I'm looking to identify a vertical shooter from the 80s.
The setting is futuristic, with the main ship being able to get upgrades based on the floating bonus which is a letter. One of the was a flamethrower, another was a six shooter. When taking the letter, parts were combined into the ship to give the upgrade. The letter "P" would give an extra life, unless it was a brown colored "P" which would instead instantly kill you.
The first boss was a ship with some sort of long "tentacles" made of circles sprites.
I played it around 1982 or something like that.
EDIT: it was an arcade game that I used to play in a pizzeria near my house. It was way before the time of Xenon 2, the next year my parents bought me a ZX spectrum 16K