The Option Investor Newsletter Wednesday 1-26-2000 Copyright 2000, All rights reserved. Redistribution in any form strictly prohibited. Posted online for subscribers at http://www.OptionInvestor.com Also provided as a service to The Online Investor Advantage ****************************************************************** MARKET WRAP (view in courier font for table alignment) ****************************************************************** 1-26-2000 High Low Volume Advance Decline DOW 11033.00 + 3.10 11131.00 11002.60 1,119,661k 1,726 1,313 Nasdaq 4069.91 - 97.50 4174.72 4069.91 1,710,684k 2,017 2,132 S&P-100 762.79 - 4.52 770.69 762.31 Totals 3,743 3,445 S&P-500 1404.09 - 5.94 1412.73 1400.16 52.1% 47.9% $RUT 521.04 - 0.55 524.39 520.36 $TRAN 2664.79 + 10.10 2676.16 2633.93 VIX 25.08 + 0.74 25.58 23.97 Put/Call Ratio .55 ****************************************************************** Greenspan Re-nominated! Are we supposed to be happy or sad? This Fed governor for the ages has kept us in a bull market for years, but we all still curse his name when we think of the impending Fed meeting on February 1st and 2nd. Let's face it, the title of Federal Reserve Chief is a lose-lose situation. If you mess up the economy, you are cursed. If you try to stop a raging bull market in a healthy economy, you are double-cursed. No one doubts the super job that Alan has done over time, but in the short-term, we love to hate him. And we have four more years to enjoy it. Today, was one of those tough days if you held long positions. Alan Greenspan met on Capitol Hill in front of the Senate Banking Committee for his confirmation hearing. His prepared remarks where light on monetary policy direction, but it spooked the market nevertheless. It is widely anticipated that we will see a 25 basis point move at the next meeting. Alan Greenspan did say that the Fed's challenge is to foster financial conditions that will allow the economic expansion in the U.S. to continue as long as possible. He also said that maintaining price stability would be a key going forward. The result was probably nil, but traders used it as an excuse to sell stock. The Dow closed barely in plus territory, up 3.10 at 11,032.99, but it continues to hold above the key 11,000 level. The Nasdaq wasn't as lucky plunging into the closing bell to finish at 4069.94, down 97.47. The S&P 500 was down less than one percent at 1404.09, down 5.94 on the day. Volume continues to be heavy with the NYSE trading over 1.1 bln and the Nasdaq over 1.7 bln. The one bright spot was the Russell 2000 which reluctantly gave back 0.10% today. This index continues to outperform the rest of the markets and it's about time. Advancers held off decliners 17-13 on the NYSE, but lost on the Nasdaq 21-20. One concern that reared its ugly head today was margin debt. It is at unusually high levels and the thought of a declining market could trigger some margin calls and compound the issue. You don't hear as much about this topic except in times of a failing market. All of a sudden it can be a big issue and show that there is a certain level of fear in the markets. That helped the $VIX to a nice bump up near 28 this morning before settling out at 25.08, up 0.74 for the session. Here is the technical picture for the Nasdaq. You can see from the chart below that we closed below the 10-dma (4091) today for the first time since January 10th. Not good. You would also be able to see from an intraday chart that the 4150 level, which used to be strong support, acted like resistance all day. That is another uh-oh for the Nasdaq. Maybe the biggest of all concerns though is what happened last year. The Nasdaq has mirrored the pattern of October 1998 to January 1999. A stellar rise followed by a slump through the end of January to mid-March. The resemblance between the two is incredible. So where might we go? Right now the Nasdaq looks to have decent support at around 3750. That is where the Nasdaq bottomed in early January and is where the 50-dma currently resides. Even before that will be the magic number of 4000 which we almost hit on Tuesday, but that may be minor support after the DELL earnings warning after the close (see below). This morning, beverage giant Coca-Cola (KO) reported Q4 earnings of 31 cents a share before a write-down, which was one cent above the First Call estimate. KO also announced plans to begin laying off approximately 6,000 employees within the next year to help the company trim expenses. Citing a necessary "realignment" as the reason for the massive layoffs, Doug Daft, KO President and CEO, went on to say that "This management team is committed to doing what is necessary to ensure a strong future for the Coca-Cola company." KO also announced a reduction in their earnings projections for the first half of the year to between 11 and 13 cents per share. Shares of KO finished down $2.81 at $63.06. Another notable earnings related move came from QUALCOMM (QCOM). Shares of QCOM plummeted $24.38 to close at $124.63 with over 68 million shares traded. QCOM announced Q4 earnings this morning, coming in at 25 cents a shares, one penny ahead of estimates, yet 2 or 3 cents shy of the "unofficial" whisper numbers. QCOM warned of a slow down in wireless chip sales for the first quarter. The reasons given for the slow down were "seasonal factors, inventory balancing by customers due to continued shortages of other phone components, and transition from older chips to the latest chips." Because of this warning, Solomon Smith Barney downgraded the stock from Buy to Outperform. Merrill Lynch also downgraded QCOM, dropping it from an Accumulate to a Neutral. QCOM also announced plans today to purchase SnapTrack for an approximate $1 billion stock swap. Shares of Nortel Networks (NT) and BCE Inc. (BCE) were halted late in the trading session pending news regarding BCE's plans to spin off its stake in NT. After the close, BCE did announce that it planned to spin off 37% of its stake in NT while retaining 2%. Shares of both companies remained halted to the close. Today, Sprint Corporation announced that it will be selling its interests in Global One to Deutsche Telekom and France Telecom. The deal will be worth an approximate 1.3 million in cash. Sprint plans to focus its attention on its pending acquisition by MCI Worldcom. Staffing agency Robert Half International, beat analysts estimates by three cents, coming in at 41 cents per share. Following the earnings report, RHI received several upgrades, one from Solomon Smith Barney from a Neutral to a Buy, another from CS First Boston form a hold to a Buy and the last from Dain Rauscher Wessels from a Neutral to a Buy. Shares of McDonalds (MCD) traded to a new 52-week low today as MCD fell a penny short of analysts earnings estimates, coming in at 35 cents a share. Other earning surprises included BMC Software (BMC) who fell one penny short of estimates at 41 cents a share, Commerce One, who also missed estimates by one cent losing 16 cents a share and CPQ who beat estimates by 3 cents at 19 cents a share. After the close, Dell Computer (DELL) warned that it would miss analysts earnings estimates by up to 7 cents and could come in as low as 15 cents per share. DELL cited inconsistent semiconductor flow and Y2K issues as the reasons behind the expected earnings shortfall. This was a widely anticipated announcement and the stock was halted near $37 after-hours. That is already down from a regular session close of $40.38. This may be enough to do in the Nasdaq tomorrow so trade carefully. There is no telling what the fallout may be in the sector or the broader technology markets. I'm sorry to say, but my gut still says sideways to lower in the near-term. With earnings behind us and interest rates on the rise, the market has some digesting to do. Granted the 30-year bond has been gaining strength due to the stock market weakness, but that may be more out of panic buying than the emergence of a new trend. The 30-year yield ended at 6.58% today. At least we can take comfort in the fact that the Labor Department delayed the key Employment Cost Index (ECI) report until Friday due to the east coast blizzard clean up. This report is a favorite of Greenspan's and will be closely watched. In glancing at the charts, I see more stocks in trouble than at entry points. With the Russell rising almost daily, there is an argument being waged that investors have left momentum for value. It is easy to believe when you look at the carnage in QCOM today. But who knows? We have seen lighting quick corrections lately that last 2 or 3 days before buyers return. No one is scared to buy the dips anymore. That may be enough to continue to hold up the markets. Nasdaq 4000 and Dow 11000 are the levels to watch tomorrow for support. Otherwise, pick your trades carefully ahead of the Fed and sell too soon. Ryan Nelson Asst. Editor *********** STOCK NEWS *********** Research and Investing: Thank God for the Internet Remember the old days when researching companies meant going to the library, and asking the person behind the reference desk to point you to the investment section. I loved going to the library to try to find that needle in the haystack. It was the ultimate challenge. For the average investor who did his/her research way back in the early 90s, the library was THE resource for researching stocks. The first thing I would do is ask for the big black binder on the shelves in the back behind the clerk. The book: The ValueLine Investment Survey. This binder weighed about as much as a small child. This thing required two hands...one was not enough. The ValueLine wasn't just sitting on the regular shelves with the "regular' investment books. No, Sir. This book was in demand. I had to give the desk clerk a library card, a drivers' license, my mother's maiden name, and if I remember correctly, a pint of blood. No other publication in the entire library, or county, warranted this kind of collateral. Climbing Everest seemed an easier task than getting this binder, but it was well worth it. Once I coughed up the library card, lung, and signature, the clerk walked back, back, back, past the "other" reference materials to where the good stuff was hiding. The clerk returned, dragging the black-vinyl monster up to the counter. But this ordeal was not over. Now that I had the Holy Grail of finance in my hands, it would not be in my possession for the rest of the day. There was a 30-minute time limit. "The demand for this item is very high," is what I remember hearing the clerk say, as I ran off to start perusing. This was the life the typical investor back in the dark ages. Pardon me, I mean the early 90s. Large binders chock full of balance sheets, income statements, and earnings announcements were the only medium available when I started researching stocks. Names like ValueLine, Growth Stock Outlook and Standard and Poor's Reports ruled the reference shelves of most libraries. Between the pages of these sources lay all the answers. But even though it took hours paging through publication after publication, investing felt more cerebral than it does now. I would read, take notes, scribble out charts, and make list after list of possible buy candidates. I would spend hours pouring over issues of Wall Street Journal, Investors Business Daily, Fortune and Money magazine, monthly Nasdaq Over-the- Counter (OTC) and New York Stock Exchange (NYSE) news release binders, Growth Stock Outlook, ValueLine's Special Situations manual, and other sources. The time I spent in the library always seemed well worth it, even if my library endeavors did not translate into instant profits. Trying to get information on initial public offerings (IPOs) back in the old days was a difficult task. I would be lucky if I heard about one from a stockbroker buddy or read about one in the newspaper, let alone, have access to shares. Looking for information on initial public offerings at the library was also tedious, as the number of resources discussing IPOs were few and far between. Unlike today, there was no such thing as typing in a keyword or phrase at a Web site, and instantly receiving reams of online profiles of companies either registered with the SEC or getting ready to debut in the coming week. The publication I used to read when I first started doing research on IPOs was called New Issues, which the mailman brought to the library once a month, if I was lucky. It was a $400 per-year publication that was worth every penny. New Issues, for me, was the way to quick riches. It was the best source, and the only source, I could find that had reviews and recommendations on IPOs. It would typically mention four or five prospective candidates, and make one or two outright recommendations from that list. In total, it usually included 50-70 companies that had either recently filed their S-1 with the SEC to go public, or were already registered and ready to debut on one of the major exchanges. New Issues also gave the names of the underwriters and price-range of each offering. Obtaining shares of these hot companies, however, was a completely different story. The only real avenue available to buy shares of an IPO was to call the underwriter of the offering and ask to buy shares. Of course, the few shares these companies were offering were usually reserved for the underwriting firm's largest and most loyal clients. I didn't qualify. My only access to these shares would be to purchase them in the secondary market, after the big run-up. Thanks, but no thanks. These days, if you have an online brokerage account and are an active trader (meaning you generate lots of commissions), you can sometimes get access to IPO shares before they start trading. Competition among online brokers like E*Trade or Ameritrade is fierce, and these firms sometimes offer access to IPO shares as a reward for a customer's activity. The way we research and invest today has changed dramatically. The information we have available to us is so abundant compared to just a few years ago. With the click of a mouse, you can buy stocks without a broker, get analyst research, review initial public offerings, or check out economic news. You can discuss investments in real-time with people halfway across the globe. But abundant information does not always mean good information. For every helpful Web site, there are 10 sites that are looking to scam investors in some way, shape or form. Maybe investing isn't as cerebral as it used to be. But the Internet has helped tremendously in helping to level the investment playing field. Viva la Internet! ********************** PLAY OF THE DAY - PUT ********************** IIJI - Internet Initiative Japan $74.63 -3.81 (-7.00 this week) Founded in 1992, IIJI offers a comprehensive range of Internet access services and Internet-related services to customers, including corporations and other Internet service providers, in Japan. IIJI offers its services via one of the largest Internet network backbones in Japan as well as between Japan and the United States. Sunday's Write Up We were waiting for IIJI to make up its mind as to what direction it was going to head. Friday was encouraging for our put play, as IIJI dropped $3.75 for the session. IIJI tested and held support at $80 several times throughout the day. As we have mentioned, this level seems to be providing solid support and timing new entries around this current level could be risky. We are obviously looking for a drop below this level to indicate the continuing negative momentum for this put play. Otherwise, new entries are really only going to be feasible on any moves up held back by resistance. This could be risky and it will be imperative to use your stops if you are going to try and target shoot your way in. We saw a pick up in Friday's volume, as it was nearly double over Thursday's, which was a nice bearish indication. IIJI looks to have immediate resistance overhead at $82 backed by its 5-dma of $84. Though we have not been able to confirm the date yet, there will most likely be an upcoming earnings announcement sometime around February 15th. The possibility of an earnings run makes a breakthrough the $80 level even more important for the continuance of our put play. Exercise caution. On Friday, IIJI announced that it will be expanding service areas for high-speed dialup access from 30 points, to 34. This will allow dial-up customers more convenient access to wider areas. Tuesday's Write Up 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. BUY PUT FEB-75*IUJ-NO OI= 50 at $9.88 SL=7.25 BUY PUT FEB-70 IUJ-NN OI=112 at $5.63 SL=3.75 Average Daily Volume = 504 K Chart = /charts/charts.asp?symbol=IIJI ************************************* BIG COVERED CALLS & NAKED PUT SECTION ************************************* This week, several of our candidates have reported favorable earnings and announced stock splits. Each of the "in-the-money" positions offer conservative entry points into technically bullish charts, with reasonable monthly returns. The positions that we find favorable (and will track every week) are marked with ***. We will also list more aggressive positions for those traders so inclined. Do not enter these positions unless you fully understand the strategy and various methods of manipulating the position should the stock price drop or rise and in the event you decide you want to keep the issue. Summary of Previous Picks: NOTE: January data is based on Friday's closing prices. Covered Calls: Stock Strike Strike Cost Current Profit Monthly Symbol Month Price Basis Price (Loss) Return PUMA JAN 80 77.16 99.00 $2.84 7.0% HNCS JAN 60 58.81 102.50 $1.19 6.8% CLRS JAN 60 58.06 75.13 $1.94 6.4% RFMD JAN 65 63.88 89.56 $1.12 5.9% INCY JAN 60 58.22 157.13 $1.78 5.8% AFFX JAN 120 116.75 253.63 $3.25 5.3% HGSI JAN 125 121.63 221.88 $3.37 5.3% NEWP FEB 55 52.06 63.13 $2.94 5.7% DITC FEB 90 85.25 130.88 $4.75 5.6% ASDV FEB 60 57.00 76.38 $3.00 5.3% CNXT FEB 65 61.93 74.31 $3.07 5.0% VRIO FEB 55 52.50 67.25 $2.50 4.8% QCOM FEB 125 119.00 124.63 $5.63 4.8% ADAP FEB 75 71.06 147.13 $3.94 4.6% GMH FEB 100 95.81 112.50 $4.19 3.6% NVLS FEB 38 36.48 49.81 $1.53 3.4% Naked Puts: Stock Strike Strike Cost Current Profit Monthly Symbol Month Price Basis Price (Loss) Return ARTG JAN 75 74.06 125.25 $0.94 15.0% ASDV JAN 55 54.37 77.13 $0.63 13.4% PUMA JAN 70 69.25 99.00 $0.75 12.4% CLRS JAN 55 53.87 75.13 $1.13 11.7% INCY JAN 50 49.00 157.13 $1.00 10.5% IDC JAN 30 29.37 37.00 $0.63 9.6% AFFX JAN 105 103.44 253.63 $1.56 9.5% PUMA JAN 65 63.87 99.00 $1.13 9.4% INCY JAN 65 64.44 157.13 $0.56 8.9% HGSI JAN 115 113.62 221.88 $1.38 8.6% CRA JAN 115 113.75 267.63 $1.25 7.2% JDSU JAN 125 124.31 233.13 $0.69 6.3% ICGE JAN 110 108.87 159.00 $1.13 6.2% DITC FEB 85 81.25 130.88 $3.75 13.7% QCOM FEB 115 111.12 124.63 $3.88 11.8% CNXT FEB 60 58.25 74.31 $1.75 9.9% VRIO FEB 50 48.56 67.25 $1.44 9.7% NEWP FEB 50 48.69 63.13 $1.31 9.5% ASDV FEB 50 48.81 76.38 $1.19 7.7% ADAP FEB 65 63.25 147.13 $1.75 7.1% CTXS FEB 120 117.69 139.56 $2.31 7.0% NXTL FEB 100 98.12 115.06 $1.88 6.3% NVLS FEB 33 32.63 49.81 $0.71 5.8% GMH FEB 95 92.75 112.50 $2.25 5.6% NEW PICKS NOTE: This week, our target Return On Investment is 3.8% which correlates to a 5% monthly return. A margin account would double the listed covered call returns. January Plays ************* HLIT - Harmonic $111.69 *** Fiber Optics *** Harmonic designs, manufactures and markets digital and fiber optic systems for delivering video, audio and data services over cable, satellite and wireless networks. Their products include optical transmitters and node receivers, return-path transmitters and receivers, network management software, and data delivery systems that enable high-speed Internet access, video-on-demand, and other interactive services. Harmonic reported blow-out earnings last week, besting the First Call estimates with $0.33 per share on net sales of $63 million, up 134% from $27.1 million for the fourth quarter of 1998. The company experienced strong demand for its fiber optic products across its worldwide base of cable customers and domestic sales increased 197% from the fourth quarter of 1998. During the quarter, Harmonic announced the acquisition of DiviCom (from C-Cube Microsystems) to help position the company as a leading supplier of open-system solutions for delivering video, voice and data over a variety of network architectures. The new combination will double the size of the company and allow them to offer more complete solutions for cable operators, as well as expand their penetration into telecommunications, satellite, wireless and other emerging broadband markets. They also intend to develop advanced fiber optic and digital systems, along with expanding their worldwide sales and marketing effort. Action Month & Option Open Closing Cost Return On Req'd Strike Symbol Interest Price Basis Investment Sell Call FEB 95 LQL BS 90 20.13 91.56 3.8% *** Sell Put FEB 85 LQL NQ 52 1.56 83.44 6.5% *** Sell Put FEB 90 LQL NR 197 2.25 87.75 8.9% Sell Put FEB 95 LQL NS 38 3.50 91.50 11.1% Chart = /charts/charts.asp?symbol=HLIT **** JNPR - Juniper Networks $143.75 *** New Price Target *** Juniper Networks is a leading provider of Internet infrastructure solutions to Internet service providers and other telecom service providers. The company delivers next generation Internet backbone routers specifically designed for service provider networks. The company's flagship product is the M40 Internet backbone router, featuring high performance ASIC-based packet forwarding technology and Internet optimized architecture into a purpose-built solution for service providers. Juniper's backbone routers are specifically designed to accommodate the size and scope of the Internet. Juniper recently posted its first gains as a public company and two analysts raised their outlook on the stock based on revenue growth of $45.4 million, a 54% rise from the third quarter. The analyst from Credit Suisse First Boston said Juniper's quarterly results easily surpassed his expectations and he announced that strong international sales along with growing customer diversity bode well for the company's revenues. Warburg Dillon Read analyst Nikos Theodosopoulos also raised his 12-month price target for Juniper Networks to $155 per share, based on solid revenues and upwardly revised estimates for the coming year. Action Month & Option Open Closing Cost Return On Req'd Strike Symbol Interest Price Basis Investment Sell Call FEB 125 JUX BE 33 23.63 120.12 4.1% *** Sell Put FEB 113 JUX NW 85 2.38 110.62 7.6% *** Sell Put FEB 116 JUX NX 187 2.94 113.06 9.0% Sell Put FEB 120 JUX ND 311 4.00 116.00 10.6% Sell Put FEB 123 JUX NY 40 4.88 118.12 11.7% Chart = www.OptionInvestor.com/charts/charts.asp?symbol=JNPR **** MERQ - Mercury Interactive $128.94 *** Revenues up 47% *** Mercury Interactive develops and supports a comprehensive suite of automated software testing solutions. The company's Xrunner product is an automated graphical user interface regression tool that tests X-Windows applications running under UNIX. WinRunner tests enterprise applications on Windows 3.1, Windows 95, and Windows NT platforms. LoadRunner is an integrated client/server and Web load-testing tool that provides a scaleable load testing solution for managing the risk of enterprise systems. Mercury's TestDirector is workgroup test management software that directs the quality assurance process for software development. WebTest is the first technology designed specifically for testing World Wide Web applications, and Astra SiteManager is a comprehensive visual Web site management tool that is designed to meet the challenges faced by Webmasters and business managers of rapidly growing Web sites with changing contents and shape. One of MERQ's most popular software programs is used to "stress test" Web sites for companies and apparently that service is in high demand. Their recent earnings report was very favorable with quarterly revenues of $60 million, an increase of 47% over the fourth quarter of 1998. Net income was $14.9 million, an increase of 71% and earnings per share climbed to $0.34, up 55% from the previous quarter and $0.04 higher than the analysts' expectations. Mercury's record results suggest their comprehensive offering of testing and monitoring solutions, available as either product or hosted e-services, will allow them to profit from the critical e-commerce infrastructure issue of performance and further their market dominance in this growing area of technology. Action Month & Option Open Closing Cost Return On Req'd Strike Symbol Interest Price Basis Investment Sell Call FEB 110 RQB BB 91 22.63 106.31 3.5% *** Sell Put FEB 95 RQB NS 2 1.13 93.87 4.2% *** Sell Put FEB 100 RQB NT 88 1.81 98.19 6.6% Chart = /charts/charts.asp?symbol=MERQ **** PGTV - Pegasus Communications $115.00 *** Media Sector *** Pegasus is a diversified media and communications company that provides direct broadcast satellite television services to a wide range of customers in rural areas of the US. Pegasus is the largest independent provider of Directv and the company has the exclusive right to distribute Directv digital broadcast satellite services to almost 5 million rural households in 36 states. The company distributes Directv through the Pegasus retail network and has expanded this network across America as a result of its acquisitions of Directv rural affiliates. Pegasus is also the owner or programmer of a number of other TV stations affiliated with Fox, UPN or the WB network and the owner of a large cable system in Puerto Rico. The bullish charting indications brought us to this issue and it's obvious what investors think about the company and its industry. Recent news about acquisitions, upgrades and a new convertible issue all have bearing on the outcome but in the end, the tape tells all! Action Month & Option Open Closing Cost Return On Req'd Strike Symbol Interest Price Basis Investment Sell Put FEB 95 GUQ NS 0 1.31 93.69 4.8% *** Sell Put FEB 100 GUQ NT 100 2.25 97.75 6.8% Chart = /charts/charts.asp?symbol=PGTV **** PMCS - PMC Sierra $203.13 *** Stock Split *** PMC-Sierra develops, markets and supports high-performance semiconductor system solutions for advanced communications markets. The company is a leading supplier of Asynchronous Transfer Mode (ATM), SONET/SDH and T1/E1 broadband component solutions for the Information Superhighway. PMC's products are used in local area networks and wide area networks for switching, mapping, protocol conversion, transmission and multiplexing. PMC provides fast Ethernet integrated circuits to the networking markets. PMCS also provides internet working semiconductor devices, solutions and related technical service and support to manufacturers for use in their communications and networking equipment. This company knows no limits and its share value continues to rise on momentum from better-than-expected earnings and a 2-for-1 stock split announcement. The split will become effective on or about February 11 for stockholders of record as of January 31. Analysts are very bullish on the issue and Warburg Dillon Read recently raised its price target on the stock to $225. CS First Boston has also revised its favorable rating and expects fiscal year 2000 earnings to come in 15% higher than previously expected. We favor the break-out area near $170 as support for any future consolidation. Action Month & Option Open Closing Cost Return On Req'd Strike Symbol Interest Price Basis Investment Sell Put FEB 150 SDL NJ 376 1.88 148.12 4.4% *** Sell Put FEB 155 SDL NK 905 2.38 152.62 5.5% Sell Put FEB 160 SDL NL 245 3.25 156.75 7.4% Sell Put FEB 165 SDL NM 865 4.25 160.75 9.0% Chart = /charts/charts.asp?symbol=PMCS **** RIMM - Research In Motion $71.63 *** Wireless Access *** Research In Motion is a designer, manufacturer and marketer of innovative wireless solutions for the mobile communications market. The company makes two-way text pagers, wireless PC cards and radio-based modems for the mobile personal communications market. Its palm-sized interactive pager lets users access the Internet to send and receive messages and features a miniature keyboard and a mouse-like device. Portable computers can send and receive data using their wireless PC card and RIMM's modems are integrated into laptops, vehicles, and vending machines. The recent rally started after the company announced a deal to supply its product to staff at Intel (INTC). RIMM surprised the market with news it would provide its pagers to 65,000 employees at the computer chip giant. The contract is their biggest one-time order and could be worth up to $800,000 excluding monthly service revenue. Intel will also deploy RIMM's enterprise servers for its network to support the palm-sized pagers and this may be the first step in a number of new orders. Another technical break-out provides an excellent opportunity for favorable entry at a price near recent support. Action Month & Option Open Closing Cost Return On Req'd Strike Symbol Interest Price Basis Investment Sell Call FEB 60 RUL BL 103 14.25 57.38 4.6% *** Sell Put FEB 50 RUL NJ 54 0.81 49.19 5.4% *** Sell Put FEB 55 RUL NK 234 1.44 53.56 9.1% Sell Put FEB 60 RUL NL 31 2.63 57.37 13.4% Chart = /charts/charts.asp?symbol=RIMM **** RNWK - RealNetworks $169.94 *** Stock Split *** RealNetworks provides branded software products and services that enable the delivery of streaming media content over the Internet and Intranets. The company's software runs on a variety of operating systems and hardware platforms, enabling content providers to encode content such as audio, video or other multimedia programming into discrete data packets that can be broadcast to large numbers of simultaneous users. Their products and services include its RealSystem, a streaming media solution that includes RealAudio and RealVideo technology, an electronic commerce Website designed to promote streaming media products, and a network of content collection Websites. Other RealNetwork products include the Basic Server, RealProducer G2, RealEncoder, Commerce Solution and Real Presenter. In addition, the company provides consulting services that relate to the creation and maintenance of streaming media networks. Today RNWK soared after the company reported its second straight profitable quarter and beat Wall Street estimates. Several Wall Street analysts raised their estimates for the company after its strong fourth quarter results and a bullish outlook for the year 2000. Donaldson, Lufkin and Jenrette and Bear Stearns revised their earnings estimates as new advertising and digital music revenues are expected to help drive further profitability and margin expansion. The company also announced a 2-for-1 split. The break-out above recent resistance near $155 should provide a reasonable support area (entry opportunity) for those who are bullish on the issue but don't want to pay retail. Action Month & Option Open Closing Cost Return On Req'd Strike Symbol Interest Price Basis Investment Sell Call FEB 150 RNO BJ 1519 26.50 143.44 4.6% *** Sell Call FEB 155 RNO BK 229 23.50 146.44 5.8% Sell Put FEB 130 RNO NF 396 2.25 127.75 6.2% *** Sell Put FEB 135 RNO NG 115 3.13 131.87 8.4% Sell Put FEB 140 RNO NH 263 4.00 136.00 9.5% Sell Put FEB 145 RNO NI 99 5.25 139.75 10.9% Sell Put FEB 150 RNO NJ 335 6.38 143.62 11.7% Sell Put FEB 155 RNO NK 69 8.38 146.62 13.6% Chart = /charts/charts.asp?symbol=RNWK **** VIGN - Vignette $234.13 *** Going and Going and Going! *** Vignette is the leading supplier of e-business applications for building online businesses. Vignette enables Internet businesses to reach more prospects, attract and retain new customers, increase overall customer satisfaction and raise the total purchase per visit. Vignette powers more than 500 of the leading dot.com and Fortune 500 e-businesses, including AT&T, BMW, CBS Broadcasting, c/net, Daimler/ Chrysler, Drug Emporium, FedEx, Kinko's, Simon & Schuster, Sprint, Tandy, United Airlines and Waste Management. Vignette e-business applications transparently automate the customer's side of the interaction, taking away all the anxiety and work involved in being a customer. Vignette reported record earnings on Tuesday, with total revenues up 512% to $40.9 million compared to the same period in 1998. Though it reported a loss ($0.10 a share), it expects to turn profitable by the last quarter of 2000. It is interesting that Vignette's board of directors voted on Monday to increase the number of authorized shares to 500 million from the current 80 million (pending approval by share- holders on March 14). Though some consolidation would be in order, the chart remains extremely bullish as Vignette continues a strong stage II climb into blue sky territory. Action Month & Option Open Closing Cost Return On Req'd Strike Symbol Interest Price Basis Investment Sell Put FEB 160 UOJ NL 63 2.31 157.69 4.7% *** Sell Put FEB 165 UOJ NM 27 3.00 162.00 6.0% Chart = /charts/charts.asp?symbol=VIGN ************************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. You may subscribe at any time but your subscription will not start until your free trial is over. To subscribe you may go to our website at www.OptionInvestor.com and click on "subscribe" to use our secure credit card server or you may simply send an email to "Contact Support" with your credit card information,(number, exp date, name) or you may call us at 303-797-0200 and give us the information over the phone. You may also fax the information to: 303-797-1333 *********** DISCLAIMER *********** This newsletter is a publication dedicated to the education of options traders. The newsletter 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 newsletter 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 accuracy or completeness. The newsletter staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control.
Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.
Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.
To ensure you continue to receive email from Option Investor please add "email@example.com"
Option Investor Inc