  We report here optical observations during the September/October 1998
outburst of the black hole candidate XTE J1550-564. CCD photometry was obtained
for the optical counterpart with the 0.9m Dutch telescope at La Silla since the
onset of this event. We analysed 211 U, V and i frames, from Sep 10 to Oct 23.
Stochastic flaring activity was observed on Sep 11-16, but no evidence for a
superhump period, as seen in other soft X-ray transients, was found. An optical
flare nearly simultaneous to an X-ray flare that occurred on Sep 21 was
observed in the V-band. A reddened optical spectrum showed the typical emission
lines corresponding to X-ray transients in outburst. From the interstellar
absorption lines, we derive E(B-V) = 0.70 +/- 0.10 and suggest a distance of
about 2.5 kpc. In such case, M_{B} = +7 mag. for the progenitor, which is
consistent with the spectral type of a low-mass K0-K5 main-sequence companion.
