Option Investor

Daily Newsletter, Wednesday, 01/26/2000

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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


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!


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 

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


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%

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

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

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