The Option Investor Newsletter Wednesday 2-23-2000 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) ****************************************************************** 2-23-2000 High Low Volume Advance Decline DOW 10225.70 - 79.10 10338.30 10164.90 993,740k 1,235 1,758 Nasdaq 4550.33 + 168.21 4567.97 4382.12 1,892,802k 2,199 1,987 S&P-100 736.30 + 4.72 740.28 724.43 Totals 3,434 3,745 S&P-500 1360.69 + 8.52 1370.11 1342.44 47.8% 52.2% $RUT 549.91 + 8.96 549.93 540.95 $TRAN 2420.28 - 38.86 2461.72 2417.48 VIX 26.26 - 1.29 28.36 25.45 Put/Call Ratio .37 ****************************************************************** Greenspan Related Turbulence Calms As Records Fall The Greenspan factor was in full force today and the related turbulence was relatively mild. With the Fed Chief speaking before congress today, the markets were mixed early before turning into a full-fledge market rally. Good old Greenspan was unusually candid when speaking about the future direction of the economy. He must have awoke on the right side of the bed too, because his comments were extremely market-friendly. The Nasdaq responded in a big way as it closed with a 168 point gain to a record high. That is nearly a 4% gain on the day. Even the Dow couldn't sour the sentiment with a 79 point loss. What a day to be long this market! Let's take a close look at some of the comments from our best friend (for today anyway), Alan Greenspan. He did make some bearish comments, using an analogy of a ship headed towards a dock that needs to turn ahead of time if it wants a soft landing, referring to future interest rate hikes to keep the economy in check. In general though, his comments were both blunt and upbeat for the future. He said the labor pool was shrinking, but did not see any signs of inflation yet. He said that he would not be specifically targeting the stock market. And when asked how much the American public should fear inflation on a scale of 1 to 5, he responded by asking if he could go lower than one. These comments were taken to heart by investors and the stage was set for a mammoth rally on the street. You just get the feeling that no one wants to miss the next wave and are sitting on the sidelines with checkbook in hand for that next brief dip in the markets. Missing an entry point is the only real fear on Wall Street right now. Back to the markets where records were falling. The Nasdaq broke both an intraday and closing high by ending at 4550.21. The Russell 2000 also had a big day closing up 8.93 to 549.88, while the S&P 500 finished at 1360.69, up 8.52. Like we said earlier, the Dow bore the brunt of the selling, giving back Tuesday's gains and finishing down 79.11 to 10225.73. Volume was big with 1.87 bln traded on the Nasdaq and 980 mln on the NYSE. The VIX retreated after signaling a buying opportunity when it hit 30 yesterday. Now that cooler heads have prevailed, the VIX has retreated to 26.98, a more neutral position. The 30-year treasury also remained quiet, finishing with a yield of 6.12%. The bond market was hardly a factor in today's action after it was realized that Greenspan had said little other than what he said to the House banking committee a week ago. You don't have to look hard to find sectors moving higher. The Biotechs were back leading the way higher like they have for most of the year with a 5% gain today. Other hot sectors include the Brokers, Internet, Hardware, and Software to name a few. The list of big point gainers was full of the same old stuff, VRSN +19, JDSU +20.75, NSOL +36.63, QLGC +19.81, LHSP +22.50, BVSN 20.75, DISH +20.81, EBAY +20.44, and QCOM +16.31. Sector losers also had a familiar ring with Banks, Cyclicals, Chemicals, Healthcare, Utilities and Gold/Silver all heading south. Shares of Chemdex (CMDX) skyrocketed today following Tuesday's announcement that the company would be venturing into uncharted territory by taking the life sciences industry and combining it with the booming world of Business-to-Business. Chemdex will be forming a new corporation by the name of Ventro, which will begin trading under ticker symbol VNTR in March. While Ventro will maintain its current business in the agricultural, pharmaceutical, and biotech product arena, the company plans to expand into such areas as health care as well. Chemdex is introducing VNTR as the "leading builder and operator of B2B vertical marketplace companies." Shares of Incyte Pharmaceuticals moved up today on a raised price target and the completion of a private offering. Deutsche Banc Alex Brown raised its 12-month price target for Incyte from $235 to $374. Incyte also reported that it had raised $422 million through a private sale of its stock. Gateway began the day with a few upbeat comments from Bear Stearns analysts. The analysts stated that "we think the company has multiple engines of growth coupled with better execution against its goals of diversifying its revenue streams." Gateway then came out with a few upbeat comments of its own, announcing its goal of generating $30 billion in revenue by 2004, while expanding its product lines. In addition, GTW announced several new strategic alliances which include Sun Microsystems, OfficeMax and eSoft. Shares of GTW finished the day at $67.63, up $10.44. Merrill Lynch analyst Henry Blodget, initiated coverage on eBay with a Buy rating and a 12-18 month price target of $175. The report went on to comment "We view the stock as a core holding. In the Internet sector, we believe it is important to stick with the clear leaders, and eBay is one." eBay closed today's session up over 20 points at $154.94. Two other companies reaping the benefits of kind words from Merrill Lynch analysts, were Time Warner and America Online. AOL was given a 12-month price target of $90. The two analysts, Jessica Reif Cohen and Henry Blodget, commented that the recent slump in the share price of both companies following the merger announcement, may have resulted in "an excellent buying opportunity." AOL, which had traded through an important $50 support level in yesterday's session, reveled in the news and made a move back up to close at an even $57, while posting volume of over 43 million shares. Shares of Time Warner closed the session up $3. Henry Blodget made an appearance on CNBC after today's market close to reiterate Merrill's bullish stance on the pending merger and both of the companies involved. He further commented that he believed AOL was currently undervalued, a prospect that he found exciting in the current market. In the quest to become the grandest of them all, MGM Grand has offered approximately $3.4 billion, or $17 per share, to purchase Las Vegas casino, Mirage Resort. The question MGM investors seem to be asking is, "what's in it for us?" The deal could have a prolonged impact on MGM's earnings. The proposed merger has many investors wondering if the move is more image than business driven. Mirage has until the 8th of March before the offer expires. The only conclusion I can draw after witnessing the strength of the Nasdaq today is that investors are more afraid of missing the next big move than they are of a correction. This is not real fear. What ever happened to having your finger on the speed dial to your broker's office wanting to sell it all? That gut-wrenching feeling that if the market drops by just one more tick you are burning your investing books and buying 10-year CDs. CDs? Are you kidding me? Even Alan Greenspan concedes today that this is a new economy. "The new economy needs a new kind of monetary policy" to be exact. This policy has yet to be fine-tuned and there is a reason for that. It is hard to test a new fix when there isn't a problem to test it on. Until there is, don't get caught dumping your positions to someone else right at the bottom. Looking ahead to tomorrow, Durable Goods orders for January are to be released before market open. Consensus is for a decline of 2.0%. Look for this only to have an impact if it is way out of line of estimates. Word on the street is that still more money is coming in from 401K, tax returns and bonuses. That should keep the market moving higher. The Dow could be a non-factor again. 10,000 on this index is still highly likely, but you won't likely see a real sense of fear unless you get a couple days of closing below that mark. We could be seeing what we did last October when buyers just stood aside until it hit that mark and then came flooding back in. Most stocks on my screen look to be higher after- hours so look for a pop on the open barring any unforeseen news. That could make it tough to find entry points, but that is usually the case among winners, especially on the Nasdaq. Just don't be lured into the value plays on the Dow until we see clear signs of a reversal in sentiment. It's like my friend Louis says, "Sure I can get into the WNBA games cheap, but do I really want to be there?" Maybe once the action picks up. But until then, I will do my playing where the stocks are hot, the moves are fast and the result is a slam dunk. Ryan Nelson Asst. Editor *************************Advertisement**************************** Options Traders ! Mr. Stock's new online trading site has been designed for you. Trade spreads, straddles, covered writes, and stocks online. Get real-time market data throughout our site. Advanced options tools include volatility graphs, implied volatilities, and more. http://mojofarm.mediaplex.com/adserver/click_thru_request/565-58-1875-3 ****************************************************************** *********** STOCK NEWS *********** Portal Software Posts Unexpected Profit By Cindy Christ If you haven't heard about it already, here's a company you'll want to keep an eye on: Portal Software (PRSF). By targeting its products and services to Web-based communications, service and infrastructure providers, the Cupertino, Calif.-based vendor of billing and customer management software aims to grow its business at the same torrid pace as expansion in the Internet. So far, its plan is working. Experts estimate the market for Internet Protocol billing software will double every year to more than $5 billion by 2004. And according to analysts polled by Zacks Investment Research, Portal's earnings should grow 60 percent per year over the next five years. Credit Suisse First Boston analyst Wendell Laidley boosted his revenue and profit estimates for the Cupertino, Calif.-based firm Wednesday, propelling shares more than 5 percent to $77.50. Intraday, shares traded as high as $80.56. Laidley lifted his fiscal 2001 revenue outlook to $185 million from $169 million, and set earnings per share at 2 cents. For 2002, Laidley set revenues at $259 million and profits at 12 cents a share. The upgrade followed Portal's fourth quarter report Tuesday, when the company posted an unexpected profit. Portal, which Merrill Lynch last month added to its list of top 10 technology picks, has beat analysts' consensus estimates every quarter since going public last May. In the fourth quarter ended Jan. 31, Portal posted revenues of $39 million, up 252 percent from a year ago. Net income was $400,000, versus a net loss of $6.7 million last year. Analysts were expecting a 2-cent loss. For full-year 2000, Portal reported sales of $103 million, up 286 percent over 1999. Net loss for the year was $7.6 million compared to a net loss of $17.4 million last year. "This year, Portal has played a key role in helping many of the world's leading service providers build exciting new Internet- based businesses," said John Little, Portal founder and CEO, in a statement. "By providing the market with the business infrastructure that is driving the Internet economy, we plan to capitalize on our market momentum and continue cementing our leadership position during FY 2001," he added. During the quarter, Portal also scored strong wins in its three-pronged strategy to tackle the hottest segments of the Internet's build-out. Portal has made the wireless Internet a major focus of its sales efforts this year, recently forming strategic partnerships with Motorola, Hewlett Packard and Nokia that will enable mobile service providers to offer new wireless Internet applications. The company already handles the billing for the Palm VII, a version of the world's top-selling handheld computer, and for radio Palm Pilot. On Wednesday, Nokia Networks said it would incorporate Portal's Infranet customer management and billing software into its next-generation wireless technology. The company also has been busy signing up clients in the broadband, or high-speed Internet access market, targeting Digital Subscriber Line (DSL) and Internet service providers, next-generation telecommunications carriers, and wireless Internet and electronic commerce businesses. Portal's timing in the DSL arena couldn't be better. This year, demand for DSL service is expected to explode thanks to legislation that will cut service costs in half for consumers and small- to medium-sized businesses. Portal's customers include all three of the top DSL service providers, Covad Communication Group, NorthPoint Communications Group and Rhythms NetConnections, plus Qwest Communications, USinternetworking, and Deutsche and France Telekom. International expansion is the third leg in Portal's Internet plan of attack. In the fourth quarter, the company hired Netscape Japan's former general manager to run its Japanese operations. The company also signed new customer deals in Latin America and with Telenor Mobile and Sonera, the leading mobile telecommunications providers in Norway and Finland. "We experienced significant growth in all regions which resulted in record revenue for both the fourth quarter and full year," said Portal Software chief financial officer Jack Acosta. If all of this isn't enticing enough, consider the fact that Portal boasts profit margins of around 97 percent on its license revenues. Would-be investors might also take solace in knowing that Cisco Systems, which bought three million shares in Portal at its $14 IPO price, owns 4 percent of the company, representing the largest cash investment the Internet networking giant has ever made in a public company. Anderson Consulting also is a strategic investor. While there are traditional billing companies who'd like to convert to Internet billing services, analysts say Portal has first-mover advantage and no comparable competitors. When it comes to Internet Protocol-based billing services, it seems businesses are putting their checks in the mail, and they're on their way to Portal Software. ********************** PLAY OF THE DAY - CALL ********************** ERICY - LM Ericsson Telephone $91.88 +0.63 (+3.19 this week) Ericsson is a world-leading supplier in the fast-growing and dynamic telecommunications and data communications industry, offering advanced communications solutions for mobile and fixed networks, as well as consumer products. Ericsson is a total solutions supplier for all customer segments: network operators and service providers, enterprises and consumers. Ericsson has more than 100,000 employees, representation in 140 countries and clearly the world's largest customer base in the telecommunications field. Sunday's Write Up This is the kind of call that you want to pick up. ERICY is shaping up nicely for us as it has continued its steady upward climb. ERICY did trade through its 10-dma, which is currently at $88, and could now offer some support going forward. The next level of resistance for ERICY looks to be at $90, which it did flirt with during Friday's session. A breakthrough here backed with the kind of strong volume we have been seeing, will be a nice bullish indication. As you will see below, we think that the positive news out on ERICY will help ERICY to trade higher next week. On Saturday morning, Ericsson Microelectronics announced that they would be working with QUALCOMM to co-develop chips using what is known as the Bluetooth Standard. This enables data to move between cellular phones, notebook PCs, and other handheld devices over a wireless network. In other ERICY related news, it is anticipated that telecom stocks, along with many Internet and techs, will benefit from the upcoming computer and technology trade show known as CeBIT. The trade show will be held from February 23rd through March 1st in Hanover, Germany. It is expected that Ericsson will have a very visible presence at the trade show. They plan to show off many of their products for e-commerce, the mobile office, and the mobile Internet. And finally, another little tidbit in regards to the pending 4:1 stock split. There will be a vote held at the Annual General Meeting for approval of the split. ERICY believes that the actual split will take place in May. Tuesday's Write Up This is turning out to be a news driven momentum play. ERICY jumped out of bed this morning, gapping up $3.75 to a new 52- week high of $93.25. ERICY then quickly pulled back to test support at $90. This level held nicely, and provided some room for entry. ERICY demonstrated some great relative strength against today's rather bleak market too. Part of this may be attributed to a strong Euro, which helped boost a few of the telecom stocks. The current level could provide some potential for new entries should ERICY continue on with its positive momentum run. Watch for $90 to hold on the pullbacks. On Monday, ERICY received a nice mention in an article written by two Internet stock columnists, Michael Ward and Mido Shammaa. It was written that ERICY offers "an exciting opportunity to develop a position in the burgeoning global Internet equipment market". They went on to comment that investing in a stock like ERICY offers investors combined exposure to wireline telecom, broadband and wireless equipment sectors. ERICY announced on Monday that it would be investing approximately $26 million in its Malayasian plant. ERICY also revealed intentions to invest in the cellular market in Mexico. BUY CALL MAR- 80 RQC-CP OI= 506 at $13.75 SL=11.00 BUY CALL MAR- 85 RQC-CQ OI=1414 at $ 9.88 SL= 7.25 BUY CALL MAR- 90*RQC-CR OI=1592 at $ 7.00 SL= 5.25 BUY CALL MAR- 95 RQC-CS OI= 817 at $ 4.63 SL= 2.75 BUY CALL MAR-100 RQC-CT OI= 408 at $ 2.88 SL= 1.50 Picked on Feb 15th at $86.38 P/E = 120 Change since picked +5.50 52-week high=$93.25 Analysts Ratings 8-11-4-0-0 52-week low =$20.50 Last earnings 01/00 est= 0.32 actual= 0.36 Next earnings 04-28 est= 0.17 versus= 0.04 Average Daily Volume = 5.18 mln http://OptionInvestor.com/charts/charts.asp?symbol=ERICY ************************************* BIG COVERED CALLS & NAKED PUT SECTION ************************************* All of our February candidates remained at maximum profit on Friday's expiration. While the Market continues to be divergent and highly volatile, our strategy excels using high probability "in-the-money" covered calls and deep "out-of-the-money" naked puts. During the month of March, we will continue to offer conservative entry points in our quest for consistent, low risk returns. Summary of Previous Picks: NOTE: February data is based on Friday's expiration day prices. Covered Calls: (Margin would double the listed Monthly Return) Stock Strike Strike Cost Current Profit Monthly Symbol Month Price Basis Price (Loss) Return MRVC FEB 60 58.00 90.50 $2.00 6.6% CTXS FEB 63 61.00 86.50 $2.00 6.2% Split 2 - 1 RNWK FEB 75 71.72 84.44 $3.28 6.0% Split 2 - 1 RIMM FEB 60 57.38 108.50 $2.62 6.0% NEWP FEB 55 52.06 115.38 $2.94 5.7% DITC FEB 90 85.25 93.50 $4.75 5.6% JNPR FEB 125 120.12 238.31 $4.88 5.4% NSM FEB 50 48.63 62.00 $1.37 5.4% ASDV FEB 60 57.00 105.00 $3.00 5.3% NEWP FEB 65 63.25 115.38 $1.75 5.3% QCOM FEB 125 119.00 134.50 $6.00 5.1% CNXT FEB 65 61.93 111.88 $3.07 5.0% HLIT FEB 95 91.56 120.75 $3.44 5.0% VRIO FEB 55 52.50 73.63 $2.50 4.8% MERQ FEB 55 53.16 89.75 $1.85 4.6% Split 2 - 1 ADAP FEB 75 71.06 99.00 $3.94 4.6% CNXT FEB 75 73.50 111.88 $1.50 3.9% GMH FEB 100 95.81 102.44 $4.19 3.6% NVLS FEB 38 36.48 51.50 $1.53 3.4% Split 3 - 1 SCMR MAR 95 89.31 113.88 $5.69 6.5% LWIN MAR 80 75.63 87.38 $4.37 5.9% NEON MAR 55 52.00 88.75 $3.00 5.8% INSP MAR 145 135.56 194.50 $9.44 5.7% ITVU MAR 105 98.25 143.00 $6.75 5.6% CHINA MAR 95 90.12 125.00 $4.88 5.5% TIBX MAR 65 61.79 87.00 $3.20 5.3% Split 3 - 1 FIBR MAR 55 51.75 93.00 $3.25 5.2% ENTU MAR 65 61.88 85.50 $3.12 5.1% IMNX MAR 130 122.50 199.50 $7.50 5.0% MUSE MAR 87 82.50 116.63 $4.50 4.5% Split 2 - 1 DITC MAR 62 58.94 100.13 $3.07 4.3% Split 2 - 1 Naked Puts: Stock Strike Strike Cost Current Profit Monthly Symbol Month Price Basis Price (Loss) Return FIBR FEB 60 58.94 89.75 $1.06 21.8% ITVU FEB 105 103.56 135.00 $1.44 16.6% IMNX FEB 130 128.56 193.38 $1.44 14.2% DITC FEB 65 64.28 93.50 $0.72 14.0% Split 2 - 1 DITC FEB 85 81.25 93.50 $3.75 13.7% NEWP FEB 60 58.81 115.38 $1.19 13.6% IMNX FEB 115 112.50 193.38 $2.50 13.5% MRVC FEB 55 53.94 90.50 $1.06 12.6% NSM FEB 50 48.88 62.00 $1.13 11.9% QCOM FEB 115 111.12 134.50 $3.88 11.8% RNWK FEB 65 64.00 84.44 $1.00 10.8% Split 2 - 1 CTXS FEB 60 58.98 86.50 $1.03 10.8% Split 2 - 1 JNPR FEB 113 110.62 238.31 $2.38 10.1% CNXT FEB 60 58.25 111.88 $1.75 9.9% VRIO FEB 50 48.56 73.63 $1.44 9.7% NEWP FEB 50 48.69 115.38 $1.31 9.5% SDLI FEB 230 227.00 329.81 $3.00 9.3% VIGN FEB 145 143.00 209.00 $2.00 9.1% JNPR FEB 110 108.63 238.31 $1.38 9.0% HLIT FEB 85 83.44 120.75 $1.56 8.6% RNWK FEB 65 63.88 84.44 $1.13 8.2% Split 2 - 1 INSP FEB 150 149.00 200.25 $1.00 8.1% ASDV FEB 50 48.81 105.00 $1.19 7.7% RIMM FEB 50 49.19 108.50 $0.81 7.1% CTXS FEB 60 58.85 86.50 $1.16 7.1% Split 2 - 1 ADAP FEB 65 63.25 99.00 $1.75 7.1% CNXT FEB 70 69.31 111.88 $0.69 6.9% MUSE FEB 175 174.00 230.00 $1.00 6.4% PGTV FEB 95 93.69 105.63 $1.31 6.3% NXTL FEB 100 98.12 118.69 $1.88 6.3% VIGN FEB 160 157.69 209.00 $2.31 6.2% PMCS FEB 75 74.06 152.06 $0.94 5.8% Split 2 - 1 NVLS FEB 33 32.63 51.50 $0.71 5.8% Split 3 - 1 MERQ FEB 47 46.94 89.75 $0.57 5.6% Split 2 - 1 GMH FEB 95 92.75 102.44 $2.25 5.6% SCMR MAR 85 81.50 113.88 $3.50 13.3% NEON MAR 50 48.44 88.75 $1.56 10.9% MUSE MAR 82 80.19 116.63 $2.32 9.9% Split 2 - 1 ENTU MAR 60 58.31 85.50 $1.69 9.8% CHINA MAR 85 82.62 125.00 $2.38 9.3% INSP MAR 130 125.37 194.50 $4.63 9.3% LWIN MAR 70 68.19 87.38 $1.81 9.1% TIBX MAR 58 56.83 87.00 $1.50 8.5% Split 3 - 1 HLIT MAR 95 92.50 126.38 $2.50 7.4% PROX MAR 80 78.50 128.88 $1.50 5.2% NEW PICKS The positions that we find favorable (and will track every week) will be marked by asterisks. Do not enter these trades 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. **** BVSN - Broadvision $207.75 *** Split Rally? *** BroadVision develops, markets and supports fully integrated large-scale, application software exclusively designed to manage one-to-one relationships for the extended enterprise. Their end-to-end solutions enable businesses to capitalize on the Internet as a unique platform that empowers businesses to enhance commerce, provide critical self-service functions and deliver highly specialized information to customers, suppliers, distributors, and employees of the extended enterprise through real-time interactive one-to-one relationships. BroadVision's One-To-One product family allows businesses to tailor Website content to the needs and interests of individual users by personalizing each visit on a real-time basis. There unique applications achieve this result by interactively capturing Website visitor profile information and targeting organized enterprise content to each visitor based on easily constructed business rules. Lots of new agreements and alliances for this software giant but the big news this week concerned the settlement of its patent infringement suit against Art Technology Group (ARTG). As part of the settlement, Art Technology will pay an ongoing licensing fee to BroadVision. The total payment will amount to $8 million initially, and $7 million more during the next three years. Of course the real reason that investors are buying this issue is the upcoming split. BroadVision will split its stock 3-for-1, in the form of a dividend. The record date of the split was Monday, February 21. The shares resulting from the split are expected to be distributed on or about March 13 -14, 2000. Action Month & Option Open Closing Cost Monthly Req'd Strike Symbol Interest Price Basis Return Sell Call MAR 170 BZV CN 1282 44.13 163.62 5.2% *** Sell Call MAR 175 BZV CO 1272 40.63 167.13 6.2% Sell Put MAR 155 BZV OK 224 2.81 152.19 8.4% Sell Put MAR 160 BZV OL 701 3.75 156.25 10.9% *** Sell Put MAR 165 BZV OM 237 4.63 160.37 13.3% Sell Put MAR 170 BZV ON 719 5.88 164.12 15.2% Chart = /charts/charts.asp?symbol=BVSN **** CRA - Celera Genomics Group $167.00 *** Bio-tech Leader *** Celera Genomics Group generates and commercializes genomic information to accelerate the understanding of biological processes and to assist pharmaceutical, biotechnology, and life science research entities in areas of research including: new drugs and improved drug development processes; novel genes and factors that regulate gene expression; and interrelationships between genetic variability, disease, and drug response. Through GenScope, Celera offers genomics-related products and services including gene discovery, target discovery/validation, efficacy and safety assessment, and pharmacogenomics study services. Through AgGen, the company specializes in providing services to the agriculture market. AgGen provides genotyping and genomic services for plant and animal breeding programs. This is an aggressive position on an incredibly volatile and industry dominating issue. We thought CRA might be at the end of it's run in early January when we played the stock at $160. Now it has doubled and we still don't know where it will finish. The desire to own these stocks is just amazing and Genomics, the study of gene structure and function in order to develop drugs, is one of the hottest topics in recent months. Investors simply don't know when to quit, having driven shares of these companies to new highs on hopes that health care will be revolutionized by what they discover. Some companies are also using their genomic discoveries to develop new drugs and that trend should continue to propel the sector higher. As far as CRA's current technicals, there is some support near $130, but this issue has the ability to move quickly, in either direction. Monitor the play on a daily basis. Action Month & Option Open Closing Cost Monthly Req'd Strike Symbol Interest Price Basis Return Sell Call MAR 130 CKA CF 155 42.38 124.62 5.7% *** Sell Call MAR 135 CKA CG 159 38.75 128.25 7.0% Sell Put MAR 115 CRA OC 48 2.00 113.00 7.5% Sell Put MAR 120 CRA OD 60 2.81 117.19 10.3% *** Sell Put MAR 125 CRA OE 30 3.63 121.37 13.0% Sell Put MAR 130 CRA OF 38 5.13 124.87 17.6% Chart = /charts/charts.asp?symbol=CRA **** INKT - Inktomi $136.63 *** New All-Time High! *** Inktomi develops and markets scaleable software applications made to enhance the performance and intelligence of large-scale networks. Traffic Server is Inktomi's large-scale network cache application designed to address capacity constraints in high- traffic network routes. The Traffic Server software speeds traffic flow on the Internet by storing information closer to the user. Traffic Server increases effective bandwidth, adding speed, reliability and scalability to the network. Their Internet search engine application enables Internet portals and other Website customers to provide online search services to end-users. The Internet shopping engine, Inktomi's newest application, was initiated with the acquisition of C\\2\\B Technologies. The shopping engine is designed to enable end-users to quickly and easily locate products of interest, compare features and prices among products, and locate and purchase such products through participating merchants. Inktomi's pride and joy is their new shopping engine, a tool that provides a robust commerce infrastructure for many of the Web's leading destination sites and merchants. The newest customer for the product is ReleaseNow.com, a provider of e-commerce services. ReleaseNow.com's users now have the ability to display and sell downloadable software titles on the Inktomi Shopping Engine. The company is the first e-commerce services provider to market and sell downloadable digital goods through Inktomi's platform and network of partners. Officials at ReleaseNow.com say the Inktomi Shopping Engine will provide powerful commerce capabilities and distribution for our customers, accelerating time to market and lowering customer acquisition costs. Goldman Sachs recently offered a new BUY rating on the company with a spot on the "recommended" list, based on the outstanding progress of the shopping engine. It appears that investors agree with their assessment. Action Month & Option Open Closing Cost Monthly Req'd Strike Symbol Interest Price Basis Return Sell Call MAR 125 KYQ CE 504 17.00 119.63 5.9% *** Sell Put MAR 110 KYQ OB 290 1.63 108.37 7.3% *** Sell Put MAR 115 KYQ OC 153 2.38 112.62 8.9% Sell Put MAR 120 KYQ OD 138 3.50 116.50 11.1% Chart = /charts/charts.asp?symbol=INKT **** ITVU - InterVu $143.00 *** A Formidable Team! *** InterVU provides Website owners and content publishers with feature-rich, cost-effective services for the delivery of streaming, live and on-demand video and audio content over the Internet. InterVU's streaming media services allow web users to view news, sports and other events from around the world, listen to live radio broadcasts, watch and listen to specialized content not widely available on television or radio, hear live earnings reports, accompanied by a graphical presentation, view a movie trailer before purchasing a movie ticket, videotape or DVD and watch music videos or listen to songs on demand. InterVU has also developed a suite of services that automate the publishing, distribution and programming of video and audio content. Early this month, Akamai Technologies (AKAM) announced plans to merge with Intervu in a $2.8 billion stock deal. AKAM's business is building faster web sites with leading-edge technology. With the addition of ITVU's products, they will become a full service provider in virtually every type of online content. Together, the combined company will have a leading market share with over 1,000 of the Web's most popular sites. Of course the deal is subject to approval by shareholders and regulators but most experts believe it will eventually be approved. Another big announcement occurred this last as Akamai reported it has entered an alliance to connect its servers within the network of Internet media company America Online (AOL). AKAM is placing its servers within the American Online network to boost the speed and reliability of their services. Under the agreement, Akamai, whose customers include CNN, Yahoo, Martha Stewart Living and the Motley Fool, will make payments to AOL based on its future revenue stream. The combination of the Internet's most advanced video presentation specialist and the leading web-page enhancement company should ultimately produce a winner. ITVU's recent technical support near $100 and the bullish upside potential provides the basis for a number of favorable, low risk positions. Until this issue proves us wrong, we are going to keep offering it as a candidate. Action Month & Option Open Closing Cost Monthly Req'd Strike Symbol Interest Price Basis Return Sell Put MAR 100 QYU OT 64 1.44 98.56 6.3% Sell Put MAR 105 QYU OA 31 2.06 102.94 8.9% *** Sell Put MAR 110 QYU OB 10 3.00 107.00 12.6% Sell Put MAR 115 QYU OC 66 4.00 111.00 15.9% Chart = /charts/charts.asp?symbol=ITVU **** MRVC - MRV Communications $99.94 *** Own This One! *** MRV Communications is a manufacturer and marketer of optical high-speed networks that integrate switching, routing, remote access and fiber optic transmission systems. The company designs, manufactures and sells computer networking products, primarily Ethernet LAN routing switches, WAN and remote access devices and fiber optic components for the transmission of voice, video and data across enterprise, telecommunications and cable TV networks. The company's advanced networking solutions greatly enhance the functionality of local area network and wide area networks by reducing network congestion while allowing end users to preserve their legacy investments in pre-existing networks and providing cost-effective migration paths to next generation technologies such as Gigabit Ethernet. MRVC is growing to meet the needs of the industry and in early February, the company announced that it completed expansion of its photonic capacity with a new state-of-the-art facility for research and development, engineering, packaging, integration, testing and sales and marketing. This expansion will increase their construction capacity, provide a quicker time to market with better quality control and lower manufacturing costs. The facility will also improve their technical research ability and allow the company to increase its staff with new scientists and engineers. The CEO says the added capacity will provide new momentum to MRVC's goal of dominating the fiber optic component market. Evidently the plan is working as Tuesday's earnings were favorable and investors lifted the issue to new highs after the announcement. The option premiums are still excellent and from our point of view, the issue is just too strong to suffer much in any post-earnings sell-off. The consolidation area near $80 should provide adequate support in the event of a short-term market downturn. Action Month & Option Open Closing Cost Monthly Req'd Strike Symbol Interest Price Basis Return Sell Put MAR 70 VQX ON 234 0.94 69.06 5.9% *** Sell Put MAR 75 VQX OO 210 1.63 73.37 10.0% Chart = /charts/charts.asp?symbol=MRVC **** PUMA - Puma Technology $129.00 *** Another Split! *** Puma Technology develops, markets and supports mobile device management and synchronization software designed to improve the productivity of handheld computers, smart phones and other wireless personal communications platforms. The acquisition of NetMind gives the company a complete e-commerce strategy at a time when businesses are trying to offer consumers more wireless and mobile data services. With Puma's unique, leading-edge data synchronization technology, the e-commerce technology from NetMind and the technology for rendering Web pages on hand-helds from the August acquisition of Proxinet, Puma is poised to become the next leader in the industry. Of course today's big news was the split announcement. Puma's Board of Directors has approved a two-for-one split of its common stock. The stock split will be affected as a stock dividend and shareholders of record as of March 8, 2000 will receive a stock certificate representing one additional share for each share of common stock held on the record date. These certificates will be distributed on March 22, 2000. The rally should be significant, hopefully carrying the issue to new all-time highs. We favor the ITM positions and the recent reversal to a new trend (bullish) in this conservative, momentum play. Action Month & Option Open Closing Cost Monthly Req'd Strike Symbol Interest Price Basis Return Sell Call MAR 95 PUP CS 95 37.50 91.50 5.1% *** Sell Call MAR 100 PUP CT 176 33.75 95.25 6.6% Sell Put MAR 85 PUP OQ 115 1.38 83.62 6.7% Sell Put MAR 90 PUP OR 150 2.13 87.87 10.1% *** Sell Put MAR 95 PUP OS 21 3.00 92.00 13.8% Chart = /charts/charts.asp?symbol=PUMA **** SMTC - Semtech $73.38 *** Earnings Break-Out! *** Semtech Corporation designs, manufactures and markets a wide range of analog and mixed-signal semiconductors, including standard semiconductor products, power management circuits, automated test equipment circuits, transient voltage suppressers, advanced communication circuits, rectifier and assembly products. Their devices are used in a variety of applications including computer, communications, industrial, military-aerospace and automotive. They also provide custom and application specific integrated circuits, and a limited amount of wafer foundry services to other electronic component manufacturers. Their products are also used in personal computers and related peripherals. Semtech has recently introduced a number of new products including a transient-voltage suppression (TVS) IC designed specifically to protect Asynchronous Digital Subscriber Lines (ADSL) from strong lightning surges, electrostatic discharge (ESD) and other voltage induced transients. Unfortunately, that is not why Semtech's stock rallied today. Earnings are tomorrow and investors believe they are going to be favorable. In fact, the issue reached a 52-week high on the momentum. With today's rally, Semtech broke out from a two-month ascending triangle on extremely heavy volume. The previous resistance around $67.00 now becomes the first line of support and Semtech appears ready to resume its up-trend. Action Month & Option Open Closing Cost Monthly Req'd Strike Symbol Interest Price Basis Return Sell Call MAR 55 QTU CK 41 20.63 52.75 5.6% *** Sell Call MAR 60 QTU CL 92 16.50 56.88 7.3% Chart = /charts/charts.asp?symbol=SMTC **** VRSN - Verisign $242.63 *** Technicals Only! *** Verisign is the leading provider of digital certificate solutions and infrastructure needed by corporations, government agencies, trading partners and individuals to conduct trusted, secure communications and commerce over the Internet, intranets and extranets using the Internet Protocol. Their digital certificates (Digital IDs) provide security in millions of copies of Microsoft's and Netscape's browsers, as well as tens of thousands of copies of Web servers and other software applications. They provide turn-key and custom solutions needed by many large organizations, such as DowJones, NationsBank & VISA. Companies that provide Internet infrastructure continue to dominate the market and Verisign is a top performer in that group. The issue has enjoyed an incredible run in the past year and with the recent consolidation now complete, VRSN appears poised to continue higher. Today's rally to a new all-time high suggests the trend is back on track and the previous highs near $190-200 should provide adequate support for any future corrections. Action Month & Option Open Closing Cost Monthly Req'd Strike Symbol Interest Price Basis Return Sell Put MAR 180 QVZ OP 332 1.88 178.12 4.9% Sell Put MAR 185 QVZ OQ 68 2.75 182.25 7.1% *** Sell Put MAR 190 QVZ OR 82 3.38 186.62 8.6% Sell Put MAR 195 QVZ OS 18 4.25 190.75 10.5% Chart = /charts/charts.asp?symbol=VRSN **************************Advertisement************************* Have you got an idea for a financial website? Need help getting started? Technical support? Funding? We will help you turn your idea into a reality. 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