The Option Investor Newsletter Tuesday 1-25-2000 Copyright 2000, All rights reserved. Redistribution in any form strictly prohibited. Posted online for subscribers at http://www.OptionInvestor.com ************************************************************ MARKET WRAP (view in courier font for table alignment) ************************************************************ 1-25-2000 High Low Volume Advance Decline DOW 11029.90 + 21.70 11079.50 10883.40 1,067,416k 1,243 1,773 Nasdaq 4167.41 + 71.33 4303.15 4095.31 1,735,345k 2,010 2,183 S&P-100 767.31 + 8.57 770.06 755.32 Totals 3,253 3,956 S&P-500 1410.03 + 8.12 1414.26 1388.49 45.1% 54.9% $RUT 521.59 - 1.36 525.27 513.69 $TRAN 2654.69 - 48.26 2717.82 2651.89 VIX 24.34 - 1.98 26.37 23.62 Put/Call Ratio .53 ************************************************************* Miraculous recovery or bear trap rally? After a week of losses on the Dow, amounting to over -800 points at the intraday low of today, the Dow finally showed signs of a pulse. The rebound off the bottom at -120 came after a breath stopping drop below 10900 which was not a real support level technically but possibly a psychological support level. On Monday the low came within 20 points of 10900 before rebounding. After trading as high as +75 shortly after the open this morning the almost -200 point drop to the low at 2:PM had traders biting their fingernails afraid we were going to repeat the -243 loss from Monday. The Nasdaq tried twice to rally after an almost -85 point drop at the open but followed the Dow down at 2:PM to a low of 4028. The rebound however was outstanding with a +139 point gain from the low. The general consensus of the analysts had the Dow rebound as simply a relief rally from the six day sell off. The spark for the rally was also the cancellation of the Greenspan testimony today because of a severe snow storm. With traders worried about what he might say the market had been jittery. Take away the photo op and sound bite possibility and add a -800 point drop into oversold and you have a thin excuse for a rally. The Nasdaq has not needed an excuse to rally lately and with any positive Dow momentum behind it could be back in record territory soon. The flaw in this theory of course is still the Employment Cost Index on Thursday and the Fed meeting on Mon/Tue of next week. Everyone believes they will raise rates and anything in the +.25% range is already priced into the market. Still there is that level of uncertainty that will keep the volatility in the markets. The bonds rallied higher today as money still moved out of stocks. The bonds had been weak early after the Consumer Confidence numbers came in at 144.7, the highest ever in the report's 32 year history. This was revised upward from 141.7 in December. With the economy firing on all cylinders the prospects for a stronger than expected GDP on Friday are good. The prospects for a stronger than expected ECI report on Thursday are also good with record year end bonuses and heavy weightings in energy as well. This strong data in front of the Fed meeting could cause market indigestion. Stock splits and earnings are still powering the markets with record numbers of each. With 67% of the S&P companies that have reported posting better than expected results, investors should be happy with the returns. As usual many stocks are taking a beating even after announcing results that beat estimates. AMGN +.01 and lost -3.38, QCOM +.01 lost -10.50, AHP +.01 lost -2.00. Qualcomm (QCOM) on Tuesday posted a fiscal first quarter operating profit that was just ahead of Wall Street's expectations, on revenue that increased 19 percent. Excluding non-recurring charges, the wireless-communications technology provider logged earnings of 25 cents per share, during the period ended Dec-26th. Revenue during the quarter came in at $1.1 billion, up from $941 million during the year-ago period. Analysts had expected QCOM to post a first quarter profit of 24 cents per share, according to First Call. Compaq Computer (CPQ) reported a 56 percent tumble in fourth- quarter profits on a 4 percent drop in revenue, dragged down by lower sales of business computers as the company struggled to maintain its global leadership in PCs. Compaq did manage to beat Wall Street expectations, but the results were bolstered by a gain of $50 million in its own investment portfolio, separate from growth from its computer business. CPQ earned 19 cents a share, in the final quarter of 1999, off from 43 cents a share, in the year-ago quarter. Sales dipped to $10.48 billion from $10.86 billion. Analysts estimates were for 16 cents per share. In a side note, Dell still has not warned but their quarter does not end until Jan-31st. Online auction house eBay (EBAY) reported better-than-expected fourth-quarter profits Tuesday, reflecting a surge in registered users. The San Jose, company posted net income of $4.9 million or 4 cents per diluted share. Profits, excluding one-time items, rose to $6.1 million, or 4 cents per diluted share, compared with $3.9 million, or 3 cents per diluted share, in the year-ago period. Analysts expected eBay to earn 2 cents per share. Revenues reached $73.9 million, a 139 percent increase over the $30.9 million reported for the year-ago quarter. Shares of Ebay bucked the post earnings trend and were up sharply in after hours trading. Internet search site Ask Jeeves Inc. (ASKJ) disclosed it will acquire privately held Direct Hit Technologies Inc., a Web search engine firm, for stock valued at approximately $507 million. Terms call for ASKJ to exchange 5.12 million unregistered shares of common stock for all outstanding shares, warrants and options of Direct Hit. Based on Monday's closing price of 99 for Ask Jeeves shares, the transaction is valued at $507 million. CS First Boston initiated coverage of Ask Jeeves with a "buy" recommendation, and set a year-end price target of 215. LSI Logic Corp. (LSI) reported 1999 record revenues of $2.09 billion, a 38 percent increase over the $1.52 billion in 1998. During 1999 profits grew at more than twice the rate of revenue growth, and cash more than doubled to $661 million. Net income for 1999, before amortization of goodwill and other special items (EBG), was $1.12 a diluted share, an 85 percent increase over the 65 cents a diluted share reported for 1998. LSI Logic also announced a stock dividend in the form of a 2:1 common stock split, effective February 4, 2000. Shares of Nortel Networks (NT) moved higher after hours after the networking behemoth topped analysts' estimates and declared a 2:1 split of its shares. Sales at the Canadian company rose 21 percent to $6.99 billion. Nortel earned 55 cents per share, up from 36 cents per share, beating consensus estimates of 45 cents per share. The stock closed at 102.63 and moved to 105 after hours also bucking the trend. Splits announced today included YWAVE - Yellowwave 2:1, SJR - Shaw Communications 2:1, DS - Dallas Semi 2:1, LSI - LSI Logic 2:1, RNWK - RealNetworks 2:1, NT - Nortel 2:1. Important earnings to watch for tomorrow will be EMC (Easy Money Corp), JDSU (Just Don't Sell Us) and BVSN (Best Valued Stock in Nasdaq). The aliases of course are ours. With the good earnings performance by EBAY and other Internet companies Nasdaq will be hard pressed to drop very far even if there is a Fed wreck. There is just too much positive investor sentiment. Even with the positive sentiment and the positive close on both indexes today the breadth was still negative with advancers losing to decliners. Actually, the volume was lighter today than normal if you can call 2.8 bln shares on both exchanges light. After the nearly 2 bln share day yesterday the Nasdaq dropped back over -200 mln shares to ONLY 1.7 bln! We get another chance at Greenspeak tomorrow as Greenspan testifies before the confirmation committee as he tries to keep his current job. The cancelled testimony today is likely to be rescheduled for later in the week and will give traders yet another Maalox moment between now and the Fed meeting. I continue to urge traders to be cautious going into February. The violent drops and wide intraday ranges are symptomatic of a weak market. Traders are afraid the bottom can fall out from under them at any moment and they sell on the slightest indication of weakness. This provides a great traders market but gives the buy and hold investor ulcers. While I am concerned about weakness going into February the Dow is still in oversold territory. Also, the last several Fed meetings has seen an increase in buying the last two days before the event as the more aggressive traders try to take positions in front of a possibly favorable decision. I think the bad news is in the market and today proved there were buyers lurking in then wings. Just be cautious until a new trend becomes apparent. Good Luck, Sell too Soon Jim Brown Editor **************************************************** ANNUAL OPTION INVESTOR SEMINAR UPDATE - IMPORTANT !! **************************************************** The four day Option Investor Option Expo in Denver on March 28-31st is going fast. We are going to announce the guest speakers next Sunday and you are not going to believe who we have coming!! If you were thinking about going but had not made up your mind then this is your last chance. We were fortunate that the hotel had meeting rooms available for this seminar and there will not be another opportunity until next year. The four day Option Investor Seminar will be taught by 15 of the Option Investor staff and will have several well known "guest" speakers. The first day, Tuesday March-28th is optional. This is a special Options Boot Camp session for newer traders who need to better understand the basic strategies before attending the Wed/Thr/Fri advanced classes. The four day seminar will focus on explaining in detail each of the option strategies you need to be a successful trader in all kind of markets. You will learn how to choose what strategy is right for you in every situation. You will learn how to make money in any market and recognize the difference. This is intensive instruction with real time, real life examples. We will use live examples and study real plays as they occur. Representatives will be available to answer your questions from many of the brokers, charting and quote services we use at OIN. The tax saving information you will receive in the tax classes will more than pay for the entire trip. This is our annual event and will not be repeated until 2001. You can lose more than the price of the seminar in only one trade. Why not invest the same money in education and profit from the experience the rest of your life? For more information click below. http://www.OptionInvestor.com/bootcamp/oinmain.html Some of the topics covered will be: Entry Point, Entry Point, Entry Point Technical & Fundamental Analysis Options on Stock Splits Understanding Market Sentiment Recognizing Market Changes Cash Flow with Covered Calls Covered Calls on Leaps Using The Power of Index Options Successful Spread Techniques Maximizing Returns With Options Selling Puts, A Win - Win Play Using Options To Hedge the Market Buying Stock with Options Fundamentals of Charting Picking the Right Play In the Money, At the Money, Out of the Money Understanding Risk Profiles Making Stop Losses Work Trend Trading Day Trading Options Trading Psychology Money Management Target Shooting, Waiting on the Market Capitalizing on Earnings Stress Free Straddles Taxes and the Trader Keeping more Profits by Paying Less Taxes Selling Time OEX Skybox Recognizing Opportunity and Profiting From It. The second session is already over half full. If you are interested please register immediately because seating is limited. http://www.OptionInvestor.com/bootcamp/oinmain.html ********** STOCK NEWS ********** St. Jude: You May Want To Bypass This One Shares of St. Paul , Minn.- based St. Jude Medical, Inc. (NYSE: STJ) have not been experiencing the best of times for the past several months. The company, which designs, manufactures, and markets medical devices primarily for cardiac care, has seen its stock price fall from $40 per share last September, to a current price of $25, a drop of 38 percent. http://members.OptionInvestor.com/stocknews/012500_1.asp ************** Market Posture ************** As of Market Close - Tuesday, January 25, 2000 Key Benchmarks Broad Market Bearish/Bullish Last Posture/Since Alert **************************************************************** DOW Industrials 11,000 11,250 11,030 Neutral 1.25 * SPX S&P 500 1,340 1,400 1,410 BULLISH 12.03 OEX S&P 100 700 750 767 BULLISH 12.03 RUT Russell 2000 430 450 522 BULLISH 11.12 NDX NASD 100 3,200 3,850 3,759 Neutral 1.06 MSH High Tech 1,650 1,900 1,864 Neutral 1.06 XCI Hardware 1,300 1,350 1,421 BULLISH 1.14 CWX Software 1,210 1,420 1,314 Neutral 1.07 SOX Semiconductor 640 660 816 BULLISH 12.21 NWX Networking 820 900 892 Neutral 1.07 INX Internet 665 800 736 Neutral 1.06 BIX Banking 645 690 519 BEARISH 11.30 XBD Brokerage 410 450 419 Neutral 11.30 IUX Insurance 625 650 557 BEARISH 11.30 RLX Retail 900 935 905 Neutral 1.25 * DRG Drug 380 400 344 BEARISH 12.07 HCX Healthcare 760 790 703 BEARISH 12.07 XAL Airline 180 190 131 BEARISH 5.21 OIX Oil & Gas 280 315 285 Neutral 1.06 Posture Alert Strong corporate earnings continue to support this market from being overtaken by the bears; however, with major earnings season soon to be over, what will become everyone's focus? As such, strong volume and volatility continue to be the norm. Today's leading sectors were Semiconductors (+3.35%), the NASDAQ 100 (+2.68%), and Hardware (+2.19%). Now with this most recent market action, we have lowered the Retail sector and the Dow to Neutral from Bullish. *************** Market Sentiment *************** Tuesday, January 25, 2000 Reaching for the Tums yet? The battle for control of this market continues with volatile price movements and action, in which both bears and bulls have been getting shaken out of their trading positions, only to see a major reverse occur. This lack of confidence in both camps (bears/bulls) has only helped fuel these extremes, as well as the swell in exchange volume. If January's volatility is any indication for the rest of 2000, then we should be buying the major drug and pharmaceutical companies, because it will easily be a record year for sales in Alka-Seltzer, Zantac, Tums, etc. Now, for the bears out there, we see some indications that this market may have peaked, at least in the near-term. These reasons include: 1. Financial sector weakness 2. Failure to react to favorable earnings reports 3. Violation of key support levels 4. Breakdown of Russell 2000 5. IPO failure 6. Higher energy costs In the above list, we have already witnessed 4 out of 6 reasons become reality, with the exceptions of the Russell 2000 and the failing of initial public offering. With several IPO's due out this week, it will be interesting to see how they react. With regards to the Russell 2000, it was one of the few indexes to turn around today, as it closed in the red. We will continue to monitor these two scenarios to see if they pan out. Now not to end on a negative note, we do find the put/call ratio on many of the indexes to be a positive for the bulls' camp. As the market dropped on Monday, we did witness put buying to be significant in comparison to the calls. This does prove to be very important, as we believe this will give the market support in the short-term. As it stands, the overall put/call ratio for the major indexes are as follows: S&P 500 (SPX) 1.39 S&P 100 (OEX) 1.65 NASDAQ 100 (NDX) 4.57 All equities: 0.65 Now from a contrarian stance, these numbers above do favor the bulls' efforts in the short haul. In addition, the Pinnacle Index (OEX (750-770) saw a nice pickup in value, indicating once again that put buyers were rushing into the market quicker than call buyers. Should the Pinnacle Index (2.93) increase during the next couple of trading sessions, it may suggest that a near-term bottom has already occurred. BULLISH Signs: Corporate Earnings: Major corporate earnings are coming out left and right and it looks to be another very solid quarter! Cash Flow: The cash that has been sitting on the sidelines has been put to use as of late, as record volumes for the major indexes have been shattered. Mixed Signs: None BEARISH Signs: Volatility Index (24.34): The VIX continues to prove that the low 30's are an excellent buying opportunity, and the high teens continue to be a great selling opportunity. Interest Rates (6.634%): The yield continues to break new highs, with the next stop being 6.75-7.00%. The market has already priced a 25 basis point increase this February, however the market is also pricing in a 30% chance of a 50 basis point hike. Energy Prices: With the rapid rise in crude oil, everything from manufacturing to transportation will be affected by higher costs. These higher costs will be felt 1-2 quarters out, and could put pressure on profit margins. The Power of Sentiment Analysis It has often been said that the crowd is right during the market trends but wrong at both ends. Measuring and evaluating the sentiment of the crowd, therefore, can give savvy option traders a decided edge. Pinnacle Index OEX Friday Tues Benchmark (1/21) (1/25) Overhead Resistance (780-800) 0.83 1.26 OEX Close 779.78 767.31 Underlying Support (750-770) 2.14 2.93 What the Pinnacle Index is telling us: Based on January 25, underlying support for the OEX is building as put buyers come rushing into play this recent downdraft. Overhead resistance is still light, and should the put players continue on their ways, we may see the OEX make a rally attempt. Put/Call Ratio Friday Strike/Contracts (1/21) CBOE Total P/C Ratio .47 CBOE Equity P/C Ratio .41 OEX P/C Ratio 1.26 Peak Open Interest (OEX) Friday Tues Strike/Contracts (1/21) (1/25) Puts 760 / 5,234 760 / 7,121 Calls 745 / 4,079 745 / 4,304 Put/Call Ratio 1.28 1.65 Please view this in COURIER 10 font for alignment ************************************************* CHANGES THIS WEEK Daily Results Index Last Mon Tue Week Dow 11029.89 -243.54 21.72 -221.82 Nasdaq 4167.41 -139.32 71.33 -67.99 $OEX 767.31 -21.04 8.57 -12.47 $SPX 1410.03 -39.45 8.12 -31.33 $RUT 525.27 -10.99 -1.36 -12.35 $TRAN 2654.69 -48.54 -48.26 -96.80 $VIX 24.34 3.66 -1.98 1.68 Calls Mon Tue Week TQNT 159.63 1.13 17.00 18.13 TQNT is a great performer SILK 159.50 4.00 9.50 13.50 New, remains strong VECO 56.00 5.63 0.75 6.38 New, future looks bright PMCS 196.88 -4.00 9.63 5.63 New, positive momentum VIGN 216.50 5.50 -1.50 4.00 Dropped, earnings today ANAD 81.50 -2.88 5.13 2.25 The countdown is on CMVT 152.00 -5.00 6.63 1.63 Buyers push CMVT up MFNX 70.63 4.13 -3.38 0.75 MFNX needed a break! MSTR 289.00 -6.13 6.00 -0.13 Dropped, earnings Thurs VOD 55.06 -1.00 0.13 -0.88 VOD behaves very nicely JDSU 232.00 -17.06 15.94 -1.13 Dropped, no mystery here DISH 94.81 -0.38 -1.06 -1.44 A break-out for DISH! LVLT 108.88 2.38 -4.00 -1.63 Makes decisive recovery PCS 108.25 -2.25 -0.25 -2.50 On the road to recovery NOK 183.00 -5.00 3.06 -2.88 Support holds nicely AES 76.00 0.00 -4.00 -4.00 Dropped, stock collapses GMST 75.00 -7.81 2.94 -4.88 We like overall uptrend TWX 86.63 -3.50 -1.38 -4.88 TWX holds up very well EXDS 129.38 -8.94 0.44 -8.50 Dropped, earnings Weds SEPR 146.00 -5.00 -4.00 -9.00 Dropped, takes it on chin NTAP 107.19 -15.13 5.19 -9.94 Good bang for the buck? NTLI 125.50 -8.13 -2.75 -10.88 10-dma holds as support HGSI 205.19 -6.63 -10.06 -16.69 Splits 2:1 next Monday AFFX 224.75 -27.25 -1.63 -28.88 Out of the woods yet? Puts CMGI 114.44 -7.63 3.81 -3.81 Edges closer to our goal IIJI 78.44 -0.13 -3.06 -3.19 IIJI closes below $80! RLM 66.38 -2.19 -0.81 -3.00 Market adds pressure SLR 76.50 -3.00 -0.50 -1.88 Looks technically weak MU 65.88 2.38 -3.63 -1.25 Downgrade sinks shares FD 43.06 -2.63 1.81 -0.81 Quite a bit of news RMBS 76.38 -0.38 1.38 1.00 Investors cast leery eye WCOM 43.19 -0.81 2.38 1.56 Dropped, found a bottom ************ WOMANS WORLD ************ There is no Womans World article tonight, as Renee is on Vacation. ************** TRADERS CORNER ************** An Osmotic Technical Point of View - Whoops! Whoops, I was reading Option Investor's weekend update and realized that I had not written a story to put in it, again. That and I forgot to put in stop limits on my only losing trade last week. Just perfecting that disappearing money trick for the day I take my act on the road. They say that your memory is the first thing to go when you get old and I don't remember the second thing. I hope everyone is having as much fun as I am with this market. I have a feeling that February is going to be a real doozie! Speaking of which, do you know where doozie came from? It came from the car, Dussenberg. Perhaps the best car ever made, but that is another story. Speaking of driving, if the market were my friend and we had been out for "a few," I would be taking away the keys right about now. It is acting like it had more than one too many. Speaking of friends.....for those of you that are as enamored with JDSU as I am, have I got a tidbit for you. ETEK has become another very good friend to us. This is an excerpt from ETEK's very own website at www.e-tek.com: "The merger agreement provides for the exchange of 1.1 shares of JDS Uniphase common stock for each common share of E-TEK. Completion of the transaction is subject to customary closing conditions, including an E-TEK stockholders' vote and regulatory approvals. Following completion of the transaction, E-TEK will operate as a wholly-owned subsidiary of JDS Uniphase." JDSU was trading at $230 per share and ETEK at $215. What is wrong with this picture? Come on, the answer is worth $38 per share. When you buy ETEK you will receive 1.1 shares of JDSU. ETEK should be trading at a 10% premium to JDSU. Why isn't it you may ask? How many of you knew about this? I must say that OIN readers are way above average in the gray matter department (no, I am serious). But, you can't keep up with everything. How long will this last? Maybe a week. Maybe a month. Who knows? But, I can guarantee you it will not be there forever. So, if you like JDSU, you have to love ETEK. As soon as the big boys figure this one out, you will see at least parody on the prices and then a move into the premium. This could happen all in one day. I'll post the progress of this in the future. Well, I have a few too many trades going at once today, so I am going to pair it down some. SEBL is looking pretty good these days on solid consolidation. Maybe some in the money Aug calls. Hmmmm. After all, I am an Option Trader! Happy Trading! Contact SupportHarrison PICKS WE DROPPED **************** When we drop a pick it doesn't mean we are recommending a sell on that play. Many dropped picks go on to be very profitable. We drop a pick because something happened to change its profile. News, price, direction, etc. We drop it because we don't want anyone else starting a new play at that time. We have hundreds of new readers with each issue who are unfamiliar with the previous history for that pick and we want them to look at any current pick as a valid play. CALLS: ***** AES 76.00 -4.00 (-4.00) After showing remarkable relative strength in the face of yesterday's debacle, AES completely collapsed during today's late rally. We warned about the support level, so hopefully it was not too painful. We are dropping this play so quickly for one simple trading rule: If a position does not start working right away you should get out. There is some support at this price, so perhaps we will get a little bounce on tomorrow's open that will allow us to exit without too much of a loss. MSTR $289.00 +6.00 (-0.13) If you had not watched this stock for the past two days you would say nothing has happened, shrug your shoulders and get on with your life. The truth is that the stock has traded in a 48 point range. Not only did MSTR break out convincingly to a new high on Monday's opening, but it also reversed course and broke its short term uptrend only to rally back to the high $280's where it is trying to consolidate. We are dropping this very profitable play because it is announcing earnings and splitting on Thursday. If you were unable to take your profits on yesterday's gap up look to get out sometime tomorrow before the earnings and split. Today's range was $289.88-$266. Those two prices should be the pivot points for any major moves. VIGN $216.50 (+4.00) Our play on VIGN is now officially over as the company reported earnings today after the close. We were provided many opportunities to profit on this play as the price ran up in anticipation of earnings. The sellers started to appear yesterday right after the open and VIGN headed down from there along with the NASDAQ. This is consistent with the new pattern emerging where traders start to sell a day or two before the actual earnings announcement. For now, we say thank you to VIGN and look forward to adding it to the play list again in the future. JDSU $232 +15.91 (-1.13) No great mystery here. With earnings coming out tomorrow after the bell, it's time to say good bye to a very profitable play. Veteran readers know we never recommend holding over earnings - the risks outweigh the rewards. That said, we have every confidence that JDSU will handily beat the street estimates. However, optimism is already reflected in the stock. With a $45 move since we picked it on January 13, JDSU has been and should continue to be a winner, and we may pick it up again as its split date of March 10 approaches. Based on Nortel delivering a 22% earnings surprise after today's close, with most of their 21% revenue growth coming in their optical business, the long term future for those of you that actually own JDSU shares or LEAPS looks great. It's just drop for now, not a drop forever. EXDS $129.38 -0.44 (-8.50) Same story, different stock. Hopefully, you got out yesterday before the afternoon selloff. EXDS reports earnings tomorrow, so we are dropping it tonight. The good news is that EXDS could announce another split with their earnings announcement. We will be keeping an eye on EXDS with the idea that it may again make a good play, depending on the earnings and possible split. Until then, time to harvest the profits and exit the play. For those of you contemplating hanging on, just a reminder that you won't go broke making a profit. Sell too soon. SEPR $146.00 -4.00 (-9.00) It's time to let SEPR go for the time being. SEPR took it on the chin Monday as the broader markets experienced wide spread selling. SEPR did manage to make a new high at $158.50 before the selling began. The volume Monday was fairly heavy with 920K changing hands. SEPR fell to a support level of $135 today before buyers stepped in. SEPR ended the session down -4.00 at $146.00. We are dropping SEPR, as the company reports earnings Friday morning before the open. We will keep our eye on the biotech company as they announced a 2-for-1 split of the company's stock last week. The ex-date for the split is scheduled for Feb 28th and could show up on our play list as a split run play in the very near future. PUTS: ***** WCOM $43.19 +2.38 (+1.56) We were wondering if poor WCOM was ever going to find a bottom and it looks like we got our answer. Setting a new 52-week low at $40.63 yesterday, WCOM finally got some relief today, adding $2.38 by the close. Adding to the recovery today was the positive earnings announcement from AT&T. There may be further downside potential if the broad market continues to weaken, but we think there are better opportunities elsewhere. ******************** PLAY UPDATES - CALLS ******************** TQNT $160.00 +17.00 (+18.13) TriQuint Semiconductor has been one of the single best performing technology stocks of the past two days. Yesterday was a perfect day for trading the strategy mentioned in Sunday's write-up. TQNT gapped up on the open, during amateur hour it pulled back and subsequently experienced a very nice rally after taking out the opening high price, only to suffer profit-taking into the close. Today, TQNT got a huge boost for being added to the S&P MidCap 400 Index. The stock gapped up double digits, pulled back only a little, and then made another new high right before the close. This is a very strong accumulation pattern and we will go with it until it stops. Since the trading pattern is intact, try to avoid buying gap ups and try to possibly go long on pullbacks. Be very careful if the stock trades below today's low print of $148.75. Any break in the uptrend could result in some selling and a period of consolidation. AFFX $224.75 -1.63 (-28.88) Affymetrix trades just as true to breaking support levels to the downside as it does breaking resistance to the upside. One of the problems of trading a stock that just went parabolic to the upside is that real support is not found until the stock goes all the way back to the breakout point. This is exactly what happened today. The breakout point for AFFX was $204. Today the stock bounced very nicely off of $205.88 and rallied the rest of the day. Humane Genome stocks have been hit with profit taking. Today's close below yesterday's low tells us that AFFX might not be out of the woods yet. If it does trade to the upside tomorrow then look for initial resistance at $226.50 followed by $232.50. If it can take out those levels then $250 could be reached very quickly. GMST $75.00 +2.94 (-4.88) We still like the story that has propelled the shares of Gemstar higher. We also like the overall uptrend. The break below the $80 support was a little discouraging in the very short-term. Today the shares of GMST dropped in what could have been a short-term selling capitulation within an uptrend. The nice rally into the close was very encouraging especially with the stock closing up on the day. We mentioned in Sunday's write-up that a little consolidation looks to be in order for GMST. It is very possible that a little patience will be necessary before we can start taking profits. There is some good support in the $72 area which might provide a good entry point for a bullish position. Any gap up will take out today's high, which would be bullish. However, try and be patient and see if you can get a pullback. A trading range between $72 and $81 seems likely for the next few days. CIBC World Markets began coverage of GMST today with a Strong Buy recommendation. PCS $108.25 -0.25 (-2.50) Though PCS did have two days in a row on the downside, it spent the majority of today's session on the road to recovery. Monday, PCS opened and quickly traded to a high of $111.50 before succumbing to a few rounds of profit-taking. PCS fell out of bed this morning, opened down $2.50 and traded as low as $104.25. This looks to have been a good place to get on board with new entries. PCS moved steadily up for the rest of the day and managed a close right on its 5-dma. PCS could encounter some resistance at the $110 level. Should PCS continue picking up its positive momentum, we could be cleared for new entries to carry us through to earnings. Do not forget the reasons for this play. We have an earnings announcement on February 1st, followed by a 2:1 split on February 4th. CMVT $152.00 +6.63 (+1.63) We were really starting to get concerned about CMVT, especially after the drop to $137.50 during amateur hour today. Fortunately the buyers came back and quickly pushed our play up to the $142-143 range where it stayed until the last hour of the day. Volume returned and pushed CMVT up through $144, (which could have become resistance), to close at its high of the day. We are now back above the $149 level, but we need to see it hold. Look for a bounce at this level or a continued move up on strong volume before opening new positions. Remember that the primary catalyst for this play (other than momentum) is our anticipation of a split announcement. Congratulations if you bought the dip this morning, but don't forget to keep those stops in place. TWX $86.63 -1.00 (-4.88) Given the carnage in the markets yesterday, our TWX play held up very well. It didn't even seriously challenge support at $84. Melting down with the broader markets yesterday, TWX finally bounced at $85 in the last 30 minutes of the day, closing at $87.63. Although volume remains near 5 times its historical average (a side effect of merger interest), it was encouraging to see that it was less than half the ADV seen all last week. Recall that this is a leveraged play on the merger with AOL. The selloff in AOL that followed the merger announcement looks to have been overdone and we want to take advantage of the recovery. There are 1.75 outstanding shares of AOL for each share of TWX, meaning TWX shares will move faster in this merger-of-equals. Adding further fuel to the play was the announcement yesterday that TWX and EMI Group reached an agreement to merge their recorded music and music publishing interests in a 50/50 global joint venture. Going forward, wait for a bounce off support accompanied by a rise in volume before initiating new positions. With the current volatility in the broad markets, be sure to use stops. VOD $55.06 +0.13 (-0.88) Considering the ferocity of the selloff in the markets yesterday, VOD has behaved very nicely, telling us that the $54 level is strong support. Dipping as low as $53.94, VOD saw buyers return, pushing the price back up for only a $1 loss on the day. Trading today was fairly tame, with our merger play adding $0.13 on light volume of only 1.8 million shares. New positions can be considered on a bounce from the $54-55 level as long as buying volume returns. In the news, VOD shareholders overwhelmingly approved the pending merger with Mannesmann and the US joint venture with Bell Atlantic. Chris Gent, VOD's CEO reaffirmed the company's strategy of becoming Europe's global telecom leader and urged Mannesmann shareholders to approve the merger before the offer expires on February 7th. NOK $182.75 +2.75 (-2.88) Earnings are on the immediate horizon, scheduled for February 1 before the bell. We might even get a split announcement then too. Unless NOK has all of a sudden forgotten how to make phones, the fabulous earnings of NOK's suppliers (TXN, AMCC) are telegraphing that NOK may blow away their earnings too. Their CEO's admission that they would be cramming three years of revenues into two years is promising for the future. Technically however, the wimpy volume today despite the gain, throws a caution flag. We'd expect that this close to earnings and a possible split, NOK ought to move with a bit more conviction. No matter, even in the turbulent action over the last two days, a rising support level of $180 is holding nicely. Still NOK needs to get the lead out. Our best suggestion is to still buy on any weakness with your eye on February 1. Just be sure the market is running in your favor before you get into the play. MFNX $70.63 -3.38 (+0.75) OK, still no news, but we were grateful to see MFNX finally have a negative day after 11 straight days of gains. This is probably the only time you will ever see us happy about a loss for the day. Nothing goes up forever in a straight line and MFNX needed a break in order to give us an entry. You might view today's loss as a buying opportunity, especially since it came on reduced volume compared to recent days. Along with everything else in today's market, MFNX too got a bump back up over $70 late in the afternoon providing some support at $68. From last Friday, there is also support at $66. Target shoot to your comfort level, but recognize that today's loss turns the technical indicators in the down direction, and frankly one day may not be enough for MFNX to cool off. Give it some room. Let a pickup in volume and overall positive tone of the market be your guide. Unfortunately, there is no earnings event on the horizon until perhaps late February or early March according to IR. So we'll have to wait for that earnings run until later. ANAD $80.34 +4.38 (+2.25) The final countdown is upon us. There's only two trading days left to play this earnings' run. ANAD is confirmed to report this Friday at 8:30am. The past two days have been volatile however, the stock didn't disappoint us amidst the Nasdaq's weakness. On Monday ANAD managed to trade consistently above $80 until the late day pressure pushed it down -$2.88. Today amateur hour was nerve-wracking as ANAD plummeted to an intraday low of $73.75. But the stock's powerful run-up as the market reversed restored our confidence. This is indeed all "good & dandy", but remember the tight two- day time frame left to play. OIN never recommends holding over an earnings' announcement. LVLT $108.88 -4.00 (-1.63) At its lowest point of trading today, LVLT lost over 10.3% of its share price the day after its analyst and investor conference. Today's downdraft was sharp and the dip below the 5-dma ($105.05) was a bit daunting. However the decisive recovery during the last hour of trading proved the stock hadn't lost its upward momentum. More simply, LVLT was a victim of expected profit-taking after such huge gains and of course was responding to the overall market weakness. If you're more conservative, wait for another break through $110 for better confirmation. The main topics of yesterday's conference included Level3's accelerated worldwide network construction schedule that is expected to be finished ahead of schedule in the 4Q of 2000. Also company executives discussed the expansion of its wholesale facilities and the plans to build an Asian undersea connection. The race with Qwest (Q) and Global Crossing (GBLX) is on! Today Kaufman Brothers reiterated a Buy recommendation and issued an $163 price target. LVLT is reporting earnings next week on February 3rd, before the bell. NTLI $125.50 -2.75 (-10.88) NTLI suffered a significant decline yesterday violating its trailing support at the 5-dma ($129.84). Still we're keeping this split play on our call list because it held firm at the 10-dma ($125.51) throughout trading today. Put another way, this downdraft is more likely a response to the negative market sentiment and natural consolidation. Recall NTLI just set an all-time high at $137.09 on Friday. Consider waiting for a definitive bounce before opening a new position. This play is time-sensitive. There's only a few trading sessions left before NTLI splits 5:4 on February 3rd. In the news, NTL and Aston Villa, an English Premier League soccer club inked a lucrative deal. Aston Villa will be given a $42.9 mln interest-free loan payable over five years. In turn NTL receives a 9.9% stake in the club and according to a Premium TV managing director Geoffrey Hamilton-Fairley, NTL would harness "all media opportunities including e-commerce and the Internet, which is going to be an increasingly important medium in football". This arrangement follows others in the industry vying for media rights. *********************************************** PLAY UPDATES - CALLS - CONTINUED IN SECTION TWO *********************************************** ************************Advertisement************************* Tired of waiting on trades to execute? Does your broker offer Stop Losses on Options? Trade instantly with Stop Losses at Preferred Capital Markets Stop Losses based on the option price or the stock price. Move your trading into the next millennium with Preferred Capital Anything else is too slow! http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN ************************************************************** FREE TRIAL READERS ****************** If you like the results you have been receiving we would welcome you as a permanent subscriber. The monthly subscription price is 39.95. The quarterly price is 99.95 which is $20 off the monthly rate. We would like to have you as a subscriber. 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The Option Investor Newsletter Tuesday 1-25-99 Copyright 2000, All rights reserved. Redistribution in any form strictly prohibited. ******************************** PLAY UPDATES - CALLS - CONTINUED ******************************** HGSI $205.19 -10.06 (-16.69) HGSI jumped up to a new 52-week high right out of the gate Monday morning at $241. Actually the Genomics company held up very well until the selling got serious in the major indices. HGSI fell to a low of $205, but rebounded to close at $215.25 down only -6.63 for the session. The volatility continued today as traders sold shares of HGSI at the opening bell. HGSI made a low of $196.81 in the first fifteen minutes of trading today, when the buyers stepped in bidding the price back up. Given the fact that HGSI has gained over $96, since Jan 12th, a retracement was not unexpected. What is impressive, is how well the stock held up given the weakness seen the past two sessions. HGSI did propose a private offering of $150 million, in convertible notes Monday after the close. HGSI splits 2:1 next Monday and we believe HGSI may regain its momentum going into the split. The $200 area provided good support for HGSI. Continued movement to the upside would provide one last chance to enter this split run play. A close below $200 would definitely change our view. NTAP $107.19 +5.19 (-9.94) NTAP could not escape the selling in the broader markets Monday. Investors shaved almost 13% off the price of NTAP stock, as traders finally decided to take some money off the table. The volume behind the move was solid with 3.2 mln shares changing hands. NTAP gave back in one day, most of what it gained last week, but did bounce off a strong support level this morning at $100. So we are back at square one. NTAP did pick up $5.19 today on good volume. Our reasons for entering this play have not changed. We believe the company is well positioned in its industry, and a can produce a good bang for the buck. NTAP announced today that Informix Corporation has certified NetApp data management appliances, also known as "fliers" for deployment in Informix data environments. As for our play, continued momentum would provide a good point to enter a new play. Conservative investors may want to see NTAP move through the $110 resistance level, supported by strong volume, prior to placing an order. DISH $94.81 -1.06 (-1.44) Our play in DISH started off in the right direction first thing Monday morning. We said Sunday that we believed the recent momentum behind DISH had the company poised to break out over $100. Break-out it did. DISH made a new high at $104.44 in the first hour of trading, pulled back near $100 and began another move higher before the carnage began in the major indices. Although it wasn't panic-selling investors sold shares of DISH all the way down to $95, near the end of the session. The selling continued this morning, however DISH bounced off its 10-dma at $91.38 when buyers entered the market driving the price of DISH shares back up to $94.81. No company specific news in the past two session, just traders moving in and our of the stock. Intraday support for DISH is seen at $92 and resistance is found at $96. A new entry point would be seen on continued strength over $96. With the volatility seen in the broader markets, set your stops according to your risk profile and be prepared to take a profit when given the opportunity. ******************* PLAY UPDATES - PUTS ******************* RMBS $76.38 +1.38 (+1.00) Investors are casting a cautious eye in the direction of RMBS. RMBS was up at close today, but volume was below average, meaning those investors buying RMBS are minimal. The 50-dma ($76.08) acting as resistance held true with a few bounces above the level, but no breakouts. We did fall as far as 72.25 and that is bringing us closer to support at $67. Which should be the next stopping point for RMBS. So when you have a stock like RMBS that has wide trading ranges from day to day, entry points are easier to find. Anywhere close to resistance from the 10-dma would be a good entrance. Stops are important on any breakouts above the 10-dma that are supported with volume. Without a lot of investors support backing the up day, which was probably due to market conditions more than anything, we still see RMBS on a downward fall. There was no major news effecting our play today. IIJI $78.44 -3.06 (-3.19) It was a great day for our put play as IIJI finally broke through and closed below $80. If you have been following this one at all, you know that IIJI has been flirting with a breakthrough of this level for some time and had been unsuccessful, until today. IIJI moved down to a low just over $75. IIJI is now trading under its 100-dma of $79, which could provide some resistance. This level is backed by $80 and we are looking for this level to begin to provide as formidable of resistance as it did solid of support. IIJI does have some support between $74 and $72. Volume has been a little light and though we are encouraged by today's decline, we would like to see the volume pick up to confirm the validity of the drop. Until we see an increase in volume to back the trading at this level, we recommend holding off on any new entries. FD $43.06 +1.19 (-0.81) Quite a bit of news out there for FD so far this week. On Monday, Net Perceptions (NETP) announced that it had been selected by Fingerhut Companies, a division of FD, as it's preferred partner for advanced e-commerce solutions. Meaning? This appears to be a step toward FD's continuing Internet advancement. This morning, two Bear Stearns analysts released an article revealing the results of study that they had done in the weeks preceding the holidays of several well-known Web sites. FD was mentioned in the article though it was not in the most positive light. FD was touted as the "delivery offender" since FD was unable to deliver the merchandise that the analysts had ordered by the designated time frame. The analysts report goes on to warn that on-line shopping can be a "tedious" experience and say that shoppers may be better off by making a run to the store. Not exactly the kind of news you want to be hearing soon after a company announces that they plan on spending as much as $200 million on its Internet businesses in the next twelve months. $42 served as support throughout today's session. $44 has continued to provide resistance. Being that we did not see good volume backing today's move up, we are not convinced that today was any kind of indication of trend reversal. Therefore, watch for the $44 level to hold, a drop below $42 backed with good volume and take advantage of days like today for possible points of new entry. MU $65.94 -3.56 (-1.25) MU shares reacted positively on Monday to an upgrade from ABN AMRO, who raised MU from a Hold to a Buy with a 12-month price target of $120. The stock picked up over $2 on the news. The enthusiasm regarding the upgrade seems to have been rather short lived as today, MU resumed its downward trend. This was helped by BancAmerica Semiconductor analyst, Rick Whittington, who downgraded MU this morning from a Strong Buy to a Buy, citing concern over the continuing decline in DRAM spot prices as the reason for the downgrade. This news caused shares of MU to drop sharply mid-day. MU traded as low as $64.25 before attempting a bit of a recovery. MU then fell back to close toward the low end of its day. We are thankful for Monday's upgrade as it offered us some nice opportunities for entry points. $71 held as resistance on Monday and MU's 5-dma (currently $69) managed to hold MU back today. We saw big volume backing today's decline, an nice bearish indication. Watch for a drop below $65 with continuing volume. The next support level looks to be right at $60. SLR $76.50 -0.50 (-1.88) SLR continues its decline on the chart. Technically, it's weak in the RSI, MACD, and stochastic departments. Extra volume above the ADV while SLR is in a decline is an added bonus. Late yesterday afternoon would have made a great entry as it fell back under $79 after bouncing up to about $81 early in the day. Today, the trend continued. While finding just a bit of near-term strength with a small uptrend from $75 at 2:30 p.m. ET, we don't think that will hold. The next real support is at $72. Earnings are not until March 13, so an earnings run will not save it. Neither will their 2:1 split which does not occur until March 8. If SLR bounces up at tomorrow's open, and assuming the rest of the market doesn't blast off into the stratosphere, consider taking a position soon after amateur hour (generally the high of the day on a weak stock) or when the price declines again below $79. It's a great company, but everybody is looking at the other pretty girls at the dance right now. CMGI $114.44 +3.81 (-3.81) CMGI edged itself closer to our ultimate goal near the 50-dma ($105.76) this week. Overhead resistance proved to be strong at $115 indicating a pattern of lower-highs may be forming. And volume remains robust with over 8 mln shares being exchanged in comparison to the ADV of 5.75 mln. Importantly CMGI also managed to penetrate $112.50 during intraday trading this week. This is a good sign because it represented the first line of opposition established last week. Following along those lines, we'd like to see a close below this mark over the next few days. In the news CMGI and its venture capital arm, @Ventures, launched @Ventures Technology Fund, a $1 bln capital investment focusing on Internet technologies and infrastructure companies. Also CMGI announced a 50-50 joint venture with Pacific Century CyberWorks, Asia's largest scope Net company outside of Japan. Together they will orbit the emerging Asian cyberspace. RLM $66.38 -0.88 (-3.00) The negative market sentiment added pressure to RLM's share price over the past two days. Although there was a big drop in volume too with levels dipping below its ADV of 500 K. Nonetheless, RLM shed another 4.3% in a steady descent. There hasn't been any company specific news to effect Reynolds. However on Monday rival Alcan (AL) reported solid earnings coming in at $0.69 p/s versus $0.30 last year same quarter and beating First Call estimates of $0.56! Make note too that investors shunned the Buy reiteration from Deutsche Bank Securities and the $110 price target it issued for RLM on Monday. Taking a look at a one-month chart it appears a bounce off the 5-dma (now at $68.36) signals is a comparative entry point. ************** NEW CALL PLAYS ************** VECO - Veeco Instruments Inc. $56.00 +0.75 (+6.38 this week) Veeco Instruments is a worldwide leader in metrology tools for the data storage, semiconductor and research and scientific markets; and process equipment etch and deposition tools for the data storage and opto-telecommunications markets. Major clients include; IBM, Seagate, Read-Rite, TDK, Siemens and Samsung. Some of Veeco's major products include, force/ scanning probe microscopes, optical interferometers, stylus profilers, X-Ray fluorescence thickness measurement systems and leak detection/vacuum equipment. Companies that are providing the tools enabling semiconductor and telecommunications companies to make their products have been very strong so far this year. In fact, the relatively smaller P/E's and strong growth rates of these companies has made them a very popular way to invest in the continuing technological revolution. Add to this the markets recent broadening of investments to start including some of the smaller stocks out there (Veeco has a market cap just under a billion dollars), leads us to believe that more money may be going into stocks like Veeco. In recent weeks, Veeco has received new orders for just under $7 million. If this trend continues, which seems likely considering how technology manufacturing companies are constantly upgrading equipment to stay competitive, then look for Veeco to get more new contracts and to continue its stock price appreciation. It was a long time in coming, but Veeco is finally approaching its high of just under $65 made last year right around earnings. Hmmm, could it happen again? Since October the stock had been trading in a nice range between $40-$50 with a fakeout selloff in the first week of this year (what stock didn't). The recent rally has been the result of the breakout above $50 on incredible volume too. With its penchant for round numbers, look for a test of the old highs when the stock can take out $60, followed by a possible run into earnings on Feb 10th. Support can first be found at $53.38 and then $50. The most recent analyst comments came from Bank of America. B of A raised their rating to a Strong Buy. BUY CALL FEB-50 QVC-BJ OI=394 at $7.75 SL=5.75 BUY CALL FEB-55*QVC-BK OI= 61 at $4.38 SL=2.75 BUY CALL FEB-60 QVC-BL OI=107 at $2.56 SL=1.25 SELL PUT FEB-50 QVC-NJ OI= 30 at $1.38 SL=2.50 (See risks of selling puts in play legend) Picked on Jan 25th at $56.00 P/E = 41 Change since picked +0.00 52-week high=$58.69 Analysts Ratings 7-5-1-0-0 52-week low =$24.44 Last earnings 10/99 est= 0.35 actual= 0.39 Next earnings 02-10 est= 0.39 versus= 0.30 Average Daily Volume = 366 K Chart = /charts/charts.asp?symbol=VECO **** PMCS - PMC-Sierra Inc. $196.88 +9.63 (+5.63 this week) PMC-Sierra is in the business of designing, developing, and supporting high-performance semiconductor system solutions for the communications market. The company is a leading provider of high speed internetworking component solutions emphasizing ATM, Ethernet, SONET/SDH, T1/E1 and T3/E3 applications. The company's products are used in broadband communications infrastructures and high bandwidth networks. Other network equipment manufacturers integrate the company's products into their own system for Internet, remote-access and corporate data networking applications. Things were already looking pretty good for PMCS. Announcing earnings two cents better than estimates and a 2:1 stock split ex-div on February 14th last week certainly didn't hurt things. Follow that up with a dose of reiterated ratings peppered with a few healthy upgrades, and voila! You have yourself a call play. PMCS had spent a good deal of time flirting around the $100 level. PMCS bid farewell to this level with a brief dip mid-December and has been headed steadily uphill ever since. PMCS looked to have misplaced its running shoes around the 7th of this month but found them at $120 and quickly reclaimed its positive momentum run, tagging a low $34 dollars higher the very next day. Morgan Stanley gave PMCS yet another boost in the arm by initiating coverage at an Outperform with a $225 price target. On Monday, PMCS traded up to a new all-time high of $205. PMCS traded up to $204 during today's session. We did see volume over two times the daily average backing today's nearly 10-point gain, another good bullish indication in favor of our call play. PMCS has plenty of support to fall back on should the profit-taking bears emerge from the woods. PMCS has a bit of support right around $191 with more solid support backing at $190. Additional support can be found at the 5-dma, which is currently at $184 and has done a nice job of holding in the past. This is backed by the 10-dma of $171.50, should things get ugly for a bit. Resistance is at $200. We are inching closer to a close above $200, which we would like to see to confirm continuing positive momentum. Last Thursday, the American Stock Exchange announced plans to begin trading in options on several companies, one being PMCS. On Friday, Robertson Stephens reiterated their Strong Buy Rating on PMCS. That same day, Lehman Brothers upped their earnings estimates for PMCS and Pacific Crest upgraded PMCS from a Buy to a Strong Buy. Wow, enough said! BUY CALL FEB-190 SDL-BR OI=218 at $22.25 SL=17.50 BUY CALL FEB-195 SDL-BS OI=114 at $19.75 SL=15.50 BUY CALL FEB-200*SDL-BT OI=252 at $17.50 SL=13.50 BUY CALL FEB-210 SDL-BB OI= 64 at $13.63 SL=11.00 Picked on Jan 25th at $196.88 P/E = 170 Change since picked +0.00 52-week high=$205.00 Analysts Ratings 15-6-2-0-0 52-week low =$ 31.94 Last earnings 01/00 est= 0.27 actual= 0.29 Next earnings 04-20 est= 0.29 versus= 0.17 Average Daily Volume = 1.55 mln Chart = /charts/charts.asp?symbol=PMCS **** SILK - Silknet Software $159.50 +9.50 (+13.50 this week) Silknet Software is squarely positioned in the e-business world, providing its industry-leading customer-centric applications and systems to the likes of Microsoft, Office Depot, Sprint, Inacom, and Bell Canada. SILK's software allows companies to build strong customer relationships through personalized marketing, sales, electronic commerce and customer support services. SILK's approach integrates all customer interactions and data, whether across the Internet, by phone, through e-mail, or in person, providing the company's partners and customers with a single view of their relationship. Along with the rest of the NASDAQ, sellers hammered SILK right after the first of the year. After finding its feet near $105, buyers began immediately buying it up and quickly pushed the price above $130. After a couple days of consolidation, the stock began steadily moving up, using the 10-dma (currently $142.50) as support. The move really got underway when the company announced strong earnings on the 13th, followed by George Gilbert of Credit Suisse First Boston reiterating his Buy rating the next day. It has been encouraging to see that SILK has remained strong this week in the face of the weakness in the broader markets. We are a bit concerned that volume has been light and we want to see it pick up going forward. Looking at an intraday chart, we see a very nice pattern of higher-highs and higher-lows over the past week and a half. Because the move up has been so quick, there is not strong support until $133. We should see mild support at $150, and then $144; a bounce at either of these levels accompanied by increasing volume is a good target for opening new positions. The next point of resistance will likely be the 52-week high ($177.94), set on December 30. This is a volatile internet stock, subject to large daily moves. While this provides plenty of entry points, exercise caution and use stops to protect yourself in the event of a correction. SILK continues to form strong alliances and customer relationships, the latest with Computer Sciences Corp. Beneficial to both companies, the agreement (announced today) extends SILK's business-to business market penetration. On January 19th, the company announced the adoption of Silknet eBusiness Systems and Silknet eService by two automotive e-commerce companies, BBCN.com and CarParts.com. BUY CALL FEB-155 ULI-BK OI= 23 at $21.00 SL=16.38 BUY CALL FEB-160*ULI-BL OI=156 at $18.50 SL=14.50 BUY CALL FEB-165 ULI-BM OI= 41 at $16.63 SL=13.00 BUY CALL APR-170 ULI-BN OI= 41 at $14.63 SL=11.50 Picked on Jan 25th at $159.50 P/E = N/A Change since picked +0.00 52-week high=$177.94 Analysts Ratings 1-6-0-0-0 52-week low =$15.63 Last earnings 01/00 est=-0.28 actual=-0.20 Next earnings 04-13 est=-0.26 versus= N/A Average Daily Volume = 274 K Chart = /charts/charts.asp?symbol=SILK ************* NEW PUT PLAYS ************* No new put plays tonight. ********************** PLAY OF THE DAY - CALL ********************** CMVT - Comverse Technology $152.00 +6.63 (+1.63 this week) Comverse is the world leader in multimedia telecommunications applications. Through its Comverse Network Systems division, the company markets its Access NP and TRILOGUE INfinity Enhanced Services Platforms, which enable wireless, wireline, and internet companies to offer enhanced telecommunications services to business and residential customers. Among these services are voice and fax messaging, call answering, and web information services. Comverse also offers Intelligent Peripheral/Service Node, supporting next-generation personal communication services such as pre-paid wireless, mobile number portability, call screening, and mobile attendant functions. Sunday's Write Up It doesn't have the huge gains of some of the Internets, but CMVT's chart is hard not to like. Consistently delivering higher-lows, it broke through resistance at $149 on Thursday and used that level for support on Friday. With the nearly $7 gain on Thursday, we would have been surprised if there hadn't been some profit-taking. It was encouraging to see volume less than 40% of the ADV on Friday's pullback. The 5-dma (currently $148.38) provided excellent support all week, adding momentum to fuel this play which was originally started on speculation about a possible split announcement (see below). Investors are being attracted to CMVT because of the strength of its market position; its customer base currently numbers more than 290 telecommunications operators worldwide, with more than 150 of these in the rapidly growing digital wireless market. We are getting close to the 52-week high of $155.88, the next resistance level, and will need to see volume return to push us through. Going forward, CMVT has additional support at $144-145, which would provide a nice entry in the event of broad market weakness. There is additional support near $139-140, but in the absence of a broad selloff on the NASDAQ, a drop to that level would cause us to question the viability of our play. Consider opening new positions on a convincing bounce (read volume) off of support anywhere above $144. For those with open positions, remember to use stops so you don't end up giving back your gains. News is sparse on CMVT, so we are left to enjoy the ride while we wait for the much anticipated split announcement. Recall that it has been a split candidate since October when the company increased the number of shares and the CEO said a split would be coming in a matter of weeks or months. Tuesday's Write Up CMVT We were really starting to get concerned about CMVT, especially after the drop to $137.50 during amateur hour today. Fortunately the buyers came back and quickly pushed our play up to the $142-143 range where it stayed until the last hour of the day. Volume returned and pushed CMVT up through $144, (which could have become resistance), to close at its high of the day. We are now back above the $149 level, but we need to see it hold. Look for a bounce at this level or a continued move up on strong volume before opening new positions. Remember that the primary catalyst for this play (other than momentum) is our anticipation of a split announcement. Congratulations if you bought the dip this morning, but don't forget to keep those stops in place. BUY CALL FEB-145 CQV-BI OI=190 at $14.63 SL=11.50 BUY CALL FEB-150*CQV-BJ OI=285 at $12.00 SL= 9.50 BUY CALL FEB-155 CQV-BK OI=229 at $ 9.50 SL= 7.00 BUY CALL MAR-150 CQV-CJ OI= 4 at $16.75 SL=13.00 SELL PUT FEB-135 CQV-NG OI=130 at $ 4.00 SL= 5.75 (See risks of selling puts in play legend) Picked on Jan 9th at $139.00 P/E = 78 Change since picked +13.00 52-week high=$158.50 Analysts Ratings 10-4-0-0-0 52-week low =$ 43.63 Last earnings 11/99 est= 0.53 actual= 0.56 Next earnings 02-29 est= 0.56 versus= 0.44 Average Daily Volume = 1.29 mln Chart = /charts/charts.asp?symbol=CMVT ************************ COMBOS/SPREADS/STRADDLES ************************ Dow Stages Comeback? Monday, January 24 Nervous investors clobbered the market today, driving the Nasdaq to its fourth biggest point loss ever after a Federal Reserve official suggested aggressive interest-rate hikes may be in the works. The Dow closed down 243 points, its ninth biggest point loss, while the Nasdaq composite ended down 139 points at 4096. The S&P 500 index ended down 39 points at 1401. Volume on the Big Board was active with 1.1 billion shares traded. Losers thumped winners 2,039 to 1,029. Bond prices were higher with the 30-year treasury up 20/32, bid at 93 6/32, moving its yield down to 6.64%. Sunday's new plays (positions/opening prices/strategy): Cintas CTAS FEB65C/60C $0.75 credit bear-call Progressive PGR FEB85C/80C $0.62 credit bear-call BCE Inc. BCE FEB75C/85C $8.25 debit bull-call ESC Medical ESCM APR7C/10C $1.38 debit bull-call Sprint Pcs PCS FEB85C/95C $8.88 debit bull-call Sprint Pcs PCS FEB85C/100C $12.50 debit bull-call Portfolio plays: Monday's sell-off started right after Federal Reserve Bank of Atlanta President Jack Guynn said he did not see many signs that the committee's previous actions were slowing consumer demand. Retailers, cyclicals, Internet stocks and energy shares quickly plummeted and the majority of blue-chip stocks ended the day sharply lower. The Fed's policy-setting committee is scheduled to meet next week to decide whether to raise interest rates and most economists are now predicting a 25-basis-point increase in the federal funds rate. Until today, most technology investors had ignored the possibility of higher interest rates. Now it appears they are taking notice. In our long-term portfolio, Johnson & Johnson (JNJ) was the big loser, falling $6 to $84. Our LEAPS/CC's play was substantially profitable and based on the bearish trend, we decided to close the position to protect current gains. On the good side, Procter & Gamble (PG) recovered some losses today after reporting it has ended merger discussions with Warner-Lambert (WLA) and American Home Products (AHP). PG's CEO said the pact would have created substantial shareholder value with minimal up-front dilution but investors had been skeptical about the 3-way merger. In addition, P&G reportedly had sent an unsolicited letter to Gillette (G), seeking to discuss the possibility of a deal weeks before they entered talks to buy Warner-Lambert. Our long-term position will remain profitable with the stock in the $100 range but with the recent bearish technicals and earnings forthcoming, it may be prudent to exit the spread now while it is profitable. Another losing issue, SBC Communications (SBC) appears to be content in the new range below $45. With little news to move the stock in the short term, we have decided to close this position and move the remaining capital into a new play. The few winners in today's session were in computer software and biotechnology issues. The leader in the Spreads/Combos portfolio was Geron (GERN), up almost $6 at $37 on continued optimism over their new patents in cloning technology. The patents cover nuclear transfer procedures, which could help doctors grow living tissue, such as cartilage, bone and muscle, for transplants. The transfer technology is expected to be of significant value in regenerative medicine, which is focused on producing cells and tissues in vitro for treatment of a wide range of degenerative diseases. Another issue that rallied today was Computer Associates (CA). The stock climbed $2.38 to a new high near $73 after a joint announcement that Computer Associates and Red Hat (RHAT) have discovered some ground-breaking solutions For Linux. The details will be released later this week. Computer Associates also reports earnings after Tuesday's session. Tuesday, January 25 Investors recovered from Monday's interest-rate woes, boosting the blue-chip index to a winning session on strength in corporate earnings. The Dow Jones industrial average rose 21 points to end at 11,029 while the Nasdaq composite index moved 71 points higher to end at 4,167. The broader S&P 500 stock index climbed 8 points to close at 1,410. On the NYSE, decliners beat advancers 17 to 12 with over 1 billion shares exchanged. There were 187 shares at new lows and 33 at new highs. The benchmark 30-year U.S. Treasury Bond was up 6/32 with the yield at 6.63%. Portfolio plays: A number of issues rebounded in today's session and small-caps were again the leaders in the portfolio. Our recent adjustment on Key Energy Group (KEG) is paying off as the bullish stock climbed another $1.06 to end at $9.12. The recent momentum is based on new investor interest in the oil service companies and KEY's positive earnings report last week. The CEO said the company should be able to generate substantial free-cash flow, even with modest growth in activity levels. Demand for service is increasing and activity in all of their domestic and international operations grew from the prior quarter. Equipment utilization, revenues and service margins all showed signs of improvement. With commodity prices continuing to escalate, customers are spending more on drilling, service and ancillary equipment. That virtually guarantees Key's success this year as they are one of the world's largest land-based rig service operators and one of the nation's largest drilling companies. The other surprises came in the medical appliances group. I-Stat (STAT) rallied $1 to close at $14 with no public news. The move provided a break-even exit for those of you that may be concerned with the bearish indications in the chart pattern. A break below today's low would be another early exit signal and rather than testing the support, it may be more prudent to move the capital into another position. Medtronics (MDT) was the other medical mover, climbing $1.50 to and at $44.75. Our bullish LEAPS/CC's spread returns the maximum profit above $42.50. Other issues in the long-term portfolio enjoyed bullish sessions. Adobe Systems (ADBE) and Sun Microsystems (SUNW) both rallied in the wake of recent positive earnings announcements and we expect these well-known technology issues to hold their value even in the event of a rate hike. In addition to being a sector favorite, Sun Microsystems also announced a new pact with software maker Oracle (ORCL) and business consultants Price-Waterhouse-Cooper to provide technology tools and services to entertainment and media companies. The companies said they plan to offer services such as archiving and retrieval of content, support for e-business applications, royalties and intellectual property rights management, and digital conversion. In the latest chapter in the legal battle between SUNW and Microsoft, a federal judge reinstated an order forcing MSFT to change software based on the Java programming language created by Sun Microsystems. The decision supports a November 1998 injunction that was overturned by an appeals court last August. That should be a bonus as well. One of our major oil issues was in the news. Exxon Mobil (XOM), the world's largest publicly traded oil company, finished unchanged at $84 after reporting last quarter's income rose by 34%. Our bullish position is at maximum profit with the stock at $85. Summary Of Monthly Positions: This month's incredible market volatility provided some excellent opportunities for the Spreads/Combos section and we have tried to offer a wide selection of different candidates in the most basic strategies. Fortunately the market has cooperated with us in many of the recent positions and we are happy to report that January's group of plays enjoyed the best performance in the history of this section. While our conservative style and simplistic approach may not always be the most exciting avenue for profits, we hope you can find something in the play suggestions or narratives that help you become a profitable trader. ********************* CREDIT SPREAD SUMMARY ********************* Stock Pick Last Position Credit Cost G/L Status ALLR $130.25 $153.50 JAN175C/165C $0.75 $0.00 $0.75 Closed BCR $49.00 $47.56 JAN65C/60C $0.38 $0.00 $0.38 Closed BCR $49.00 $47.56 JAN65C/55C $1.56 $0.00 $1.56 Closed EXDS $87.12 $137.88 JAN70P/72P $0.50 $0.00 $0.50 Closed LGTO $61.31 $30.00 JAN80C/75C $0.62 $0.00 $0.62 Closed RMBS $77.62 $75.38 JAN60P/65P $0.38 $0.00 $0.38 Closed TDS $122.12 $121.19 JAN150C/J145C $0.50 $0.00 $0.50 Closed TDS $122.12 $121.19 JAN150C/J140C $1.38 $0.00 $1.38 Closed VYTL $45.25 $45.63 JAN55C/JAN50C $1.00 $0.00 $1.00 Closed Credit spreads are profitable if both positions remain OTM until expiration. The cost-to-close price can be used to compare the initial opening credit to the current spread value. *********************** CALENDAR SPREAD SUMMARY *********************** Stock Pick Last Position Debit Value G/L Status AG $13.88 $12.81 MAY15C/FEB15C $0.75 New Play Open BCGI $5.12 $7.56 JUN5C/FEB7C $1.31 $2.00 $0.68 Open BEL $64.13 $60.06 APR65C/JAN65C ($2.00) $2.25 $4.25 Closed BIDS $5.06 $4.31 MAY7C/JAN7C $0.62 $0.50 ($0.12) Closed CHB $9.62 $8.13 APR10C/JAN10C $0.81 $0.75 ($0.06) Closed CYCH $11.88 $9.13 MAR15C/JAN15C $0.75 $0.88 $0.12 Closed GERN $13.00 $31.56 MAR12C/JAN12C $0.62 $1.00 $0.38 Closed GERN $13.00 $31.56 MAR12C/FEB15C $1.25 $2.12 $0.88 Open HUM $9.25 $7.81 MAY10C/FEB10C $0.75 $0.38 ($0.38) Open HRC $5.75 $6.38 MAR7C/FEB7C $0.19 $0.19 $0.00 Open KEG $6.81 $8.56 JUL7C/FEB10C $1.93 $2.06 $0.12 Open KLOC $5.93 $5.56 APR7C/FEB7C $0.75 $1.38 $0.62 Open LOR $18.00 $22.94 APR20C/JAN20C $1.25 $1.75 $0.50 Closed LOR $18.00 $22.94 APR20C/FEB22C $1.75 $2.75 $1.00 Open MUEI $10.50 $12.00 APR12C/FEB12C ($1.62) $0.75 $2.38 Open PDE $17.25 $17.56 APR17C/FEB17C $0.56 $0.81 $0.25 Open PILL $13.62 $10.38 APR15C/JAN15C $1.00 $0.50 ($0.50) Closed SATH $13.00 $11.94 FEB15C/JAN15C $0.38 $0.50 $0.12 Closed SGI $9.38 $10.81 FEB10C/JAN10C $0.31 $0.75 $0.43 Closed STRX $8.43 $7.94 MAY7C/FEB7C $0.12 $0.50 $0.38 Open SVGI $16.38 $24.78 JUN17C/JAN17C $2.06 $2.50 $0.43 Closed SVGI $16.38 $24.78 JUN17C/FEB20C $2.88 $3.62 $0.75 Open SWBT $19.93 $18.19 MAY20C/JAN20C $0.93 $1.12 $0.19 Open TERA $6.62 $7.06 JUN5C/FEB7C $2.00 New Play Open TALK $17.68 $18.69 APR22C/FEB22C $0.25 $0.62 $0.38 Open TDFX $8.50 $9.00 MAR10C/FEB10C ($0.38) $0.25 $0.62 Open THC $26.31 $25.25 MAY30C/FEB30C $0.75 $0.50 ($0.25) Closed ZOLT $7.68 $9.88 APR7C/FEB10C $0.75 $1.88 $1.12 Open * A number of these positions were closed early to protect profits or prevent (limit) potential losses. The calendar (or time spread) is profitable if the value of the position exceeds the initial debit (or cost-basis) at the end of the expiration period for the long position. However, because we track the plays based on the current closing cost/value, the gains for time spreads will rarely be reflected until the play closes. Each month, as we sell a new option against the long position, the net cost should decline or the position value should increase. ************************ COVERED-CALLS WITH LEAPS ************************ Stock Pick Last Position Debit Value G/L Status ADBE $76.13 $62.88 JAN80/FEB75C $6.50 $7.50 $1.00 Open CA $53.56 $70.81 JAN60/FEB65C $2.12 $11.00 $8.88 Open CS $16.80 $27.50 JAN15/FEB22C $4.75 $8.00 $3.25 Open GM $71.68 $81.94 JAN75/FEB80C $6.62 $12.25 $5.62 Open HRC $5.75 $6.38 JAN7C/FEB7C $1.25 $1.38 $0.12 Open JNJ $95.68 $89.88 JAN100/F100C $2.12 $7.50 $5.38 Open MDT $39.38 $43.56 JAN37/FEB42C $5.25 $8.00 $2.75 Open MOT $100.00 $144.25 JAN105/F135C $22.50 $37.62 $15.12 Open NETA $25.12 $27.19 JAN15/FEB25C $9.12 $10.25 $1.12 Open PG $109.50 $102.50 JAN100/F110C $11.62 $12.12 $0.50 Open SBC $54.93 $42.81 JAN40/FEB50C $12.62 $8.12 ($4.50) Open SLR $71.25 $78.00 JAN70/FEB85C $11.50 $18.00 $6.50 Open SUNW $35.88 $84.44 JAN37/FEB75C $25.50 $34.00 $8.50 Open UAL $70.38 $60.06 JAN60/FEB70C $11.25 $9.75 ($1.50) Open UAL $70.38 $60.06 JAN75/FEB75C $5.75 $4.75 ($1.00) Open VOD $49.25 $55.88 JAN45/FEB50C $7.75 $9.25 $1.50 Open XOM $81.94 $85.00 JAN85/FEB85C $2.38 $7.00 $4.62 Open * New LEAPS/Covered-Calls plays are generally not profitable for at least two strike periods. *********************** DIAGONAL SPREAD SUMMARY *********************** Stock Pick Last Position Debit Value G/L Status AG $13.75 $12.81 FEB12C/JAN15C $1.50 $1.25 ($0.25) Closed AGTX $8.88 $8.81 JUN7C/FEB10C $1.81 $2.00 $0.19 Open AWEB $9.68 $11.75 MAY10C/JAN12C $0.88 $3.00 $2.12 Closed BTGC $15.50 $15.06 FEB12C/JAN15C $2.00 $2.00 $0.00 Closed CDN $22.81 $21.88 MAY15C/FEB20C $4.19 $4.62 $0.43 Open CNCX $29.38 $49.00 APR15C/JAN25C $9.62 $10.00 $0.38 Closed CNCX $29.38 $49.00 APR15C/FEB40C $17.75 $19.50 $1.75 Open COHU $29.25 $46.00 FEB25C/JAN30C $2.88 $4.25 $1.38 Closed CRUS $14.06 $13.69 JUN10C/JAN15C $4.25 $4.75 $0.50 Closed CRUS $14.06 $13.69 JUN10C/FEB12C $2.25 $2.62 $0.38 Open DLP $26.63 $17.38 FEB30P/JAN25P $3.25 $4.88 $1.62 Closed EGRP $24.94 $23.56 APR25C/JAN30C $3.75 $5.00 $1.25 Closed GSTRF $37.68 $43.69 MAR35C/FEB40C $3.25 $4.50 $1.25 Open KM $10.00 $9.75 JUN7C/FEB10C $1.75 $2.12 $0.38 Open MSGI $20.43 $19.13 MAY12C/FEB22C $7.00 $6.88 ($0.12) Open NAV $41.31 $43.75 JUL35C/FEB45C $4.88 $8.50 $3.62 Open NETS $25.06 $25.25 FEB22C/JAN25C $0.62 $2.62 $2.00 Closed ONHN $9.69 $8.13 APR7C/FEB7C $0.62 $0.38 ($0.25) Open PCMS $10.06 $13.50 MAY7C/FEB10C $2.00 $2.50 $0.50 Closed PCMS $10.06 $13.50 MAY7C/FEB12C $3.00 $4.00 $1.00 Open PGEX $22.56 $19.88 FEB12C/JAN20C $7.12 $7.38 $0.25 Open PTX $5.38 $4.19 MAY5C/JAN7C $1.38 $0.88 ($0.50) Closed RCOT $7.50 $12.00 MAY5C/FEB10C $4.25 $4.50 $0.25 Open SPOT $49.68 $59.94 FEB45C/JAN50C $4.00 $4.75 $0.75 Open STAT $15.75 $13.06 APR10C/FEB15C $4.00 $3.25 ($0.75) Open T $50.81 $52.38 JAN46C/JAN50C $2.25 $3.25 $1.00 Closed UIS $29.25 $33.50 APR22C/FEB30C $3.75 $7.00 $3.25 Open * A number of these positions were closed early to protect profits or prevent (limit) potential losses. The diagonal spread is profitable if the value of the position exceeds the initial debit (or cost-basis) at the expiration of the long position. However, because we track the plays based on the current closing cost/value, the gains for diagonal spreads will rarely be reflected until the play closes. Each month, as we sell a new option against the long position, the net cost should decline or the position value should increase. ************* DEBIT SPREADS ************* Stock Pick Last Position Debit Value G/L Status AIG $111.68 $103.94 JAN96C/110C $10.88 $10.25 ($0.62) Closed AIG $111.68 $103.94 JAN104/110C $4.62 $4.12 ($0.50) Closed BVF $51.93 $53.00 APR42C/50C $10.00 $9.38 ($0.62) Open CD $18.50 $20.75 JAN12C/17C $4.06 $4.93 $0.88 Closed COMS $31.50 $49.56 JAN30C/32C $1.31 $2.50 $1.19 Closed HELX $51.00 $58.00 APR25C/45C $15.75 $16.25 $0.50 Open LCOS $64.00 $80.38 JAN47C/55C $5.75 $7.50 $1.75 Closed NAV $41.31 $43.75 JAN40C/45C $0.62 $2.75 $2.12 Closed NEM $24.43 $21.19 JAN20C/22C $1.93 $2.12 $0.19 Closed NTBK $21.75 $18.00 JAN22C/25C $0.25 $1.00 $0.75 Closed PCLN $65.06 $63.50 JAN50C/60C $6.88 $5.25 ($1.62) Closed QWST $38.06 $41.81 JAN30C/35C $4.00 $5.00 $1.00 Closed SPLH $12.25 $12.25 FEB7C/10C $2.00 $2.00 $0.00 Open SPOT $49.68 $59.94 JAN45C/50C $3.00 $4.38 $1.38 Closed T $50.81 $52.38 JAN46C/50C $2.25 $3.25 $1.00 Closed TKLC $26.00 $28.63 FEB17C/22C $4.12 $4.00 ($0.12) Open TWLB $9.72 $7.72 FEB10C/12C $0.75 $0.25 ($0.50) Closed WDC $5.56 $5.12 FEB5CC/NP $4.38 New Play Open * Priceline (PCLN) finished at maximum profit but that position, and a number of other plays were closed early to protect gains or prevent (limit) potential losses. A debit-spread is profitable if the value of the position exceeds the initial cost of the spread when the play is closed. However, because we track plays based on the current cost/value, potential gains may not be reflected until both positions are closed. ****************************** COVERED CALLS AND COMBINATIONS ****************************** Stock Pick Last Position Credit Cost G/L Status DLP $23.56 $17.38 JAN-17CC $16.00 $17.50 $1.50 Closed EMLX $119.00 $136.38 FEB-100C $95.00 $96.00 $1.00 Open EMLX $119.00 $136.38 FEB-95P $92.50 $93.12 $0.62 Open PSFT $17.81 $25.00 JAN-15CC $14.12 $15.00 $0.88 Closed A covered-call or combination is profitable if the closing credit from the position is greater than the initial cost-basis. *************** DEBIT STRADDLES *************** Stock Pick Last Position Debit M/V C/V Status ALL $24.50 $23.50 APR25C/25P $5.50 $7.25 $4.25 Closed ATI $16.44 $22.06 APR17C/15P $2.50 $3.38 $2.62 Closed CAL $36.43 $34.63 MAR35C/35P $8.62 $11.00 $4.12 Closed CBR $27.19 $26.00 MAY25C/30P $10.25 $9.50 $8.75 Open CFR $29.69 $24.63 MAR30C/30P $3.06 $6.12 $5.25 Open FDX $35.19 $41.69 APR35C/35P $9.75 $14.00 $9.00 Closed JMED $38.65 $56.06 MAR37C/40P $8.12 $19.00 $18.75 Open LHSG $25.50 $35.50 APR25C/25P $6.75 $11.75 $11.75 Open MYL $18.63 $26.75 APR17C/17P $4.56 $10.50 $9.38 Open U $25.62 $23.75 MAY25C/25P $8.00 $10.75 $4.62 Closed UVN $85.75 $106.81 MAR85C/85P $14.75 $23.00 $22.00 Open M/V = Maximum Value C/V = Current Value A debit-straddle is profitable when the value of the position exceeds the initial cost of the spread. **** Note: We trade the 'Spreads' portfolio just as we would trade our personal account and the ongoing narrative is a service we provide to help novice traders understand how various positions might be opened and closed. It is not intended as a substitute for your own trading techniques nor does it replace your duty to manage the positions in your portfolio. We post a list of the current plays after each expiration period and the summary is a reasonable representation of the positions offered during the month. Questions & comments on spreads/combos to Click here to email Ray Cummins ********* NEW PLAYS ********* Due to the extreme weather conditions across much of the country, a number of our data sources (charting and search engines) were unable to provide timely stock and option pricing information at the close of today's session. Rather than try to offer a group of less than outstanding selections, we have decided to take leave of the market and begin work on the first of a new collection of "Spread and Combination" strategy narratives. The first article of the series will be posted in the Sunday edition of the OIN. ************************Advertisement************************* Tired of waiting on trades to execute? Does your broker offer Stop Losses on Options? Trade instantly with Stop Losses at Preferred Capital Markets Stop Losses based on the option price or the stock price. Move your trading into the next millennium with Preferred Capital Anything else is too slow! http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN ************************************************************** ************ See Disclaimer in section one ************
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