revenue.  EDGW will also develop an Interactive Voice Response
system for Marten's fleet of drivers.  We simply favor the
improving technical picture.

JAN 5.00 FVQ AA LB=1.00 OI=576 CB=4.63 DE=42 MR=5.8%


*****
EXFO - Electro-Optical Engineering  $32.00  *** Rally Mode! ***

EXFO, which derives its name from expertise in fiber optics, is a
leading designer, manufacturer and marketer of fiber-optic test,
measurement and monitoring instruments for the telecommunications
industry.  EXFO has recently announced it is acquiring Burleigh
Instruments, a leading supplier of DWDM wavelength measurement
instruments and precision positioning equipment.  This should
help EXFO increase the breadth and scope of their industrial
and scientific product line as well as expand the capabilities
of their automated test systems.  Several new contracts should
bolster future earnings and analysts predict growth of 42% in
2001 and an average gain of 40% per year over the next three to
five years.  The technicals suggest a change of character as
EXFO has rallied above the end-of-November high.  Reasonable
speculation for those investors with a bullish outlook on the
issue.

JAN 22.50 FQO AX LB=11.25 OI=0 CB=20.75 DE=42 MR=6.1%


*****
GLGC - Gene Logic  $21.25  *** Stage I Base ***

Gene Logic is a leading provider of genomic information, enabling
the discovery and development of pharmaceutical, biotechnology,
health care, and life science products through the systematic and
industrialized application of genomics and bioinformatics.  The
Company has built and is commercializing a comprehensive survey
of gene expression in human and animal tissues.  GLGC markets
two types of gene expression database products to the global
pharmaceutical, biotechnology, health care and life science
industries: its custom databases and related software products
and the GeneExpress. Suite of databases.  LG Chemical Ltd., the
largest chemical company in Korea, has subscribed to a segment
of Gene Logic's GeneExpress. database for use in their drug
discovery and development programs and has entered into a
partnership to develop a custom gene expression database.
Gene Logic's revenues were up 25% last quarter and this new
agreement should help the company "beat the street" once again.
The stock continues to forge a Stage I base and has now made a
bullish move above its 50 dma.

JAN 17.50 CYV AW LB=5.25 OI=30 CB=16.00 DE=42 MR=6.8%


*****
QTRN - Quintiles Transnational  $18.38  *** Healthcare Sector ***

Quintiles Transnational provides full-service contract research,
sales, marketing and healthcare policy consulting and health
information management services to the global pharmaceutical,
biotechnology, medical device and healthcare industries.  QTRN
provides a broad range of contract services to help its clients
reduce the length of time from the beginning of development to
peak sales of a new drug or medical device.  Quintiles said it
is experiencing strong demand for its services from mid-size
pharmaceutical companies, biotechnology companies, and emerging
markets.  In addition, Quintiles recently agreed to purchase a
Swedish clinical development unit from Pharmacia, that includes
a contract with the company for a specified number of services
over a multi-year period, guaranteeing more than four years of
revenues to Quintiles.  The new company is expected to enhance
Quintiles expertise in pharmacology, research, bio-statistics
and data management, with a particular focus in the areas of
ophthalmology, growth hormones, cardiovascular medicine, and
urology.

JAN 17.50 QRT AW LB=2.06 OI=393 CB=16.32 DE=42 MR=5.2%


*****
RFMD - RF Micro Devices  $36.38  *** New Amplifier ***

RF Micro Devices, an ISO 9001-certified manufacturer, designs,
develops, manufactures and markets proprietary RFICs for wireless
communications applications such as cellular and PCS phones,
cordless phones, wireless LANs, wireless local loop handsets,
industrial radios, wireless security systems and remote meter
readers.  The company offers a broad array of products (amplifiers,
mixers, modulators/demodulators, and single-chip receivers,
transmitters and transceivers) representing a substantial
majority of the RFICs required in wireless subscriber equipment.
RFMD rallied strongly early this month after being added to the
Standard and Poor's MidCap 400 Index, but showed real strength
on the news that it had completed the second series of power
amplifier modules with partner Qualcomm.  Investors cheered this
proof of the fruitful collaboration with Qualcomm.  We favor the
rally above the 150 dma and the possible change in character for
RF Micro Devices.

JAN 30.00 RFZ AF LB=8.50 OI=1468 CB=27.88 DE=42 MR=5.5%


*****

**************************
SUPPLEMENTAL COVERED CALLS
**************************

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

VICL   20.13  JAN  17.50  VAQ AW  4.13  17   16.00   42     6.8%
PPDI   41.56  JAN  40.00  PJQ AH  4.63  106  36.93   42     6.0%
TVLY   11.50  JAN  10.00  QUT AB  2.25  21    9.25   42     5.9%
WIND   45.13  JAN  40.00  QWV AH  7.75  232  37.38   42     5.1%
HNT    23.00  JAN  22.50  HNT AX  1.81  27   21.19   42     4.5%
ADIC   21.56  JAN  17.50  QXG AS  4.88  160  16.68   42     3.6%


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

Naked Put Percentage List
By Matt Russ

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

AETH   68.06     60  HIZ-XL    2.06   1702   12%      60
ALXN   80.50     75  XQN-XO    2.13   2013   11%      75
ARBA   82.56     75  IUR-XO    2.81   2064   14%      70
BRCD  219.88    210  GUF-XB    4.88   5497    9%     200
BRCM  128.25    120  RDW-XD    4.25   3206   13%     120
CIEN  114.00    105  UEE-XA    3.63   2850   13%     100
CRA    49.31     45  CRA-XI    1.19   1233   10%      45
DGX   123.19    115  DGX-XC    2.19   3080    7%     118
EMLX  179.94    160  UEL-XL    4.13   4499    9%     155
GLW    76.56     70  GRJ-XN    0.81   1914    4%      70
IDPH  213.31    200  IHD-XT    4.38   5333    8%     200
IWOV   85.19     75  ICG-XO    3.00   2130   14%      73
JDSU   73.38     65  UQD-XM    1.44   1835    8%      65
JNPR  166.19    150  JUY-XJ    4.13   4155   10%     150
NTAP   87.19     75  NUL-XO    1.25   2180    6%      75
PMCS  137.00    125  SZI-XE    2.94   3425    9%     120
QCOM  103.25     95  AAF-XS    1.94   2581    8%      95
RBAK   93.69     85  BUK-XQ    2.50   2342   11%      85
SANM   92.19     85  SQN-XQ    1.69   2305    7%      87
SCMR   63.38     55  SMZ-XK    1.00   1585    6%      55
SDLI  270.63    250  QJV-XJ    5.00   6766    7%     240
SEBL  101.00     90  EZG-XR    1.69   2525    7%      90
SEPR   79.94     75  ERQ-XO    1.94   1999   10%      75
TLGD   62.75     55  TQK-XK    1.38   1569    9%      50

***These December contracts expire on Friday***


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

Position Management: Roll-outs and Adjustments...
By Ray Cummins

With the recent sell-off in technology issues, the number of
requests for portfolio management techniques has increased
substantially.  This week's discussion focuses on the most
common adjustment strategy for a sold (short) put when the
underlying issue has experienced a severe decline.

There are two basic strategies that traders use to profit from
the sale of naked puts.  The first technique involves writing
"at-the-money" puts to take advantage of a bullish movement in
the underlying stock for large, short-term profits.  The less
aggressive method involves writing "out-of-the-money" puts,
hoping that the sold position will expire worthless.  Either
technique can be used to take a position in a specific issue
but in most cases, our approach to naked put writing is applied
as a "deep-out-of-the-money" strategy in which the trader uses
the collateral value of his portfolio to return a consistent,
limited profit.

The strategy of selling out-of-the-money naked puts on bullish
issues is a relatively conservative technique but occasionally,
you will be faced with a position that is in-the-money as the
expiration date approaches.  One of the most common methods for
preventing a potential loss in this situation is the "roll-out"
and it is used when the underlying issue falls to (or below)
the strike price of the sold option.  Remember, selling a Put
obligates the writer to purchase the underlying issue at the
sold strike price.  If the stock remains above the sold strike,
the writer retains the premium for the sold option.  However,
if the stock price falls, the writer may need to roll out and
forward in his position, to avoid potential assignment of the
stock.  He can repurchase the puts that were sold initially and
sell new longer-term options.  Generally, the new options are
written at the next lower strike price, or in greater quantity
so as to generate a credit.  In this simple recovery method, no
debits are incurred but a realized loss is taken in the short
term.  If the stock price continues to decline, the process is
repeated.  Eventually, the issue stock should stop falling and
the last set of written options will expire worthless.  At that
time, the traders' overall profit will consist of the sum of
all the previous credits.

There are two requirements for success in this strategy.  The
first prerequisite is that the underlying stock must eventually
rebound and the second condition is that the trader have enough
portfolio collateral to stay with the strategy even if the issue
falls significantly.  A large stock portfolio is best for this
type of trading because the collateral required for naked option
writing may be in the form of cash or securities.  There are no
margin interest charges and the positions in the portfolio are
unaffected unless there is a need for additional funds to close
the play prematurely.  This simple exit strategy offers a high
degree of (eventual) success although in some cases, there may
be an accumulation of losses before a profit is achieved.

Good Luck!


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


SUMMARY OF PREVIOUS PICKS
*****

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

QTRN   17.00  18.38   DEC  15.00  0.50  *$  0.50  20.5%
AMZN   28.94  23.44   DEC  17.50  0.63  *$  0.63  14.2%
AEOS   40.94  40.25   DEC  35.00  1.06  *$  1.06  13.4%
ARQL   25.38  33.75   DEC  17.50  0.50  *$  0.50  13.0%
AVID   15.31  19.06   DEC  12.50  0.56  *$  0.56  12.6%
CMOS   20.88  24.81   DEC  15.00  0.38  *$  0.38  12.1%
ECLP   22.75  23.19   DEC  17.50  0.63  *$  0.63  10.6%
IDXC   29.38  30.13   DEC  22.50  0.75  *$  0.75   9.8%
CTXS   30.88  28.88   DEC  25.00  0.63  *$  0.63   9.6%
QCOM   83.00 103.25   DEC  65.00  0.75  *$  0.75   9.4%
PSUN   22.19  25.38   DEC  17.50  0.38  *$  0.38   8.6%
PWAV   56.38  73.81   DEC  40.00  0.44  *$  0.44   8.2%
MTON   18.94  18.44   DEC  15.00  0.38  *$  0.38   7.9%
HNT    22.25  23.00   DEC  20.00  0.50  *$  0.50   7.6%
CAR    30.06  30.19   DEC  25.00  0.38  *$  0.38   7.5%
WGR    25.69  24.13   DEC  22.50  0.31  *$  0.31   6.1%
OXHP   37.38  40.88   DEC  30.00  0.56  *$  0.56   6.0%
WLL    49.38  49.88   DEC  45.00  0.38  *$  0.38   5.2%
TLB    49.81  46.00   DEC  40.00  0.50  *$  0.50   5.1%
KMI    43.25  45.69   DEC  40.00  0.56  *$  0.56   4.2%
VLNC   17.31  12.06   DEC  12.50  0.31   $ -0.13   0.0%

NEM    16.25  16.63   JAN  15.00  0.88  *$  0.88   8.9%
SNPS   42.13  50.06   JAN  35.00  0.88  *$  0.88   5.2%
OXY    22.56  21.38   JAN  20.00  0.56  *$  0.56   4.9%

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

Comments:

Valence Technology (VLNC) continues to weaken and an early exit
may be a prudent move.  Monitor your positions closely as this
last week before December option expiration will be volatile.

Positions Closed:

BVSN, ANF, IMG, SMSC


NEW PICKS
*********

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

AEIS   24.38  JAN  20.00  OEQ MD  0.69  275  19.31   42     8.2%
SPF    25.44  JAN  22.50  SPF MX  0.69  0    21.81   42     6.3%
CORR   48.94  JAN  32.50  CHQ MZ  0.81  55   31.69   42     5.5%
KLAC   35.94  JAN  22.50  KCQ MS  0.56  1191 21.94   42     5.3%
TXCC   47.88  JAN  25.00  TZQ ME  0.75  64   24.25   42     5.3%
CCR    41.69  JAN  35.00  CCR MG  0.75  224  34.25   42     5.1%
FNSR   37.50  JAN  22.50  FQY MN  0.56  0    21.94   42     5.1%


Company Descriptions

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

*****
AEIS - Advanced Energy  $24.38  *** On The Rebound! ***

Advanced Energy Industries is a global company that provides the
development, marketing and support of integrated technology
solutions that are central in the manufacture of semiconductors,
data storage products and flat panel displays, as well as other
mission-critical power applications.  OEM's and others end-users
depend on the company's products when plasma-based technology
plays a vital role in their manufacturing process.  The company
offers a comprehensive suite of key subsystems for vacuum process
systems including power conversion and control solutions, process
monitoring and machine control tools, ion-beam sources, dynamic
temperature control products and plasma abatement technologies.
AEIS is on the road to recovery and the recent technical trends
suggest that our cost basis is a favorable price at which to own
the issue.

JAN 20.00 OEQ MD LB=0.69 OI=275 CB=19.31 DE=42 MR=8.2%


*****
CCR - Countrywide Credit  $41.69  *** On The Move! ***

Countrywide Credit is a holding company through which Countrywide
Home Loans is engaged primarily in the mortgage banking business,
and as such originates, purchases, sells and services mortgage
loans.  The company's mortgage loans are principally prime credit
quality first-lien mortgage loans.  The company also offers home
equity loans both in conjunction with newly produced prime credit
quality first mortgages and as a separate product.  In addition,
the company offers other products and services complementary to
its mortgage banking business.  Countrywide's mortgage business
rose sharply in November to its highest level in 16 months, as
falling interest rates enticed customers into new loans.  The
company said refinance loans totaled $1.6 billion last month, up
from $948 million for the same period last year.  Investors were
bullish on the news and Goldman Sachs upgraded CCR's shares to a
new "trading buy."  We will target a higher premium initially to
achieve a favorable monthly ROI and allow for a brief pullback in
the stock price.

JAN 35.00 CCR MG LB=0.75 OI=224 CB=34.25 DE=42 MR=5.1%


*****
CORR - COR Therapeutics  $48.94  *** Drug Sector ***

COR Therapeutics is engaged in the discovery, development and
commercialization of novel pharmaceutical products to establish
new standards of care for the treatment and prevention of severe
cardiovascular diseases.  The company's complementary research
and development programs seek to address critical needs in
cardiovascular diseases, including unstable angina, acute
myocardial infarction, venous thrombosis and restenosis.  In
addition to Integrilin, the company has developed a portfolio of
cardiovascular product candidates and programs by combining its
expertise with advanced drug discovery techniques.  COR's clot
inhibitor Integrilin is gaining widespread acceptance in the
medical industry and many of their new products have excellent
potential.  We favor the technical indications and the recent
performance of the drug sector.

JAN 32.50 CHQ MZ LB=0.81 OI=55 CB=31.69 DE=42 MR=5.5%


*****
FNSR - Finisar  $37.50  *** A Big Day! ***

Finisar is a provider of fiber optic subsystems and network
performance test systems that enable high-speed communications
over Gigabit Ethernet LANs and Fibre Channel based storage area
networks (SANs).  FNSR's optical subsystems convert electrical
signals into optical signals (light pulses) for high speed,
reliable transmission over fiber optic lines.  The company sells
its optical subsystems to manufacturers of networking and
storage equipment that in turn develop and market systems based
on Gigabit Ethernet and Fibre Channel technology.  FNSR's shares
rallied in late November after the fiber-optics systems maker
beat analysts' expectations for the second quarter and announced
a slew of acquisitions.  After a brief consolidation, the stock
is once again "on the move" and our cost basis offers favorable
speculation with low downside risk.  Target a higher premium
initially, to allow for a consolidation from Friday's $10 gain.

JAN 22.50 FQY MN LB=0.56 OI=0 CB=21.94 DE=42 MR=5.1%


*****
KLAC - KLA-Tencor  $35.94  *** New Trend? ***

KLA-Tencor is the world's leading supplier of process control
and yield management solutions for the semiconductor and related
microelectronics industries.  Their portfolio of products and
analysis services is designed to help IC manufacturers manage
yield throughout the entire wafer fabrication process, from
research and development to final production yield analysis.
KLA-Tencor's advanced products, coupled with its yield management
consulting practice, allow the company to deliver the complete
yield management solutions customers need to accelerate their
yield learning rates, reduce their yield excursion risks and
adopt industry-leading yield management practices.  KLAC rallied
$5 on Friday as investors sensed the worst may be over for the
beaten-down chip sector.  Our position offers a reasonable cost
basis for the issue, in the event of further downside movement.

JAN 22.50 KCQ MS LB=0.56 OI=1191 CB=21.94 DE=42 MR=5.3%


*****
SPF - Standard Pacific  $25.44  *** Portfolio Play! ***

Standard Pacific operates as a geographically diversified builder
of single-family homes for use as primary residences.  They have
operations throughout metropolitan markets in California, Texas
and Arizona.  The company also offers mortgage loans to its
homebuyers and others through a mortgage banking subsidiary and
a joint venture with a leading financial institution.  Most of
its homes are single-family detached dwellings, although during
the past few years some have been townhouses or condominiums.
A focused homebuilding and community development business has
paid off for Standard Pacific, which has recently been ranked
among Fortune Magazine's 100 fastest growing companies in the
United States.  The company reported record third quarter 2000
revenues of $302 million and record third quarter net income of
$25.2 million, a 56% increase over the same period last year.
As a result of its consistent growth strategy, Standard Pacific
now ranks among the 12 largest public homebuilders in the U.S.
and that makes it a great candidate for any long-term portfolio.

JAN 22.50 SPF MX LB=0.69 OI=0 CB=21.81 DE=42 MR=6.3%


*****
TXCC - TranSwitch  $47.88  *** Bottom Fishing! ***

TranSwitch designs, develops, markets and supports highly
integrated digital and mixed-signal semiconductor solutions for
the telecommunications and data communications markets.  The
company's products are Very Large Scale Integrated semiconductor
devices that provide functionality for communications network
equipment.  The company's VLSI solutions are programmable to
provide high levels of functionality for high-speed broadband
communication networks. The company's customers serve key market
segments including network infrastructure and corporate wide area
networks.  This position is simply a "bottom fishing" speculation
play for traders who favor the semiconductor sector.  The recent
technical trend suggests that TXCC has excellent upside potential
in the near-term and $25 is an acceptable price at which to own
the issue.

JAN 25.00 TZQ ME LB=0.75 OI=64 CB=24.25 DE=42 MR=5.3%


*****

***********************
SUPPLEMENTAL NAKED PUTS
***********************

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

GETY   28.25  JAN  20.00  QGT MD  0.75  326  19.25   42     8.5%
PPDI   41.56  JAN  35.00  PJQ MG  1.13  2    33.87   42     7.3%
HMN    20.00  JAN  17.50  HMN MW  0.56  0    16.94   42     6.7%
CDN    28.00  JAN  25.00  CDN ME  0.81  0    24.19   42     6.5%
IMNX   45.00  JAN  30.00  IUU MF  0.56  3506 29.44   42     4.2%
IGT    47.00  JAN  40.00  IGT MH  0.63  427  39.37   42     3.7%


************************Advertisement*************************
Try Investor's Business Daily today! Click here for 10 FREE
issues. No obligation. Nothing to cancel.
http://www.sungrp.com/tracking.asp?campaignid=1125
**************************************************************


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

A great way to end the week!

Technology stocks rallied today as investors ignored the revenue
warning from Intel (INTC) and focused instead on the favorable
employment data.

******************************************************************
- MARKET RECAP -
******************************************************************
Friday, December 8

Technology stocks rallied today as investors ignored the revenue
warning from Intel (INTC) and focused instead on the favorable
employment data.  The report renewed optimism that the Federal
Reserve will change its monetary policy bias later this month.
The Nasdaq closed up 164 points at 2,917 and the Dow was up 95
points at 10,712.  The S&P 500 index closed 26 points higher at
1,369.  Trading activity on the Nasdaq was heavy at 2.3 billion
shares exchanged, with advances beating declines 2,821 to 1,147.
Volume on the NYSE reached 1.34 billion shares, with advances
swamping declines 2,087 to 822.  In the bond market, the 30-year
Treasury fell 7/32, pushing its yield up to 5.51%.


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

Alliance    AC     JAN50C/JAN50P   $4.12   debit   straddle
Jefferson   JP     DEC75C/DEC70P   $1.00   debit   strangle
Qualcomm    QCOM   JAN75P/JAN80P   $0.75   credit  bull-put

All of our new combination positions offered favorable entry
opportunities during today's session.  The Qualcomm spread was
available at the target price during the issue's morning slump
and both neutral positions demonstrated that they have the
necessary volatility to become profitable.

Portfolio Plays:

Technology stocks soared today, driving the Nasdaq to its highest
close in three weeks, after a smaller-than-expected increase in
new employment stirred hopes that the next adjustment in interest
rates will be lower.  The benign labor report provided additional
confirmation that the Fed will switch its policy bias to "neutral"
at the December 19 meeting of the FOMC and further underscored
expectations that the world's largest economy is slowing enough
to warrant lower interest rates.  Investors also shrugged off news
that Intel (INTC) expects fourth-quarter revenues to be flat with
third-quarter revenue of $8.7 billion, below expectations for a 4%
to 8% rise.  Intel officials cited a slowing economy and analysts
cautioned that regardless of today's bullish activity, investors
should sell into any strength.  Other large-cap technology issues
moved higher during the session with Hewlett-Packard (HWP), Oracle
(ORCL), Dell Computer (DELL), Cisco Systems (CSCO), and Microsoft
(MSFT) enjoying favorable gains.  Semiconductor, computer software
and Internet companies also enjoyed substantial advances but Sun
Microsystems (SUNW) opposed the trend, falling $3.88 to $39.94 on
concerns about accounting irregularities at the company.  On the
Dow, Boeing (BA), Home Depot (HD) and 3M (MMM) led on the upside
while SBC Communications (SBC), Procter & Gamble (PG), McDonalds
(MCD), Merck (MRK) and Coca-Cola (KO) retreated.  Among the broad
market groups, almost every sector participated in the rally with
biotechnology, airline and financial issues among the top gainers.
The slump in oil service shares continued as crude oil fell to a
four-month low on expectations that mild weather will soon crimp
demand for heating oil and that Iraq will likely resume exports.

Our portfolio experienced favorable activity in almost every group
but the bullish momentum may be short-lived.  After the closing
bell, the Florida Supreme Court breathed new life into Al Gore's
bid for the U.S. presidency by ordering a recount of about 9,000
disputed ballots in Miami-Dade County.  The decision, which came
minutes after the end of the session, eliminated the possibility
that a resolution to the battle for the U.S. presidency is close
at hand.  In addition, stocks which are perceived as particularly
sensitive to a Gore administration tumbled in after-hours trading.
S&P 500 futures also moved lower, demonstrating the broad market's
unease with political uncertainty.  Still, there were a number of
winners in the Spreads section.  Juniper Networks (JNPR) was one
of the most popular big-cap technology issues, closing up $17 at
$166 as investors moved back into high growth companies that make
equipment for the Internet infrastructure.  Among biotech stocks,
Invitrogen (IVGN) was the top dog, closing $10 higher at $82 and
Vertex Pharmaceuticals (VRTX) wasn't far behind with an $8 rally
to end at $78.  In the lower-priced category of stocks, Biochem
(BCHE) finally broke out of a recent trading range near $25 and
now it's off to the races.  Carter Wallace (CAR) also appears to
be bracing for another rally and Safeco (SAFC) has exceeded all
possible expectations, climbing over 10% in less than one week.
The small-cap group has produced some excellent speculation plays
and Friday's best performers were Miravant (MRVT), Mattel (MAT),
Timken (TKR), and Pioneer Natural Resources (PXD).  Also in the
black were recent laggards AT&T (T) and Englehard (EC).  Traders
should consider using the rallies in these issues as potential
adjustment opportunities.  Unibanco (UBB) was a big mover in the
straddles section, jumping $2 to a recent high near $28 and last
week's neutral position is already yielding a 20% return.

With one week until option expiration, there is little evidence
that the recent volatility will diminish, so monitor your plays
closely and use the movement to your advantage as we transition
to January positions.

Questions & comments on spreads/combos to Contact Support
******************************************************************
                         - NEW PLAYS -
******************************************************************
AMR - AMR Corporation  $37.63  *** Reader's Request! ***

AMR Corporation is the holding company of American Airlines.
American Airlines is one of the largest scheduled passenger
airlines in the world.  American provides scheduled service
to hundreds of destinations throughout North America, the
Caribbean, Latin America, Europe and the Pacific.  American
also is one of the largest scheduled airfreight carriers in
the world, providing a full range of freight and mail services
to shippers throughout its system.  In addition, AMR Eagle
Holding Corporation, a wholly owned subsidiary of AMR, owns
regional airlines that operate as American Eagle: American
Eagle Airlines, Executive Airlines, and Business Express
Airlines.  The American Eagle carriers provide connecting
service from American's high-traffic cities to smaller markets
throughout the United States, Canada, the Bahamas and the
Caribbean.

One of our subscribers pointed out Friday's upside activity in
AMR shares and suggested that we offer a bullish position in
the issue.  Strangely enough, the rally came on the heels of
a decision by members of the federal mediation board to order
an indefinite recess to contract talks between the airlines and
its flight attendants' union.  The long and involved discussion
between the company and its attendants has been at impasse since
the union rejected a contract offer from American that included
an 8% pay hike, putting the flight attendants at the top of the
industry salary scale.  The union rejected that proposal, which
it said offered only marginally better wages than those in a
tentative agreement discarded by members in 1999 and that other
components were inferior.  Federal law states that workers can't
strike until a federal mediator declares an impasse and a 30-day
cooling-off period ends without an agreement, so investors may
see this move as short-term plus for American.  In any case, the
technical trend is favorable and those who like the outlook for
the issue can speculate on its future with this bullish position.

PLAY (speculative - bullish/synthetic position):

BUY  CALL  JAN-40  AMR-AH  OI=784  A=$1.38
SELL PUT   JAN-35  AMR-MG  OI=186  B=$0.88
INITIAL NET DEBIT TARGET=$0.12-$0.25  TARGET ROI=25%

Note:  Using options, the position is equivalent to being long
on the stock.  The collateral requirement for the naked put is
approximately $1325 per contract.


******************************************************************
PN - Pennaco Energy  $14.00  *** Energy Sector Hedge ***

Pennaco Energy is an independent energy company entirely focused
on the exploration, development, acquisition and production of
natural gas from coal bed methane properties located in the
Powder River Basin of northeastern Wyoming and southeastern
Montana.  The company owns oil and gas lease rights with respect
to approximately 743,600 gross acres in the Powder River Basin.
Of these amounts, 644,000 gross acres represent the company's
portion of the acreage contained in the Area of Mutual Interest
that it shares with CMS Oil and Gas Company.  The Company has
leasehold interests covering 99,600 gross acres outside the AMI,
the majority of which are located near the town of Gillette,
Wyoming.

U.S. natural gas futures set new all-time highs last week and
shares of many companies in the group are now expected to move
higher as conservative investors begin buying into gas-heavy
firms.  Pennaco is poised to benefit from the recovery in this
sector and Friday's bullish activity suggests that traders are
anticipating a fairly substantial boost to the company's stock
price.  This position offers a way to speculate conservatively
on the future movement of the issue with low risk and reasonable
reward.

PLAY (conservative - bullish/collar):

BUY  STOCK  PN  LAST=$14.00
SELL CALL   JAN-15.00  PN-AC  OI=1967  B=$1.12
BUY  PUT    JAN-12.50  PN-MV  OI=369   A=$1.06
TARGET COST BASIS=$13.75-$13.88 ROI=16%(margin)


******************************************************************
     - TECHNICALS ONLY -

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.

******************************************************************
PPDI - Pharmaceutical Product Dev.  $41.56  *** All Time High! ***

Pharmaceutical Product Development and its subsidiaries provide
a broad range of research and development and consulting services
in the life and discovery sciences segments.  PPD Development,
the company's life sciences subsidiary, is the fourth largest
contract research organization (CRO) in the world, providing
integrated product development resources on a global basis to
complement the research and development activities of companies
in the pharmaceutical and biotechnology industries.  The company's
discovery sciences subsidiary PPD Discovery, focuses on the
discovery segment of the pharmaceutical research and development
outsourcing market.

PPDI offers innovative technologies, therapeutic expertise and
comprehensive resources for drug discovery and pre-clinical
programs, clinical studies and post-market support.  The company
specializes in helping clients maximize their returns on major
product developments and they also provide consulting strategies
for design and management of customized programs from initial
screening to final submission.  With the incredible number of
new drugs and products being developed, this business model has
little chance of failure.  Investors apparently see the logic to
the company's unique approach as they pushed the issue to a new
high during Friday's session.  Based on the long-term trend, our
outlook for the issue remains cautiously bullish and the recent
momentum should propel the share value well clear of our target
cost basis.


PLAY (conservative - bullish/credit spread):

BUY  PUT  JAN-30  PJQ-MF  OI=10  A=$0.50
SELL PUT  JAN-35  PJQ-MG  OI=2   B=$1.12
INITIAL NET CREDIT TARGET=$0.75  ROI(max)=17% B/E=$34.25


******************************************************************
HC - Hanover Compressor  $34.56  *** Bracing For A Rally? ***

Hanover Compressor is a market leader in full-service natural gas
compression and a leading provider of contract gas handling
service, fabrication and equipment.  The company operates a fleet
of compression rental units and their compression services are
complemented by its compressor and gas equipment fabrication
operations.  The size, type and geographic diversity of this
rental fleet enables the company to provide its customers with a
range of compression units that can serve a wide variety of
applications, and to select the correct equipment for the job,
rather than trying to fit the job to its fleet of equipment.
In addition, subsidiary Hanover Smith, designs, engineers,
fabricates and either sells or occasionally rents a broad range
of oil and gas production equipment designed to heat, separate,
dehydrate and measure crude oil and natural gas.

In early November, Hanover reported continued strong growth in
revenue, cash flow and net income for the third quarter.  The
noticeable improvement in revenue and earnings reflect the
company's outstanding execution of a new business strategy as
well as the continued industry-wide growth in outsourcing in
a highly favorable operating environment.  Analysts are bullish
on the company and with the demand for natural gas increasing, it
appears that HC's share value is poised to move higher.


PLAY (conservative - bullish/credit spread):

BUY  PUT  JAN-25  HC-ME  OI=0    A=$0.25
SELL PUT  JAN-30  HC-MF  OI=100  B=$0.75
INITIAL NET CREDIT TARGET=$0.62  ROI(max)=14%  B/E=$29.38


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


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