Option Investor
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Daily Newsletter, Wednesday, 03/29/2000

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The Option Investor Newsletter                Wednesday  3-29-2000
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)
******************************************************************
       3-29-2000           High     Low     Volume Advance Decline
DOW    11018.70 +  82.60 11101.50 10910.80 1,046,973k 1,613  1,337
Nasdaq 4,644.67 - 189.22  4860.02  4641.01 1,736,965k 1,317  2,989
S&P-100  827.50 +   6.10   834.82   817.58    Totals  2,930  4,326
S&P-500 1508.52 +   0.79  1521.45  1497.45            40.4%  59.6%
$RUT     543.00 -  16.04   561.77   541.36
$TRAN   2690.24 +   9.27  2721.96  2663.92
VIX       25.96 -   0.62    27.45    25.35
Put/Call Ratio       .43
******************************************************************

So When Did The Bears Awake From Hibernation?
By Matt Russ

It has been a difficult week thus far for the bulls, at least tech
bulls.  We watch, and in some cases, trade these glamorous 
high-fliers, sending them to astronomical levels in a blink of the
eye.  But, it's amazing how they always seem to plummet back to 
earth more quickly than they took off.  Sellers rush for the exits 
with the "just get me out" mentality.  The NASDAQ sell-off of the 
past two session started with Abby's comments (I promise that's 
all I'll say about her) and continued today in a stagnant trading 
session.  Mark Mobius, emerging market guru with Templeton Funds,
didn't help the bulls with comments that echoed concerns about
valuations in the internet sector.  And what happened to the 
"window dressing" that many thought would help prop up the market?
As the day progressed, what was just a boring trading session 
deteriorated into a very, very ugly one for the NASDAQ.  It was
the kind of day that left investors with many questions and few
answers.

So let's try and break down what exactly happened today.  In 
order to do so, let's take note of the indices' quarterly 
performances.  Here are the year-to-date stats:  DOW -4.2% and
NASDAQ +10.95%.  Today, the DOW gained 82.60, or 0.76%, and the
NASDAQ was robbed of 189.20 points, or 3.91%, it's third biggest 
point drop.  Talk among traders is that mutual funds and hedge 
funds has been of taking profits in their holdings that were 
profitable.  And which ones were those?  All those high-flying 
techs of the NASDAQ.  It has indeed be a tremendous quarter for 
the techs and the biotechs as they shot out of the gates after 
the Y2K non-event.  In conjunction with all of the negative 
rhetoric swirling around the internets, we can now see why they 
have deflated.  Today, Mark Mobius further fueled investor fear 
when he said the extreme valuations in internet stocks have 
reached a "dangerous territory" and an internet crash could be 
eminent, which would impact global indices.  He foresees some of 
these stocks dipping 50%-90% from current levels.  This was 
enough to keep institutional money from making new wagers on the 
internets today, as "window dressing" seemed to turn to NYSE and 
DOW issues.  

Taking a technical look at the NASDAQ can be a little bit 
concerning.  With the Internets having put in their tops for
the time being and the chip sector selling off, it is beginning
to look like we are in a sensitive trading range.  Today, we sat
and watched the NASDAQ throughout the day, overcome with boredom.
The NASDAQ literally sat at 4651 for ten minutes around 1PM EST.
We thought that our quote system had frozen but it hadn't.  More
bored than panicked, we hoped to see a late session bounce that
would encourage investors.  That bounce happened and took the
NASDAQ above 4700.  But to our dismay, it was just a headfake as
the final hour of trading dragged the NASDAQ to close near its 
session lows at 4644.  Needless to say, we were concerned.  
Looking at the NASDAQ chart below, we now have a double top just 
above the 5000 level and a double bottom in between at the 4455 
level.  That's the trading range and with such negative sentiment 
in the tech sectors, a move to the lower end certainly will create 
jitters among investors. 
 

 

There were few standouts for the NASDAQ.  MSFT was up $2.88 to 
$107.19 and QCOM was strong all day and closed up $2.69 at 
$157.50, only after it quickly sold off $5.00 in the final 
moments.  

Another one of those standouts was ATHM.  They struck a deal to 
give AT&T more control of ExciteAtHome.  This new agreement will 
allow AT&T to increase their voting position to 74% from its 
current 56% level.  There were also a few other new agreements
announced by ATHM with such companies like Comcast and Cox 
Communications.  By the day's end, it was good for a $3.38 gain 
for ATHM to close at $37.69.  Also, AT&T had news late yesterday 
that the price range of their wireless tracking stock was set 
between $26-$32.  After dipping down this morning, T took off in 
the afternoon to close near the day high of $60.25, up $0.38.
  
Recent market leader INTC fell below key support of $135, closing 
down $3.81 at $131.88.  A lot of this selling pressure can be 
attributed to the closing of Tiger Management's Jaguar Fund. 
Rumors have been circulating about that they have incurred heavy 
losses.  Whether or not the reasoning behind the decision is just
speculation, the fund had been doing poorly relative to its peers.  
It had already posted a 13% loss by March 1st, despite a broad 
NASDAQ advance during the first two months of the year.  The 
Jaguar Fund had large positions in INTC and the liquidation 
process may be weighing heavily on it and other issues.

And although INTC was a negative for the DOW, stellar performances
from GE (+8.00), WMT (+4.63), HD (+4.06), and MRK (+2.44) held
the DOW in positive territory.  This shift into blue chip stocks
is further evidence of a sector rotation and continues to help
the DOW converge on the NASDAQ's YTD gains.  Shares of GE closed 
at a new all-time high today, breaking over resistance at $160.  
This move was spurred by Prudential Securities raising their price
target to $210.  The brokerage house also reiterated their Strong 
Buy rating.  This is just another example of the old school 
economy stocks making a comeback today.  GE finished at $164.  
All of these developments in the DOW are reminiscent of last 
April's sector rotation that was mentioned in Sunday's Market 
Wrap.  We will be closely watching this trend as we enter into 
earnings week next Monday.  We were encouraged to see the DOW 
breakout and hold strong to close at 11018, above the key level 
of 11000.


 

Here's an interesting piece of news about a public company going
private.  What?  Yep, Ben & Jerry's Ice Cream.  Who wants some 
Wavy Gravy or Chunky Monkey ice cream?  Apparently not investors.
The stock has been beaten down for years and has gained no 
investor respect.  Enough is enough and the Board of Directors 
are in talks to take the company private.  According to the New 
York Times, the tentatively agreed on price is at $38 a share.  
BJICA closed at $34.38, up $4.15.

As we look forward, it appears that this convergence that has
taken over the market will continue.  The DOW is poised to go
higher as investor search for stability and value.  Will there
be consolidation in the NASDAQ or will volatility take us for 
a ride in the trading range?  Will investors become more picky
when investing in tech stocks?  We will be watching some of 
the better quality internet stocks such as YHOO and AOL for 
leadership as this tech shakeout may continue.  Friday is the 
release of Personal Income and Consumption.  The market will be
looking to this for evidence of the "wealth effect."  Let's not
forget that the earnings season will be in full effect next week.
It has been a rough couple of days for the NASDAQ, so let's 
look for a little relief in the next two trading sessions.  

Matt Russ
Research Analyst   



***********
STOCK NEWS
***********

TriZetto to buy IMS Health
By:  Matt Paolucci

Wednesday, online health company TriZetto Group (TZIX)
agreed to buy IMS Health (RZ:21.63) IMS, a provider of
prescription drug sales analysis, for roughly $8.2
billion, creating an online B2B supplier of health-care
information.

Under the merger agreement, IMS shareholders will
receive 0.4655 shares of TriZetto for each IMS Health
share. Based on TriZetto's closing price Tuesday, the
offer values each IMS Health share at $27.03, roughly 25
percent higher than the closing price of NYSE-
traded IMS stock.

Upon completion of the merger, the new company plans to
issue three securities to all investors.

First, IMS Health, representing the core IMS
pharmaceutical market research and sales management
businesses, will be issued as a tracking stock.

Second, TriZetto, the high-growth application services
provider (ASP) and Internet portal business, will be
combined with Erisco, a provider of technology solutions
supporting 70 million managed care lives.

Third, a new security, Strategic Technologies, a leader
in pharmaceutical relationship management, will be
structured as a tax-free spin-off. So, in effect,
shareholders of both IMS Health and TriZetto will
ultimately own three securities: IMS Health, TriZetto,
and Strategic Technologies.

The new company will leverage Internet technology to
provide integrated, digital health information and
application services to healthcare constituents
worldwide. HealthWeb, a global B2B Internet portal,
enables healthcare providers, payors, and pharmaceutical
companies to access applications, information, and 
e-commerce services.

The pro-forma market capitalization of the new entity
will be approximately $10 billion, and operate in more
than 100 countries with over 9,000 employees.

"The Internet is transforming healthcare," said Victoria
Fash, IMS Health chief executive officer. "Our vision is
to leverage technology to enable information-based
business-to-business e-commerce across the global health
care system, ultimately advancing world health.

"Our strategy is TriZetto technology as the e-business
engine, driving IMS digital assets linked by the
HealthWeb global portal," she added.

The deal is structured in such a way that Trizetto would
use its stock, which has surged more than 500 percent
since its public offering last October, to acquire a
larger and more traditional concern, but it would appear
that RX, which has dropped more than 20 percent
recently, is actually acquiring TriZetto.

IMS provides prescription drug research and analysis,
and processes $165 billion of transaction records a
month. The company had 1999 revenues of $1.4 billion,
while TriZetto had $33 million of revenue in 1999.

The transaction is expected to be completed in the third
quarter of 2000.

 

***************
PLAY OF THE DAY
***************
CALL
****

T - AT&T $60.25 +0.38 (+1.56 this week)

With over 90 million customers, AT&T is the US's #1 Telecom
company.  The services offered by the company include long
distance, wireless phone service, Internet access, and local
and international phone services for businesses.  In an attempt
to dominate the domestic cable TV market, T will become the #1
US cable operator with its planned purchase of MediaOne.

Most Recent Write-up

Are you ready for the largest IPO in US history?  Today, AT&T
set the IPO terms for its wireless business.  After being beaten
down for the first two months of the year, T finally found
support near $45 in late February.  The upward move ran into
some resistance near $55, but has left that level in the dust.
The action over the past 2 days has brought T to its next level
of resistance ($60) which is also the high seen back in November.
There will likely be additional resistance at $62 and $64, as T
attempts to move higher.  The real driver for this play is the
anticipated enthusiasm for T's IPO of their wireless services
(see news below).  Tentatively scheduled for April 26th, the IPO
will occur in close proximity to earnings (4/25).  The confluence
of these two events should allow the Telecom giant to push higher
as the dates approach.  The strong move upwards over the past 2
weeks may require some profit-taking.  Look for a pullback to $58
to trigger your entry, but wait for the bounce first.  A more
conservative entry would be to wait for T to close above
resistance at $60 before throwing your hat in the ring.

AT&T is looking to raise more than $11.5 billion by selling 360
million shares of a tracking stock to represent its wireless
voice and data operations.  Announcing the pricing today, T set
an estimated price of $26-32 per share.  After the offering, T
will retain between 82 and 85 percent of the economic interest
in the AT&T Wireless Group.  If the recent 3Com/Palm spinoff is
any indication, it could be an exciting month.

Comments

A typical "sell the news" event happened this morning when 
traders sold stock after AT&T announced they had set the price 
between $26-$32 a share for the wireless IPO.  Sellers were 
quickly exhausted though and had a stellar afternoon rally to 
close right near the high.  This story is still in its infancy 
and the memory of COMS spinning off Palm is still fresh in 
everyone's mind.  We are expecting today's afternoon momentum 
to carry over for tomorrow.

BUY CALL APR-55 T-DK OI=65347 at $6.38 SL=4.00
BUY CALL APR-60*T-DL OI=45397 at $3.13 SL=1.50
BUY CALL MAY-60 T-EL OI=14301 at $5.00 SL=2.50
BUY CALL MAY-65 T-EM OI= 7004 at $3.00 SL=1.50

Picked on Mar 28th at     $59.94     P/E = 35
Change since picked        +0.38     52-week high=$63.00
Analysts Ratings      16-8-7-0-0     52-week low =$41.50
Last earnings 01/00    est= 0.56     actual= 0.57
Next earnings 04-25    est= 0.42     versus= 0.61
Average Daily Volume = 11.00 mln
/charts/charts.asp?symbol=T



*************************************
BIG COVERED CALLS & NAKED PUT SECTION
*************************************

The Sky Is Falling!...

Based on the selling in many of the leading technology issues
that might be a good description of today's activity.

Once again the value of downside protection becomes evident
and with the current lack of optimism in the market's outlook,
our positions will be limited in number and very conservative.
Remember, both of these strategies are neutral to bullish in
nature and, as with any recommendation, each play should be
evaluated for portfolio suitability and reviewed with regard
to your specific investing approach and trading style.

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

AFCI    APR    55    49.75   73.81   $5.25    7.3%
PCLE    APR    25    23.47   35.50   $1.54    6.7% Split 2 -1
ISSX    APR   105    96.19  117.19   $8.82    6.3%
ASYT    APR    40    37.18   56.63   $2.82    6.2%
YHOO    APR   175   165.07  177.06   $9.94    6.1%
DITC    APR    90    83.38  115.00   $6.63    5.5%
PHTN    APR    70    66.50   72.75   $3.50    5.3%
NXTV    APR   125   117.71  137.94   $7.29    5.1%
CY      APR    45    42.93   45.00   $2.07    4.9%
PHCM    APR   120   114.51  169.44   $5.50    4.9%
TGNT    APR    80    75.25   75.50   $0.25    0.3%
PUMA    APR    67    62.88   57.75  ($5.12)   0.0% Split 2 -1
NEON    APR    65    61.22   42.00 ($19.22)   0.0% *** 

Naked Puts:

Stock  Strike Strike Cost   Current Profit  Monthly
Symbol Month  Price  Basis  Price   (Loss)  Return

ASYT    APR    35    33.38   56.63   $1.63   11.5%
AFCI    APR    45    42.63   73.81   $2.38   10.1%
NXTV    APR   115   110.63  137.94   $4.38    9.9%
YHOO    APR   155   150.75  177.06   $4.25    9.9%
ISSX    APR    90    86.38  117.19   $3.63    9.0%
MU      APR    85    82.25  133.00   $2.75    8.9%
CY      APR    40    39.00   45.00   $1.00    8.7%
TGNT    APR    70    67.94   75.50   $2.06    8.4%
INKT    APR   140   136.00  182.00   $4.00    7.6%
PCLE    APR    22    22.03   35.50   $0.47    7.6% Split 2 -1
PHCM    APR   105   102.56  169.44   $2.44    7.6%
IBIS    APR    85    83.25  106.13   $1.75    7.6%
IMNX    APR    51    49.83   60.63   $1.83    7.4% Split 3 - 1
NT      APR   115   112.62  135.00   $2.38    6.5%
SFE     APR    60    58.00   71.63   $1.42    6.3% Split 3 - 1
AFCI    APR    45    43.81   73.81   $1.19    5.9%
PHTN    APR    65    63.94   72.75   $1.06    5.7%
PUMA    APR    60    57.82   57.75  ($0.06)   0.0% Split 2 - 1
NEON    APR    55    52.94   42.00 ($10.94)   0.0% ***

*** Any reasonable loss-cut system should have closed
    you out of NEON in the $65-70 range.


NEW PICKS 

We list favorable "in-the-money" covered write and "out-of-the-
money" naked put candidates that offer conservative entry points 
into technically bullish charts, with reasonable monthly returns. 

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.

****

KSU - Kansas City Southern  $91.31  *** Spin-Off Coming? ***

Kansas City Southern operates in two business segments.  Kansas
City Southern Lines, the holding company for the transportation
segment subsidiaries and affiliates, owns and operates a rail
network of approximately 6,000 miles lines that link key markets
in the United States and Mexico.  Through strategic alliances and
other agreements, KCSL's reach has been expanded to 25,000 miles
of lines connecting Canada, the United States and Mexico.  The
Financial Services segment includes four subsidiaries.  Janus
serves as an investment advisor to the Janus Investment Funds and
Janus Aspen Series, and to institutional and individual private
accounts and other investment companies.  Berger is also provides
financial asset management services and products.  Nelson offers
investment planning and investment management services to
individuals.  DST provides information processing and computer
software services and products to various service industries.

Kansas City Southern is actually a financial-services company and
Janus is its crown jewel.  The Janus group has 21 retail mutual
funds, 15 of them equity funds.  Janus and its aggressive, growth
oriented analysts have helped build the fund management assets to
$325 billion.  In January, Janus funds experienced $9 billion in
net sales, accounting for the majority of KSU's earnings for the
quarter.  Even in light of that success, Kansas City Southern is
planning to unload the company and get back to railroad operations.
KSU plans to separate itself from Janus and two other subsidiaries,
creating a new holding company called Stilwell Financial.  Aside
from the Janus group, Stilwell would also include the Berger Funds
group and DST Systems (DST), which develops software products and
services for other companies.  Stilwell is expected to be traded
on the New York Stock Exchange under the symbol SV.

It will be interesting to see how the details of the upcoming
spin-off affect KSU's share value.  For now it appears that most
investors are welcoming the idea.

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Put  APR 85   KSU PQ  189      3.38     81.62    13.3%
Sell Put  APR 80   KSU PP  102      2.00     78.00     9.7%
Sell Put  APR 75   KSU PO  1086     1.13     73.87     7.0% ***

Chart =
 /charts/charts.asp?symbol=KSU

****

MANU - Manugistics  $59.25  *** On The Rebound! ***

Manugistics Group provides solutions for customer-centric supply
chain optimization that are comprised of software products and
related services that enable clients to improve the efficiency
at which products flow within and among companies from raw
materials or parts through manufacturing to delivery of product
to the end customer.  Their solutions combined with their
professional services enable their clients to create and optimize
their supply chains around their customers, and are quick to
implement, adapt easily to change and deliver rapid results.
Their integrated suite of strategic, tactical and operational
supply chain planning software products address demand planning,
supply planning, manufacturing scheduling, and transportation
management, and enables collaboration within and among
enterprises.  Among Manugistics clients are Coca-Cola Bottling,
Compaq, DuPont, and General Electric.

Manugistics posted a smaller-than-expected loss in its fourth
quarter last week with licensing revenue of $22 million, up 45%
from the year-ago quarter when it posted $15.2 million in sales. 
Based on the results of our fourth quarter, the company is ahead
of the strategic plan that was established by the new CEO, Greg
Owens.  In fact, Manugistics appears to have made the transition
to a growth company.  Sales are up significantly from last quarter
and costs are way down, and its brand name has regained some of
its previous luster.  Manugistics is also proud of its e-commerce
initiatives in the business-to-business arena, boasting that 31%
of the quarter's revenues came from eBusiness.  The CEO said that
number would eclipse 50% before the third quarter of next year,
and that the company would reach profitability by the end of the
year.

Prudential leads a group of bullish analysts with a "buy" rating
and together with the favorable technical outlook, this issue may
be considered for any long-term portfolio.

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call APR 45   ZUQ DI  1324     16.75    42.50     7.8% ***

Sell Put  APR 45   ZUQ PI  234       1.81    43.19    17.5%
Sell Put  APR 40   ZUQ PH  79        1.13    38.87    11.5%
Sell Put  APR 35   ZUQ PG  125       0.56    34.44     6.0% ***

Chart =
 /charts/charts.asp?symbol=MANU

****

MFNX - MetroMedia Fiber Network  $94.75  *** Split Rally? ***

Metromedia Fiber Network, the leading provider of end-to-end
optical network and Internet infrastructure solutions, is
revolutionizing the fiber optic industry.  Offering virtually
unlimited, unmetered bandwidth at a fixed cost, the company is
eliminating the bandwidth barrier and redefining the way
broadband capacity is sold.  They are extending metropolitan
optical networking infrastructure to the end user in strategic
top-tier markets, enabling its customers to implement the
latest data, video, Internet and multimedia applications.  They
focus on domestic intra-city fiber optic networks in clusters of
the 15 largest cities throughout the United States.  MetroMedia
currently operates high-bandwidth fiber optic communications
networks in New York and the greater Philadelphia area, and will
begin to operate similar networks in Washington, D.C.  They have
also begun engineering and constructing networks in Chicago, San
Francisco and Boston, Massachusetts.

Earnings were great in the quarterly report with revenues rising
107% in 1999, up from $36.4 million in 1998.  The company's total
number of contracts increased 400% to $2.0 billion and their fiber
network jumped 181% to 646,000 miles.  To make things even better,
their board has approved a two-for-one split of its common stock.
The split, the fourth since the company went public in October of
1997, reflects the company's continued confidence in the success
of its business strategy and it will be distributed on April 17 to
shareholders of record as of March 14.

We favor the recent technical trend and the bullish forecasts for
growth.  The current consolidation should offer some opportunities
for additional premium selling in the deep-out-of-the-money Put
positions.

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Put  APR 85   QFN PX  451      3.88     81.12    16.0%
Sell Put  APR 80   QFN PP  419      2.44     77.56    12.6%
Sell Put  APR 75   QFN PO  352      1.44     73.56     9.3% ***

Chart =
/charts/charts.asp?symbol=MFNX

****

QCOM - Qualcomm  $157.50  *** Own This One! ***

Qualcomm is a global provider of digital wireless communications
products, technologies and services based on its Code Division
Multiple Access technology.  QCOM designs, develops, manufactures
and markets CDMA subscriber products and designs, develops and
markets CDMA chipsets and system software.  They also license and
receive royalty payments on CDMA technology from major domestic
and international telecommunications equipment suppliers.  In
addition, Qualcomm designs, manufactures and distributes products
and provides services for its OmniTRACS system.  The company also
has contracts with Globalstar, a low-Earth-orbit satellite system
utilizing CDMA technology, to design, develop and manufacture
subscriber products and ground communications systems and to
provide contract development services.

Tuesday's news was the long-awaited settlement between Qualcomm
and Motorola regarding a series of patent infringement lawsuits
that began in March 1997.  The agreement terminates the complex
litigation comprising a number of separate federal court cases
alleging claims and counterclaims for patent infringement, breach
of the license agreements, misappropriation of trade secrets and
unfair competition.  In the settlement, each company agreed to
dismiss its claims and counterclaims against the other and extend
their CDMA cross-licenses.  In addition, the companies said they
have agreed to a three-year moratorium on lawsuits with respect
to CDMA subscriber products, network equipment, chipsets and test
equipment.  They have also agreed to the terms of their original
1990 royalty-bearing license agreement.  As part of the agreement,
Motorola will again pay royalties to Qualcomm at rates that are
consistent with newly licensed patents.

The news of the Motorola settlement along with a number of recent
agreements and licensing deals has brought QCOM back into favor
with technology investors.  Analysts are also bullish on the issue
and today Lehman Brothers raised their price target on Qualcomm to
$180.  The favorable technical trend and the positive fundamental
outlook (potentially higher royalties) are excellent reasons for
the issue to continue higher.  The cost basis in the recommended
position is relatively conservative with a reasonable margin for
downside consolidation.

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Put  APR 140  AUA PH  8944     3.50    136.50     9.4%
Sell Put  APR 137  AUA PW  1629     2.81    134.19     8.2%
Sell Put  APR 135  AUA PG  3591     2.31    132.69     7.1%
Sell Put  APR 132  AUA PV  1004     1.94    130.06     6.5%
Sell Put  APR 130  AUA PF  9713     1.63    128.37     5.8% ***

Chart =
/charts/charts.asp?symbol=QCOM

****

SPYG - Spyglass  $72.75 *** OPTV Buy-Out! ***

Spyglass provides strategic Internet consulting, software and
professional services that enable content providers, service
operators and device manufacturers to capitalize on the potential
of the Internet.  Particularly active in the interactive
television (ITV) and mobile data(MD) markets, Spyglass offers
end-to-end solutions to many of the world's premier organizations.
Spyglass delivers solutions that enable information appliance
users to access device-specific applications and receive time
critical information utilizing the Internet.  Spyglass solutions
have helped customers Internet-enable a variety of devices as well
as deliver HTML-based applications to information appliances such
as television set-top boxes, televisions, gaming devices, wireless
phones, navigation devices, Internet screen phones, office
equipment, medical devices and industrial controls.

Merger speculation has been rampant and Spyglass surged more than
30% in trading on Monday after OpenTV Corp (OPTV) said it would
buy the Internet consultant and software company in a stock swap
worth $2.5 billion.  Under the terms of the agreement, Spyglass
shareholders will receive 0.7236 share of OpenTV for each share
of Spyglass held.  Based on OpenTV's current stock price, the
deal values Spyglass at about $80 per share, a favorable premium
for shareholders and well above our cost basis in this speculative
position.  Of course we expect OPTV to move lower, but the big
question is, "Will OPTV break below technical support near $90,
and if so, will SPYG be more attractive to another suitor at a
higher price?"  Only time will tell..

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call APR 55   YQG DK  401      20.38    52.37     6.6% ***

Sell Put  APR 55   YQG PK  395       2.63    52.37    20.2%
Sell Put  APR 50   YQG PJ  151       1.63    48.37    13.3%
Sell Put  APR 45   YQG PI  124       0.88    44.12     7.5% ***

Chart =
/charts/charts.asp?symbol=SPYG

****

ZIXI - Zixit  $89.50  *** New Trading Range! ***

ZixIt provides products and services that enhance privacy,
security and convenience over the Internet.  ZixIt is the
developer and owner of the ZixIt Digital Signature and encryption
technology.  They are also developing an Internet transaction
authorization system.  Zixit recently launched a secure Internet
messaging system, ZixMail.  ZixMail is a secure document delivery,
private email, and message tracking service that enables Internet
users worldwide to easily send and receive encrypted and digitally
signed communications using their existing email systems and
addresses.  Clients that have recently contracted to use ZixMail
include Conoco, the Perot Group, and numerous other firms.

Zixit shares jumped above $90 last week after the company said a
group headed by Florida financier Wayne Huizenga, the owner of the
Miami Dolphins football team among many other assets, will invest
between $20 million and $44 million in a private placement of
the company's common stock.  Now the issue is well above technical
support and clearly in a new trading range.  With momentum from
institutional-sized volume and the recent bullish outlook, the
issue should easily finish the expiration period above our cost
basis.

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call APR 65   HQU DM  405      27.00    62.50     5.3% ***

Sell Put  APR 65   HQU PM  186       2.31    62.69    15.1%
Sell Put  APR 60   HQU PL  272       1.63    58.37    11.0%
Sell Put  APR 55   HQU PK  157       0.81    54.19     5.7% ***

Chart =
/charts/charts.asp?symbol=ZIXI
 

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