The Option Investor Newsletter Wednesday 3-8-2000 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) ****************************************************************** 3-08-2000 High Low Volume Advance Decline DOW 9856.50 + 60.50 9918.90 9731.80 1,203,082k 1,429 1,535 Nasdaq 4897.26 + 49.42 4923.14 4722.14 2,007,629k 1,895 2,365 S&P-100 739.86 + 7.61 744.35 727.89 Totals 3,324 3,900 S&P-500 1366.70 + 11.08 4874.87 1346.62 46.0% 54.0% $RUT 594.68 - 0.79 600.39 579.16 $TRAN 2352.53 + 88.94 2362.91 2261.96 VIX 25.95 - 0.68 28.80 25.40 Put/Call Ratio .46 ****************************************************************** Two Markets, Two Bounces,...Same Theme Continuing their decline from yesterday, the Blue Chips moved down in the first hour of trading, as investor nervousness continued. The DOW managed to bounce early in the day at 9731 and moved up from there. Supported by value investors looking to buy stocks that have been beaten down lately, the DOW looked like it might post a decent recovery, up almost 120 points from its low by 2:30pm EST. The Volatility Index (VIX) moved up early in the day to just over 29 before retreating throughout the day. Ending the day at 26.14, this put the indicator right near the middle of its historical range. At least a sign that things may be cooling down after yesterday's scare. Banging its head at 9918 in the afternoon was enough to push the index down for the rest of the session. After such a large drop yesterday, the weak recovery today seems more like a dead-cat bounce. Interest rate fears are still alive and well across most sectors. Another increase when the FED meets on March 21st is almost a foregone conclusion - the only uncertainty being...how much this time and is this the last? Although largely a non-event, the FED survey known as the Beige Book came out today and showed little inflation despite a tight labor market. The report highlighted limited increases in the prices of final goods and services (transportation services and certain commodities excepted due to the meteoric price rise in crude oil), despite faster wage growth for some workers. Strong sales of semiconductors and other high-tech equipment, along with increasing demand for a variety of manufactured products such as furniture and electronics will only encourage the FED's hawkish stance when it meets later this month. Continuing to express his concern about the economy, Alan Greenspan today cautioned banks not to become complacent in their lending practices. Speaking to the Independent Community Bankers of America, the FED chairman said, "A broader and more troubling risk is that many banking institutions view current strong economic conditions as no longer extraordinary and exceptional, but as ordinary and expected". He went on to voice concern about the "grave consequences" to the industry should economic conditions weaken. This is more of the same song and dance from our lovable nemesis and represents nothing new for us as investors. Interest rates are going up, the economy is strong, and labor is tight. At the rate the tech freight train keeps roaring down the track, the continued spectre of rate hikes will bother the "old economy" stocks more than those from the "new economy". Ok, here are the vital numbers. The DOW managed to bounce off its low of 9731 to add 49.42 by the end of the day, closing at 9856.53. Although posting 8% more up than down volume on roughly 1.2 billion shares, the NYSE internals still don't look very healthy. Decliners beat advancers by a 15-to-14 ratio, and 263 new lows swamped the mere 49 new highs. That's not exactly a resounding vote of confidence for the day after the index's 4th largest point loss. The sentiment doesn't look that great when you consider that yesterday's loss capped off a 17% decline (so far) from the high of 11722 seen in January. All right, so the DOW didn't look so great. How about the NASDAQ? Although seeing some weakness in recent winners such as Biotechs and Semiconductors, the tech index didn't look too bad. Sellers stepped in early, taking the index right to key support. Bouncing at 4722, the NASDAQ recovered from a 125-point deficit to climb steadily for the balance of the day. Posting yet another 2 billion share day, and gaining 49.42 to close at 4897.26, the internals were better than on the Big Board. Decliners did beat advancers by 2372 to 1898, but 18% more up than down volume and 196 new highs vs. 167 new lows paints a picture of mere profit-taking ahead of the next run at N5K. After Saudi Arabia and Iran signaled that OPEC will increase oil production when the production limit agreement expires at the end of the month, crude oil prices fell 8% from yesterday's 9-year high of $34.37/barrel. Oil and Oil Service stocks dropped in response, led by the likes of SLB (-5.13, $77.06) and HAL (-4.63, $39.88). Don't rush out to top off your tank though. It takes months for new oil to make it through the production pipeline and show up as gasoline. If the refineries don't increase production, the supply shortage still exists, and the approach of the summer driving season, means prices could still challenge $2.00 at the pump. If you still believe what you hear from Washington, (Yes Virginia, there is a Santa Claus), Energy Secretary, Bill Richardson pledged that he will not allow gasoline prices to top the $2.00 mark. No matter how you slice it, the extreme levels will eventually trickle down and start to have an inflationary effect. An alliance between a tech stock, a retailer, and an oil company? Believe it or not, Oracle (ORCL), Wal-Mart (WMT), and Chevron (CHV) announced they will form an online supply exchange for the convenience store industry. Assigned the moniker RetailersMarketXchange.com (what a mouthful!), the exchange is designed to reduce costs for retailers and independent stores by creating a centralized Internet marketplace. ORCL seems to be the big winner here as the company saw its shares up $8.19, while WMT and CHV closed up fractionally. Need proof that investors are still in love with tech stocks? Look no further than the B2B deal announced this morning by IBM, I2 Inc., (ITWO) and Ariba Inc., (ARBA). In a joint statement the companies announced the deal, which calls for IBM, the world's largest computer company to take minority stakes in both ARBA and ITWO. The alliance will help firms create full-service online B2B marketplaces by providing logistics support for buying, selling, distribution, and inventory-control activities. All three companies moved up on the news, ARBA (+6.50, $331), ITWO (+22.19, $190.63), and IBM (+2.88, $105.88). So where do we go from here? It is starting to sound like a broken record, but the strength is in the NASDAQ. The minor recovery on the DOW didn't come anywhere near kicking it out of its downtrend. The NASDAQ on the other hand needed to take a break so that it can move higher from here. We have got enough fear selling this morning to begin a new leg higher. Just over 100 points from N5K, it is only one good day from a close above this level. Keep in mind that as we approach the April earnings, we first have to navigate the earnings-warning minefield. As we saw yesterday with the carnage that followed Proctor & Gamble's warning, the consequences of disappointing investors can be severe. The other possible fly in the ointment is the Initial Jobless Claims due out tomorrow morning. If employment shows up tighter than expected, look for both indexes to have trouble moving higher. On the other hand, a tame number could be just what the NASDAQ needs to power above that millennium mark, setting the stage for another whopper of an earnings season. Mark Phillips Research Analyst ***************************ADVERTISEMENT************************* Bring the Markets Home! ~ InvestIN.com http://www.investinoptions.com Is your broker limiting your options? Can you enter stop and stop loss orders on options? Options Trading with InvestIN.com is available for all accounts. Ranging from IRA's to Direct-Access accounts. Option Stop loss orders accepted. Streaming real time option quotes available with direct access accounts. InvestIN.com has your OPTIONS. Call Toll Free 1-800-327-1883. http://www.investinoptions.com ***************************************************************** *********** STOCK NEWS *********** Koala Corp: A Good Low Tech Bet in a Tech-Driven Market By Matt Paolucci The wild swings in stock prices these days are enough to make your head spin. Just a few years ago it used to be big news to see shares of a stock moving up or down several points. Stocks like that were considered far to volatile and risky for the average investor. Besides, the only times you'd see a stock leap or plunge back then would be for something extraordinary, such as news of a merger or a scientific breakthrough. Today, if you announce a stock split of any kind, you can almost assume a 5 point jump in share price. For those investors who are looking for growth, without the scary day-to-day swings in share price, and want to fill in the low-tech portion of your portfolio, you may want to look at shares of fuzzy wuzzy Koala Corporation (KARE). They are not located near the zoo. Koala, based in Denver, is a designer, producer and worldwide marketer of family-friendly commercial and consumer products. Koala manufactures baby changing stations and high chairs; children's activity products, such as activity tables and activity carpets; and children's modular play equipment. Koala products can be found in places such as airports, restaurants, city and amusement parks, shopping malls, schools, and churches. The company sells to a wide range of businesses and public facilities that serve customers and visitors who bring children to their establishments. Customers include Walt Disney World, The Mayo Clinic, Target Stores, McDonalds, Pizza Hut, and Burger King franchises, among others. Koala was founded in 1986, and began trading as a public company in late 1993. At that point, the company had been growing primarily through sales of its Baby Changing Stations product. But in 1996, Koala started diversifying into other areas. The company acquired the assets of a manufacturer of commercial- use children's activities products in March 1996. Then, in June of 1997, KARE bought indoor children's-equipment maker Delta Play Ltd. In December of 1998, it bought Park Structures, a producer of children's outdoor modular play equipment. In 1999, the company bought two companies, Superior Foam, a manufacturer of children's foam activity products in March, and Smart Products, a provider of children's safety and parental convenience products in September 1999. Today, its Baby Changing Stations represented less than one- quarter of the Company's sales in 1999. To boost liquidity, increase analyst awareness, and to take advantage of the stock's run up from around $18 in January to $35 late last year, the company announced a two-for-one stock split. However, on a post-split basis, Koala still only has 6.3 million shares outstanding. But, with Koala's grow rate of more than 37 percent per year for the last five years, shares should continue to do well, hopefully triggering more splits, and thus, more shares to attract the larger institutions. Shares currently trade for $16. Koala's financials look squeaky-clean. For the fourth quarter (ending December 31, 1999), sales advanced 81 percent to $10.1 million compared with $5.6 million in the year ago period. KARE reported fourth quarter earnings per share (EPS) of 21 cents (assuming dilution, versus 17 cents per diluted share in the same period last year. For the year, sales surged 94 percent to $37.1 million compared with $19.1 million in 1998. Earnings rose to 78 cents per share, assuming dilution, compared to 60 cents in fiscal 1998. According to Zack's Investment Research, all eight firms who cover KARE shares rate the stock a Strong Buy. Fiscal 2000 estimates are for 95 cents per share, and $1.12 for 2001. Top institutional holders include Oppenheimer Funds, First Union Corp., Pimco Advisors, Fidelity, and Sentry Investment Management. If the company make another great run this year, split its shares again, it should attract more big players. Koala's market capitalization is right is around $100 million, right on the corner of most small-cap fund managers' radar screens. As KARE's market cap increases, so will visibility on the stock. The company is also going to need to raise cash if it plans any further acquisitions. Currently, KARE has just $174,000. Due to its current liquidity concerns, however, shares of Koala should only be considered for speculative investors. ********************** PLAY OF THE DAY - CALL ********************** EMLX - Emulex Corp. $208.00 +1.31 (+17.75 this week) Emulex Corp is a leading developer and supplier of fiber channel technology, an ANSI standard communications interface that delivers unprecedented bandwidth, connectivity and reliability networking applications. They design three types of connectivity products: network access servers, print servers and high-speed fiber channel products. They sell their products worldwide to OEM and end users, through other distribution channels including value-added resellers, systems integrators and others. Most Recent Write-Up "The clear market leaders in end nodes are Emulex and QLogic. They have the lions share of the OEM wins in my view." That's a quote from Dane Lewis, Senior Research Analyst on data storage and peripheral companies, with Robertson Stephens. The "clear market leader", that's quite a strong endorsement for a company who just happens to be one of our top plays as well. EMLX took off Monday and didn't stop until hitting a new high early this morning at $218.44. Traders began to take some profit at that time, which isn't all that unusual considering the recent run we seen in EMLX. It was very encouraging to see an orderly decline, as EMLX really traded in more of a sideways pattern for most of the day. It almost drifted lower, rather than the sharp volatile corrections seen many times when investors begin to take some money off the table. EMLX finished the day $2.69 to the good but was heading lower as the session ended. With the move the last two days, EMLX now has support at $203 and $200. If the NASDAQ can regain its footing tomorrow we would look for shares of EMLX to get back on track as well. Comments Today was a wild ride for EMLX, opening at $209.75 and quickly tanking to $180.75 at about 11:00 EST, a free fall that gave the bulls a heartache. Yet, it is that exact free fall that hardened bulls love to see, shaking out those nervous traders who had their fingers on the sell button. At that point, strong volume lifted EMLX out of that rut quicker than it took to get there, recovering throughout the day to close at $208. This is a bullish indicator showing us EMLX's conviction to stay above $200. With resistance at $215, today's resilience may translate to a retest of that level, and above that, $219. Watch for the market's direction tomorrow to confirm this short term uptrend. ***March contracts expire in two weeks*** BUY CALL MAR-190 UEL-CR OI=138 at $25.63 SL=19.25 BUY CALL APR-210*UEL-DB OI= 16 at $29.75 SL=22.32 low OI BUY CALL APR-220 UEL-DD OI= 39 at $25.75 SL=22.75 SELL PUT MAR-190 UEL-CR OI=138 at $23.63 SL=29.50 (See risks of selling puts in play legend) Picked on Feb 13th at $123.88 P/E = 346 Change since picked +66.38 52-week high=$218.44 Analysts Ratings 3-4-0-0-0 52-week low =$ 6.63 Last earnings 01/00 est=0.14 actual=0.23 Next earnings 04-25 est=0.17 versus=0.05 Average daily volume = 1.05 mln /charts/charts.asp?symbol=EMLX ************************************* BIG COVERED CALLS & NAKED PUT SECTION ************************************* Did Jim call the bottom? Obviously that remains to be seen, but so far so good! When you realize that no stock is immune to an investor exodus (just look at Procter & Gamble or Conexant), the value of downside protection is soon realized. With stock selection critical in uncertain market conditions, we focus on well-known issues and strong technical charts. Our goal is simple; consistent monthly returns with low risk positions, thus we list the most favorable "in-the-money" covered writes and deep "out-of-the-money" naked writes. Summary of Previous Picks: Covered Calls: (Margin would double the listed Monthly Return) Stock Strike Strike Cost Current Profit Monthly Symbol Month Price Basis Price (Loss) Return SCMR MAR 95 89.31 166.63 $5.69 6.5% FNSR MAR 110 106.43 145.50 $3.57 6.4% INKT MAR 125 119.63 172.81 $5.37 5.9% LWIN MAR 80 75.63 80.38 $4.37 5.9% NEON MAR 55 52.00 81.50 $3.00 5.8% INSP MAR 145 135.56 252.13 $9.44 5.7% CRA MAR 130 124.62 205.00 $5.38 5.7% ITVU MAR 105 98.25 150.94 $6.75 5.6% SMTC MAR 55 52.75 68.19 $2.25 5.6% CHINA MAR 95 90.12 139.88 $4.88 5.5% TIBX MAR 65 61.79 134.94 $3.20 5.3% Split 3 - 1 FIBR MAR 55 51.75 125.00 $3.25 5.2% BVSN MAR 170 163.62 268.63 $6.38 5.2% ENTU MAR 65 61.88 138.44 $3.12 5.1% PUMA MAR 95 91.50 183.00 $3.50 5.1% IMNX MAR 130 122.50 229.50 $7.50 5.0% CLRS MAR 90 87.87 121.94 $2.13 4.6% MUSE MAR 87 82.50 197.69 $4.50 4.5% Split 2 - 1 DITC MAR 62 58.94 115.00 $3.07 4.3% Split 2 - 1 Naked Puts: Stock Strike Strike Cost Current Profit Monthly Symbol Month Price Basis Price (Loss) Return SCMR MAR 85 81.50 166.63 $3.50 13.3% BVSN MAR 160 156.25 268.63 $3.75 10.9% NEON MAR 50 48.44 81.50 $1.56 10.9% FNSR MAR 95 93.31 145.50 $1.69 10.8% CRA MAR 120 117.19 205.00 $2.81 10.3% PUMA MAR 90 87.87 183.00 $2.13 10.1% MUSE MAR 82 80.19 197.69 $2.32 9.9% Split 2 - 1 ENTU MAR 60 58.31 138.44 $1.69 9.8% CHINA MAR 85 82.62 139.88 $2.38 9.3% INSP MAR 130 125.37 252.13 $4.63 9.3% LWIN MAR 70 68.19 80.38 $1.81 9.1% ITVU MAR 105 102.94 150.94 $2.06 8.9% TIBX MAR 58 56.83 134.94 $1.50 8.5% Split 3 - 1 CLRS MAR 80 79.06 121.94 $0.94 7.4% HLIT MAR 95 92.50 138.06 $2.50 7.4% IMNX MAR 165 163.25 229.50 $1.75 7.3% INKT MAR 110 108.37 172.81 $1.63 7.3% VRSN MAR 185 182.25 203.00 $2.75 7.1% INSP MAR 180 178.19 252.13 $1.81 7.0% MRVC MAR 70 69.06 180.00 $0.94 5.9% PROX MAR 80 78.50 154.38 $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. **** AFCI - Advanced Fibre Comm. $69.88 *** New 52-Week High *** Advanced Fibre is a manufacturer of telecommunications systems for the "local loop" between telephone service users and public telephone networks worldwide. AFC's flagship product is the UMC 1000 Third Generation Digital Loop Carrier (3GDLC). This unit is installed in a variety of network configurations to support the varying geographic distribution of subscriber bases. There are more than 12,000 UMC 1000 systems installed in 23 countries serving approximately 2.5 million access lines. In the United States, Sprint, WinStar, and Pac Bell, among others, deploy the UMC 1000 system. The system has also been deployed in a number of other counties around the globe. A recent article from the Robertson Stephens Tech 2000 Conference offered a bullish outlook for Advanced Fibre and its industry. In an in-depth interview, Paul Silverstein, Senior Analyst with Robertson Stephens reported the sector is experiencing extremely robust demand with two fundamental drivers; phenomenal end-user growth and the need for bandwidth and services from communications service providers. He believes smaller companies such as Advanced Fibre, that concentrate on one particular market segment of the communications equipment industry have the advantage of focus. He also commented that Advanced Fibre has a product that not only is extremely technologically capable but also has been out in the field for several years now, deployed extensively throughout North America and other countries, and the company has the benefit of an impressive base of reference accounts. This sounds like the foundation for a great future and investors appear to agree. The chart reflects a solid bullish trend with little downside risk and our cost basis is well below the recent trading range. Action Month & Option Open Closing Cost Monthly Req'd Strike Symbol Interest Price Basis Return Sell Call APR 55 AQF DK 1372 20.13 49.75 7.3% *** Sell Call APR 60 AQF DL 730 17.38 52.50 9.9% Sell Put APR 40 AQF PH 25 1.38 38.62 6.2% Sell Put APR 42 AQF PS 89 2.00 40.00 8.7% Sell Put APR 45 AQF PI 52 2.38 42.62 10.1% *** Sell Put APR 47 AQF PT 87 3.00 44.00 12.2% Sell Put APR 50 AQF PJ 165 3.75 46.25 14.6% Chart = /charts/charts.asp?symbol=AFCI **** BOUT - About.com $90.00 *** Break-Out Coming? *** About.com is the leading network of niche vertical sites for users and marketers. The network includes more than 700 highly targeted environments, each overseen by a professional guide. Each vertical niche provides a comprehensive customer experience including the Internet's best link directories, original content, community features and commerce opportunities. The individual niche sites are grouped into 20 main channels such as Finance/Investing, Shopping and Sports. As the network of verticals is grouped into main channels, About.com can act as more of a "one stop shopping" experience, than other major web sites devoted to one topic. Its structure therefore enables About.com to - serve all Internet users, some of the time - resulting in broader reach, while maintaining the advantage of targeted focus. About.com also provides multiple e-commerce opportunities throughout its network. The E-networking Industry is getting a lot of attention right now and the majority of stocks in this group are moving higher on increased institutional buying. About.com is also participating in the rally and appears ready to try for a new all-time high. We favor the recent bullish trend and this one-week speculation play offers a conservative method to benefit from the sector strength. Action Month & Option Open Closing Cost Monthly Req'd Strike Symbol Interest Price Basis Return Sell Call MAR 80 AUB CP 236 11.38 78.62 5.9% *** Sell Put MAR 80 AUB OP 22 1.94 78.06 23.5% *** Chart = /charts/charts.asp?symbol=BOUT **** DITC - Ditech $115.00 *** Leading-Edge Technology *** Ditech designs, develops and markets equipment used in building and expanding telecommunications and cable communications networks. Their products are: echo cancellation equipment and equipment that enables and facilitates communications over fiber optic networks. Echo cancellation products eliminate echo, which is a significant problem in existing and emerging networks. Their optical communications products enable the implementation of wavelength division multiplexing technology, which is becoming more widely adopted by service providers to address network capacity constraints. Ditech's optical communications products are designed to function either as stand-alone products or as a complete system known as the Optical Path Solution. To date, the vast majority of its revenue has been derived from sales of its echo cancellation products. Ditech shares have rocketed over 1000% since the initial public offering last summer and Robertson Stephens analyst Paul Johnson says the company is poised for more growth in 2000. He recently raised his earnings-per-share estimates for the telecom equipment maker and reiterated a "buy" rating after the company reported strong fiscal third quarter results. Technically, the stock has been on the move since early February when it broke-out of a consolidation area near $60. A new deal with Teleglobe (TGO) and the acquisition of Telinnovation, a leading developer of voice enhancement and echo cancellation technology, bolstered the rally. Based on the outlook for the company and its industry, we favor the issue for a long-term portfolio. Action Month & Option Open Closing Cost Monthly Req'd Strike Symbol Interest Price Basis Return Sell Call APR 90 DUI DR 25 31.63 83.37 5.5% *** Sell Call APR 95 DUI DS 6 30.00 85.00 8.1% Sell Put MAR 87 DUI OF 15 1.00 86.00 14.1% *** Sell Put MAR 90 DUI OR 38 1.44 88.56 19.9% Chart = /charts/charts.asp?symbol=DITC **** IMNX - Immunex $229.50 *** 3-for-1 Split Coming! *** Immunex is a biopharmaceutical company that discovers, develops, manufactures and markets innovative therapeutic products for the treatment of human diseases including cancer, infectious diseases and immunological disorders. The Company's major product lines are Enbrel, Leukine, Novantrone and Thioplex. Enbrel is a soluble tumor necrosis factor receptor used to reduce inflammatory activity in patients with moderate to severe rheumatoid arthritis. Leukine is a granulocyte-macrophage colony-stimulating factor that is used to stimulate infection-fighting white blood cells. Novantrone and Thioplex are chemotherapy drugs that are used to treat pain in cancer patients. Immunex is also developing products to address ailments such as inflammatory disease, infection, multiple sclerosis, asthma and cancer. The recent news for Biotech leader IMNX is an experimental new asthma drug that is inhaled on a weekly rather than daily basis. The new protein-based drug, Nuvance may offer an alternative to current steroid-based treatments. In early testing, the drug appeared to prevent the allergic reaction that causes asthma. Another recent development was the approval of NOVANTRONE. The drug was recommended for approval to slow the worsening of neurologic disability and to reduce the relapse rate in patients with clinically worsening forms of relapsing-remitting and secondary progressive multiple sclerosis. In this case, we simply favor the upcoming 3-for-1 split and the potential for another rally prior to the actual dividend on March 20. The recent consolidation offers a potential entry opportunity and the cost basis near technical support makes the position even more attractive. Action Month & Option Open Closing Cost Monthly Req'd Strike Symbol Interest Price Basis Return Sell Put APR 150 QUV PJ 91 4.63 145.37 6.3% Sell Put APR 155 QUV PK 0 5.5 149.50 7.4% *** Sell Put APR 160 QUV PL 32 6.38 153.62 8.4% Chart = /charts/charts.asp?symbol=IMNX **** ISSX - ISS Group $121.06 *** Technicals Only! *** ISS Group through Internet Security Systems, provides monitoring, detection and response software that protects the security and integrity of enterprise information systems. Their SAFEsuite family of products is designed to enforce information risk management automatically in distributed computing environments. Their products use an innovative Adaptive Network Security approach that entails continuous security risk monitoring, detection and response to develop and enforce an active network security policy. Products within the SAFEsuite family include Internet Scanner, System Scanner, Database Scanner, RealSecure and SafeSuite Decisions. In addition, ISS offers professional services that deliver comprehensive network and Internet security solutions to customers. ISS has licensed its network security solutions to thousands of organizations worldwide, including firms in the Global 2000, government agencies and major universities. This issue has one of the better chart patterns in recent weeks and with today's upgrade, the outlook is very favorable. Warburg Dillon Read analyst Jordan Klein just raised his price target on the company to $160, based on the demand for Internet security technology. He also said the demand for company's services will increase as business-to-business electronic commerce grows. A press tour in late March is expected to boost interest in the company and with the current technical strength, this issue has little chance of reaching our conservative cost basis. Action Month & Option Open Closing Cost Monthly Req'd Strike Symbol Interest Price Basis Return Sell Call APR 105 ISU DA 98 24.88 96.18 6.3% *** Sell Call APR 110 ISU DB 21 21.75 99.31 7.4% Sell Put APR 85 ISU PQ 0 2.56 82.44 6.6% Sell Put APR 90 ISU PR 0 3.63 86.37 9.0% *** Sell Put APR 95 ISU PS 0 4.75 90.25 11.3% Chart = /charts/charts.asp?symbol=ISSX **** ORCL - Oracle $83.12 *** Earnings Run? *** The Oracle Corporation supplies software products for information management, and the world's second largest software company. The company's software products can be categorized into three primary product families; Server Technologies, Application Development and Business Intelligence Tools - Oracle Financial Analyzer, Sales Analyzer. In addition to software products, the company offers consulting and systems integration services. Oracle markets its products and services domestically through its own direct sales, and internationally through its subsidiaries. Oracle acquisition of Datalogix International enhanced their technology offering in the consumer packaged goods industry, and, in 1998, the company acquired Treasury Services Corporation to enhance their offerings in the financial services industry. Today's $8 move reached a new all-time high and the reason for the rally may have been the company's announcement they will form an online supply exchange for the convenience store industry. The exchange, dubbed RetailersMarketXchange.com is designed to reduce costs for retailers and independent stores that purchase more than $200 billion of supplies a year by creating a central marketplace. It is the world's first global exchange for the convenience and small-store retailing market and the developers plan to leverage the Internet to create an efficient purchasing and communications exchange. Oracle is expected to earn millions of dollars in fees from maintaining online exchanges and collecting fees from each transaction. Regardless of the news, a large part of the current interest may be due to the upcoming earnings announcement. Oracle is expected to report earnings on Tuesday, March 14 and the momentum from the recent rally should support the issue through any post-earnings correction. Action Month & Option Open Closing Cost Monthly Req'd Strike Symbol Interest Price Basis Return Sell Call MAR 70 ORY CN 15957 14.88 68.25 8.7% *** Sell Put MAR 67 ORY OU 1905 0.88 66.12 16.5% Sell Put MAR 70 ORY ON 7139 1.31 68.69 20.7% *** Sell Put MAR 72 ORY OV 1525 1.75 70.25 24.8% Chart = /charts/charts.asp?symbol=ORCL **** PUMA - Puma Technology $183.00 *** 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. The recent big news for Puma was a smaller-than-expected loss in quarterly earnings and 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 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 has already been significant and today's move to a new all-time high suggests the trend is intact. A transition to the next trading range is forthcoming and we favor ITM positions and a conservative approach in this bullish momentum play. Action Month & Option Open Closing Cost Monthly Req'd Strike Symbol Interest Price Basis Return Sell Call APR 135 YCQ DG 21 57.25 125.75 5.1% *** Sell Call APR 140 YCQ DH 21 53.88 129.12 5.8% Sell Put APR 115 PUP PC 5 3.75 111.25 6.4% Sell Put APR 120 PUP PD 45 4.38 115.62 7.4% *** Sell Put APR 125 PUP PE 47 5.75 119.25 9.4% Chart = /charts/charts.asp?symbol=PUMA ************************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. 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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.
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