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Enron Mail |
---------------------- Forwarded by Mark - ECT Legal Taylor/HOU/ECT on=20
01/18/99 08:27 AM --------------------------- =20 =09Enron Capital & Trade Resources Corp. =09 =09From: xtrials@optioninvestor.com (Option Investor Newsletter Trials= ) =20 01/17/99 05:44 AM =09 Please respond to xtrials@optioninvestor.com To: Option Investor Newsletter Trials <xtrials@optioninvestor.com< cc: (bcc: Mark - ECT Legal Taylor/HOU/ECT) Subject: Sunday - Option Investor Newsletter 3 of 7 (calls) The Option Investor Newsletter 1-17-98 Sunday Part 3 of 7 ****************************************** TLAB - Tellabs $85.94 (+11.63)(P3W $10.18) Tellabs is quickly becoming a powerhouse in the Telecom equipment industry. With their TITAN and CABLESPAN systems, and its DXX multiplexers, TLAB is raking in the money from customers among the telephone companies, cable operators, and government agencies. Though they faded from news of their failed merger of Ciena, Tellabs is still a major player. Wow! What a play. TLAB gave up only $0.44 in Thursday's turmoil and came smokin' back $5.25 on Friday to close at $85.94. Technicals look outstanding with a small consolidation already taken place; all indicators in positive territory. We introduced the play Thursday under the following logic: TLAB spiked up $13 last Tuesday to $78 on 11 million shares, $8 higher than resistance previously set at $70. TLAB drifted back to $74, then spiked $5 to $79, on average volume of 3.5 million. Over the previous 3 trading days, it gained in market weakness while giving back only $.44 in heavy trading in a downright bearish market - a terrific sign of strength. 3.5 million shares traded daily; 147 million shares in float; $3.14 per share in cash; 34% return on equitystrong fundamentals. We expect them to announce more contracts in the coming weeks. Recent news is capturing investors' eyeballs, making for a good story. We could find no news on Friday driving the price; just market recovery and stock momentum. Monday, Warburg, Dillion Read raised their rating to a "buy" citing raised earnings per share estimates to $2.35 and $2.93 from $2.30 and $2.85 for 1999 and 2000, respectively. They further state, "fundamentals for the telecom equipment group has improved over the past few months which improves visibility for Tellabs" and "Our checks with Tellabs will report fourth quarter 1998 results slightly better than our $0.58 earnings per share estimate, as well as having a positive outlook for 1999" (Reuters). Also, rumors surfaced last week that TLAB was a targeted buyout/merger candidate, but were quickly squashed. Not soon enough, though, to draw investor attention to the price move. BUY CALL FEB-80 TEQ-BP OI=3D1270 at $ 9.75 SL=3D 7.25 ATM BUY CALL FEB-85*TEQ-BQ OI=3D 965 at $ 7.00 SL=3D 5.75 OTM BUY CALL MAR-85 TEQ-CQ OI=3D 873 at $ 9.38 SL=3D 7.00 more time BUY CALL JUN-85 TEQ-FQ OI=3D 105 at $13.75 SL=3D11.00 OTM highest strike available Picked on Jan. 14th $80.69 PE=3D 39 Change since picked $ 5.25 52 week low =3D$31.38 Analysts Ratings 15-9-3-0-0 52 week high=3D$93.12 Last earnings on 09-98 est=3D.46 actual=3D.49 Next earnings on 01-25 est=3D.59 versus=3D.42 Chart =3D http://quote.yahoo.com/q?s=3DTLAB&;d=3D3m ******************************************** QCOM - Qualcomm, Inc. $63.88 (+3.63) QCOM develops, manufactures, markets, licenses, and operates advanced communications systems and products based on digital wireless technology. The Company's primary product areas are the OmniTRACS system (a geostationary satellite-based, mobile communications system providing two-way data and position reporting services), CDMA wireless communications systems and products and, in conjunction with others, the development of the Globalstar low-earth-orbit (LEO) satellite communications system. The company's CDMA technology has become the dominant wireless transmission standard in the US and Korea, and is gaining momentum in a host of other countries. Demand for CDMA phones is surging as the US wireless industry is migrating from analog to digital. In the news last week, QCOM, along with several other companies, purchased a concession to operate a fixed line telephone service in Brazil. QCOM has indicated, in the past, that it is lobbying China to adopt its CDMA technology. Since 1990, the average annual growth rate of mobile phone users in China has been about 160%, according to government figures. QCOM is building a global presence. It was also reported on CNBC on Friday that there is renewed interest in QCOM as a takeover candidate given the recent acquisition of ATI and the LU/ASND merger. If fact, the entire sector is expecting another round of takeovers given the competitive landscape. QCOM has been in a basing pattern since last November. It actually fell below its 200 day moving average in December, and then started its current run around the beginning of the year. QCOM reports earnings on Tuesday just before the close. As you know we don't recommend holding over earnings releases, but QCOM might make an interesting short term trade before the earnings release. Depending on the earnings release on Tuesday, we also like QCOM as a play after the release given the merger activity in the sector. After the earnings release, wait for a direction before initiating a play. BUY CALL FEB-60 QAQ-BL OI=3D1421 at $7.25 SL=3D5.25 BUY CALL FEB-65*QAQ-BM OI=3D1224 at $4.38 SL=3D2.75 BUY CALL FEB-70 QAQ-BN OI=3D 745 at $2.50 SL=3D1.25 BUY CALL APR-70 QAQ-DN OI=3D 401 at $5.13 SL=3D3.25 BUY CALL JUL-70 QAQ-GN OI=3D 37 at $7.88 SL=3D6.25 Picked on Jan 17th at $63.88 PE=3D22 Change since picked +0.00 52 week low =3D$37.75 Analysts Ratings 6-8-6-0-0 52 week high=3D$67.38 Last earnings 09-98 est=3D.50 actual=3D.54 Next earnings 01-19 est=3D.59 versus=3D.58 Chart =3D http://quote.yahoo.com/q?s=3DQCOM&;d=3D3m ******************************************** NOK.A Nokia $138.59 (+$3.59) Nokia is a supplier of telecommunications systems and equipment and is the world's leading maker of cellular phones. It's telecommunications and mobile phone sales are growing rapidly, and margins are higher as well. Nokia is increasing plant capacity to keep up with demand. We covered Nokia from Dec. 13th until Jan. 10th as both a split candidate and a momentum play. It climbed steadily for us into the first week of January, when the stock got ahead of itself. It had risen a little too quickly due to enthusiasm for the new Euro and to excitement over the ATI bids. When it began pulling back from its $142.25 close on Jan.6th, we feared a correction and became reluctant to recommend new positions, so we dropped it. With yesterday's $6.34 rebound, the correction appears to be over, and the stock remains well above its moving averages, so we are adding it back to our recommended plays. When NOKA announced a split in Feb. 1998, a long and steep split run followed. We have been unable to confirm the expected earnings release date for this foreign owned stock, but we will keep you posted, as that is a likely time for a new split announcement. Since we dropped it, Nokia has entered the pre-paid mobile phone market in an agreement with Topp Telecom, Inc., of Miami. Other recent news on this stock can still be found in previous newsletters posted on the O.I. website. When researching NOK.A, be aware that some sites require the dot and some won't allow it. BUY CALL FEB-135 NAY-BG OI=3D393 at $11.38 SL=3D 9.00 BUY CALL FEB-140*NAY-BH OI=3D241 at $ 8.88 SL=3D 6.75 BUY CALL APR-135 NAY-DG OI=3D299 at $17.00 SL=3D13.00 BUY CALL APR-140 NAY-DH OI=3D175 at $14.88 SL=3D11.75 BUY CALL JUL-140 NAY-GH OI=3D 14 at $ 9.25 SL=3D 7.00 Picked on Jan 17th at $138.59 P/E=3D n/a Change since picked $0.00 52 week low=3D 35.31 Analysts' ratings 10-6-0-0-0 52 weekhigh=3D142.50 Last earnings 9/98 est=3D $ .67 act=3D$.88 surprise=3D31% Next earnings 12/98 est=3D $1.01 Chart =3D http://quote.yahoo.com/q?s=3DNOKA&;d=3D3m ******************************************* Software - Sector ******************************************* MSFT - Microsoft $149.75 (-0.13)(+11.19)(-3.06)(P5W +28.13) From their own words, "Microsoft Rules." Although it's current reign is being rocked with revolution, the Evil M- pire (as some programmers and anti-Internet Explorer browser patriots call it), has been fighting the Federal government on anti-trust grounds for months. The line to take their turn and bad mouth the bully was long and distinguished. The fact is, MSFT is good at what they do. They are the world's #1 software company (Y2K compliant or not!) and their operating systems dominate the PC landscape. Extremely volatile, but almost no change from the previous week. Price range last week was $136 to $150 on above average volume for 4 of 5 trading days. Friday gave us an $8 gain following the Brazilian downdraft. CS First Boston said Microsoft "appears on track" to meet or beat estimate of 60 cents per share - an increase of 46 percent from the 42 cents in the same quarter last year. Sales are expected to increase 21 percent to $4.3 billion. With conviction, we still predict a stock split with the earnings announcement after the close January 19th (MSFT confirmed this date); only 1 trading day away. Historically, MSFT has split like clockwork at $140. MSFT has expressed optimism about their future and has every reason to split the stock. MSFT is trading just $3 off its all-time high of $152.50, set the previous week. Prudential last week set a price target of $175. We think their relative price compared to the market reflects strong investor confidence. A great play in the making. Unsavory news release late Thursday: A federal judge scolded Microsoft Corp. over new contract language requiring temporary workers to waive any awards from a pending lawsuit over the software giant's employment practices (Reuters). It had no affect on the stock, but raised eyebrows in the PR department. Conversely, a new Microsoft poll shows that 76 percent of American consumers believe that Microsoft has benefited both U.S. consumers and the computer software industry (Reuters). The real surprise was another press release stating Robert Bork believes Microsoft should be broken into 3 companies; an unusual comment from a free market champion, until you realize he's paid by Netscape to represent them in the Justice Departments case. Finally, MSFT appealed the Sun- Java infringement injunction citing that it believes the court mistakenly treated the case filed against it by Sun as a copyright issue, rather than a contract dispute. We reiterate, "no material effect on earnings". Everen Securities still has their price targets(0-6 months) of $161 and their long term (6-18 months) of $200 BUY CALL FEB-145 MSQ-BI OI=3D 7806 at $11.38 SL=3D9.00 ITM 4.75 BUY CALL FEB-150*MSQ-BJ OI=3D14655 at $ 8.75 SL=3D6.50 ATM BUY CALL APR-155 MSQ-DU OI=3D 3228 at $10.88 SL=3D8.75 BUY CALL APR-160 MSQ-DX OI=3D 3214 at $ 9.25 SL=3D7.00 Picked on December 8th at $133.63 PE =3D 70 Change Since Picked +$ 16.12 52 Week High=3D 152.50 Analysts Ratings 14-8-5-0-0 52 Week Low =3D 62.19 Last Earnings 09/98 est. 0.49 actual .56 surprise 14.29% Next Earnings 01-19 est. 0.58 versus .43 Chart =3D http://quote.yahoo.com/q?s=3DMSFT&;d=3D3m ******************************************* CHKPF Check Point Software $51.25 (+4.37)(+1.07) Network break-ins get doused with Check Point Software Technologies' firewall products -- software that protects corporate networks from unauthorized access, from both inside and outside the company. FireWall-1 authenticates remote users, controls access, and blocks viruses and other undesirable Web content. Its FloodGate-1 clears up traffic congestion on crowded Internet and intranet links by allocating available space to company-defined uses. Check Point's largest customer is Sun Microsystems' SunSoft, which accounts for about 20% of sales. Check Point operates subsidiaries in Europe, North America, and the Pacific Rim. CHKPF is a company that benefits from the explosion in the Internet. As companies increase their use of the web, CHKPF's services will be needed more and more. CHKPF has an incredible record of earning surprises. Next earnings are scheduled for January 21st. Holding over earnings is a risky proposition, but for those risk takers out there, it might pay off. There is a possibility that CHKPF might announce a stock split. They have plenty of shares, but have never announced a split in the past. MACD is positive and CHKPF price is above all moving averages. Between Tuesday and earnings after the close on Thursday, CHKPF could have a nice run. CHKPF, along with other networking security companies, will be holding a seminar in February. This seminar will outline the future of the business and the strategies these companies use and how they can help other companies with their information security. CHKPF has a consensus growth rate of 37.55%. Watch for a pullback and hang on for the ride. BUY CALL FEB-45 KEQ-BI OI=3D 153 at $8.75 SL=3D 6.50 ITM $6.25 BUY CALL FEB-50*KEQ-BJ OI=3D1034 at $5.63 SL=3D 3.75 ITM $1.25 BUY CALL FEB-55 KEQ-BK OI=3D 176 at $3.38 SL=3D 1.75 BUY CALL APR-50 KEQ-DJ OI=3D 89 at $8.50 SL=3D 6.50 ITM $1.25 BUY CALL APR-55 KEQ-DK OI=3D 35 at $6.50 SL=3D 4.75 Picked on Jan 17th at $ 51.25 PE=3D22 Change since picked +0.00 52 week low =3D$10.88 Analysts Ratings 3-8-3-0-0 52 week high=3D$52.63 Last earnings 10-98 est=3D.40 actual=3D.45 Next earnings 01-21 est=3D.47 versus=3D.37 Chart =3D http://quote.yahoo.com/q?s=3DCHKPF&;d=3D3m ******************************************* Semiconductor - Sector ******************************************* PRIA PRI Automation, INC. $34.50 (+4.87) PRIA designs, develops, manufactures, and markets factory automation systems for the cleanroom manufacturing operations of semi-conductor makers and OEM equipment suppliers. Last year's $178.2 million in revenues reflect the big downturn in the semi-conductor industry, but that is changing. The 1998 glut of chips has been depleted, and demand is strong again for these products. After hitting a high of $37.50 in Feb. 1998, PRIA stock had lost about 75% of its value by the time the market bottomed in October. However, it has been climbing fairly steadily ever since, except for a brief correction in December. With the chip industry recovering, it follows that a company such as PRIA will benefit. On January 12th, CIBC Oppenheimer upgraded PRIA to strong buy from buy. This as a momentum play in an improving industry. Earnings due out Jan. 28th. BUY CALL FEB-30*UXQ-BF OI=3D176 at $6.38 SL=3D4.75 BUY CALL FEB-35 UXQ-BG OI=3D 29 at $3.63 SL=3D1.75 BUY CALL MAY-30 UXQ-EF OI=3D107 at $9.00 SL=3D6.75 BUY CALL MAY-35 UXQ-EG OI=3D 25 at $6.63 SL=3D5.00 Picked on Jan 17th at $34.50 P/E=3D n/a Change since picked $ 0.00 52 week low=3D 9.56 Analysts' ratings 1-5-4-0-0 52 week high=3D37.50 Last earnings 9/98 act=3D-$.20 surprise=3D99% Next earnings 01-28 est=3D-$.26 Chart =3D http://quote.yahoo.com/q?s=3DPRIA&;d=3D3m ******************************************* MU Micron Technology $71.31 (+7.68) Micron makes semi-conductor memory products, PCs, circuit boards, memory modules, and system level assemblies, and has a market cap. of $17.6 billion. Revenues for MU=20 declined last year due to lower selling prices of PCs and semi-conductor products. This was a result of too much product industry wide and too little demand, but the company is recovering now, as demand increases. With the industry gaining steam, market expectations for Micron's earnings were high in December, and the stock pulled back when MU did not beat analysts' earnings by a wide enough margin. However, MU has lately begun climbing again and gathering momentum. Even in this past week's down market, the stock looked fairly strong. Chip prices climbed 6% last week as Koreans permanently slashed production and may actually swing the market from an overproduction last year to a scarcity in the coming year. The wild card in the future supply is Taiwan. Already, though, chip prices, which were $200 a year ago, and fell below $60 in May, have climbed to near $90. At the same time, sales for PCs and the chips that go in them are showing strong increases, and that will eventually show up in MU's bottom line. This is a momentum play. CBS Marketwatch screened stocks for 20 different characteristics and MU turned out in the top group. The five best characteristics: 1)Strong recent earnings/revenue growth, 2)Selling at a discount to its growth, 3)Consistently beats analysts expectations, 4)Earnings estimates continually revised upwards, 5)Short- and long- term relative strength. BUY CALL FEB-70*MU-BN OI=3D1757 at $ 7.25 SL=3D 5.25 BUY CALL FEB-75 MU-BO OI=3D1109 at $ 5.13 SL=3D 3.25 BUY CALL APR-70 MU-DN OI=3D 405 at $11.00 SL=3D 8.75 BUY CALL APR-75 MU-DO OI=3D 371 at $ 8.88 SL=3D 6.75 BUY CALL JUL-75 MU-GO OI=3D 252 at $12.63 SL=3D10.25 Picked on Jan 17th at $71.31 P/E=3D n/a Change since picked $ 0.00 52 week low=3D20.06 Analysts' ratings 10-4-6-0-1 52 week high=3D71.94 Last earnings 11/98 actual=3D -.19 surprise=3D39% Next earnings 03-22 est =3D -.10 Chart =3D http://quote.yahoo.com/q?s=3DMU&;d=3D3m ******************************************* JBL - Jabil Circuit, Inc. $73.88 (-1.00)(+.38)(+2.94)(+3.06) JBL is the third-largest US manufacturer of circuit board systems, trailing SCI Systems and Solectron. The company's products are used in PCs, printers, network hardware, cellular phones, and cars. JBL's major customers include Hewlett Packard, 3Com, and Cisco Systems with more than half of its revenues coming from telecommunications companies. JBL's customers use contract manufacturers, like JBL, to save money and improve production times. JBL has manufacturing facilities in Malaysia, Mexico, the UK, and the US. Insiders own approximately 41% of the company. In the news last week, Everen Securities initiated coverage on JBL with an intermediate term market perform and a long term outperform. The press release did note, that in the near-term they believe that JBL is close to fair value, but in the long term it should be an outperformer. The other bit of news that helped JBL was that Solectron announced a two for one stock split. As we have said on more than one occasion, this industry tends to move together. Last week, JBL bounced off of its 21 day moving average and closed right at its 10 day moving average on Friday. There also appears to be some support for JBL around $71. JBL has been on extended run since last September, and given the way the sector goes in and out of favor with the Street, you should keep a close eye on JBL if you are playing it. If JBL were to break below $71, in a significant way, we would be very cautious of the stock. Also, as with any sector, but more so with this one, you have to keep an eye on the sector when playing JBL. BUY CALL FEB-70 JBL-BN OI=3D150 at $8.00, SL=3D6.25 BUY CALL FEB-75*JBL-BO OI=3D598 at $5.25, SL=3D3.25 BUY CALL FEB-80 JBL-BP OI=3D808 at $3.25, SL=3D1.50 BUY CALL MAR-80 JBL-CP OI=3D152 at $5.00, SL=3D3.25 BUY CALL JUN-80 JBL-FP OI=3D109 at $9.25, SL=3D6.75 Picked on Dec 6th at $63.38 PE=3D33 Change since picked +10.50 52 week low =3D$23.00 Analysts Ratings 7-9-5-0-0 52 week high=3D$79.00 Last earnings 11-98 est=3D.43 actual=3D.50 Next earnings 03-17 est=3D.52 versus=3D.52 Chart =3D http://quote.yahoo.com/q?s=3DJBL&;d=3D3m ******************************************* Electronics/Peripherals/Hardware - Sector ******************************************* LXK Lexmark Intl. $98.06 (-2.50)(+.06)(+7.25)(+1.31) Lexmark has good peripheral vision. Lexmark International Group is a leading maker of computer printers and related products, which generate more than 80% of its sales. Its printer line includes laser printers (designed primarily for corporate networks and desktops) and ink-jet printers (for home and business use). Unlike many of its competitors, Lexmark develops and manufactures it's own printers, which results in fast product cycle times. The company also makes supplies for IBM and other name brand printers and typewriters. Lexmark's products are sold in more than 15,000 retail outlets in more than 150 countries. LXK consolidated this last week and is sitting right on its 20-dma. We still like LXK with earnings on the 26th of January. Remember, holding over earnings is risky. In the case of LXK, the risk might be justified if they announce a stock split. Each individual has to weigh out the risk themselves. LXK hasn't had any news the last few days. These last few weeks have seen LXK get recommended by many different professionals as a great stock to own for 1999. Remember, LXK has had an average earnings surprise of 11.75% over the last four quarters. This could help propel LXK higher before earnings on the expectation. There are different earnings dates listed on the web, but First Call does list the 26th of January. We will continue to try to get a fixed date from investor relations. BUY CALL FEB- 95 LXK-BS OI=3D 53 at $ 9.38 SL=3D6.75 ITM $3.06 BUY CALL FEB-100*LXK-BT OI=3D514 at $ 7.38 SL=3D5.25 BUY CALL FEB-105 LXK-BA OI=3D284 at $ 5.00 SL=3D3.25 BUY CALL APR-100 LXK-DT OI=3D 52 at $11.75 SL=3D9.25 BUY CALL APR-105 LXK-DA OI=3D 40 at $ 9.50 SL=3D7.00 Picked on Dec 15th at $88.38 P/E =3D 29 Change since picked: + 9.68 52 week low =3D$ 33.63 Analysts' ratings 1-4-1-0-0 52 week high=3D$103.50 Last earnings 10-98 est=3D $ .79 actual=3D $.81 Next earnings 01-26 est=3D $1.09 prior =3D $.78 Chart =3D http://quote.yahoo.com/q?s=3DLXK&;d=3D3m ******************************************* EMC - EMC Corporation $100.06 (+6.50)(+8.56)(+3.38)(+.13) EMC is a Fortune 500 company that designs, manufactures, markets an supports high performance storage products. The company's products store retrieve, manage, protect and share information from all major computing environments, including UNIX, Windows NT and mainframe platforms. EMC markets its memory products under the name Symmetrix. EMC and its enterprise storage systems have developed a clear cut technological edge over its competition. The company has been able to successfully leverage its leadership position in the mainframe storage area into the lucrative, faster growing open systems market. There really wasn't any news last week on EMC. We think the real story happened on Thursday, when the NASDAQ was down and EMC went up. This suggests that there are still a lot of buyers who want EMC stock. This was confirmed by the move EMC made on Friday. We continue to read articles that discuss EMC being in model portfolios of 20 to 30 growth stocks. There was an article in MSN MoneyCentral about EMC being one of the top 30 growth stocks. EMC has been, and is continuing to be, a great momentum stock. EMC took off again on Friday. It set a new 52 week high on Friday, and closed near the high. As we discussed above, EMC is one of those stocks that people keep buying. As long as there are buyers of the stock, we believe it will continue with it's momentum. EMC is also a split candidate. We know we keep saying this, but as it continues to move up, it only increases the probability of a split. A year ago this last November EMC split at around $63 after a strong move. FYI - EMC reports earnings before the open on 1/26. BUY CALL FEB- 95 EMC-BS OI=3D1072 at $10.75 SL=3D 8.50 BUY CALL FEB-100*EMC-BT OI=3D3511 at $ 8.25 SL=3D 6.25 BUY CALL APR- 95 EMC-DS OI=3D 540 at $15.50 SL=3D11.75 BUY CALL APR-100 EMC-DT OI=3D2619 at $12.88 SL=3D10.50 Picked on Nov 8th at $69.06 PE=3D58 Change since picked +31.00 52 week low =3D$ 23.50 Analysts Ratings 10-4-0-0-0 52 week high=3D$100.19 Last earnings 9-98 est=3D.36 actual=3D.38 Next earnings 1-26 est=3D.46 versus=3D.32 Chart =3D http://quote.yahoo.com/q?s=3DEMC&;d=3D3m ******************************************* XIRC Xircom Inc. $39.88 (+1.38)(+4.50)(+1.25) Xircom makes adapters that connect portable PCs to corporate networks, the Internet, and commercial online services. The company's products include adapter/modem cards (CreditCard Ethernet+Modem), network adapters for portable PCs (Pocket Ethernet Adapter, Pocket Token Ring Adapter), and modem-only PC cards (CreditCard Modem). Xircom sells its products to original equipment manufacturers and through a worldwide network of distributors, value-added resellers, and computer retailers. Over half of its income is from foreign sales. Intel owns 11% of Xircom; chairman and CEO Dirk Gates owns about 5%. XIRC is expecting to announce earnings that are 300% higher than the same quarter last year. With the large earning surprises XIRC has had the last four quarter, a nice run could develop into earnings. Though a split isn't likely, the company has enough shares to announced one. There is no split history for XIRC. XIRC reached a new 52-week high on Friday when it hit $40.50. XIRC was recently selected as one of the best mobile PC cards. Its product will be competing with 3COM and a few others for the best mobile PC card. This award ceremony is put on the Mobility Awards. 3COM is one of the biggest competitors of XIRC. BUY CALL FEB-35 XQR-BG OI=3D 41 at $6.63 SL=3D4.75 ITM $4.88 BUY CALL FEB-40*XQR-BH OI=3D467 at $3.75 SL=3D2.25 BUY CALL MAR-35 XQR-CG OI=3D127 at $7.50 SL=3D5.75 ITM $4.88 BUY CALL MAR-40 XQR-CH OI=3D116 at $4.88 SL=3D3.00 BUY CALL JUN-40 XQR-FH OI=3D 55 at $7.38 SL=3D5.50 Picked on Jan.9th at $38.50 PE =3D 28 Change since picked +1.33 52 week low =3D$ 9.25 Analysts Ratings 4-2-1-0-0 52 week high=3D$40.50 Last earnings on 10-98 est=3D.25 actual=3D.33 Next earnings on 01-21 est=3D.34 versus=3D.11 Chart =3D http://quote.yahoo.com/q?s=3DXIRC&;d=3D3m ******************************************* PLAYS CONTINUED IN SECTION FOUR. ******************************************* DISCLAIMER ******************************************* This newsletter is a publication dedicated to the education of options traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. The newsletter picks are not to be considered a recommendation of any stock or option but an information resource to aid the investor in making an informed decision regarding trading in options. It is possible at this or some subsequent date, the editor and staff of The Option Investor Newsletter may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. The newsletter staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control. ---------------------- Forwarded by Mark - ECT Legal Taylor/HOU/ECT on=20 01/18/99 08:27 AM --------------------------- =20 =09Enron Capital & Trade Resources Corp. =09 =09From: xtrials@optioninvestor.com (Option Investor Newsletter Trials= ) =20 01/17/99 06:08 AM =09 Please respond to xtrials@optioninvestor.com To: Option Investor Newsletter Trials <xtrials@optioninvestor.com< cc: (bcc: Mark - ECT Legal Taylor/HOU/ECT) Subject: Sunday - Option Investor Newsletter 3 of 7 (resend) The Option Investor Newsletter 1-17-98 Sunday Part 3 of 7 ****************************************** TLAB - Tellabs $85.94 (+11.63)(P3W $10.18) Tellabs is quickly becoming a powerhouse in the Telecom equipment industry. With their TITAN and CABLESPAN systems, and its DXX multiplexers, TLAB is raking in the money from customers among the telephone companies, cable operators, and government agencies. Though they faded from news of their failed merger of Ciena, Tellabs is still a major player. Wow! What a play. TLAB gave up only $0.44 in Thursday's turmoil and came smokin' back $5.25 on Friday to close at $85.94. Technicals look outstanding with a small consolidation already taken place; all indicators in positive territory. We introduced the play Thursday under the following logic: TLAB spiked up $13 last Tuesday to $78 on 11 million shares, $8 higher than resistance previously set at $70. TLAB drifted back to $74, then spiked $5 to $79, on average volume of 3.5 million. Over the previous 3 trading days, it gained in market weakness while giving back only $.44 in heavy trading in a downright bearish market - a terrific sign of strength. 3.5 million shares traded daily; 147 million shares in float; $3.14 per share in cash; 34% return on equitystrong fundamentals. We expect them to announce more contracts in the coming weeks. Recent news is capturing investors' eyeballs, making for a good story. We could find no news on Friday driving the price; just market recovery and stock momentum. Monday, Warburg, Dillion Read raised their rating to a "buy" citing raised earnings per share estimates to $2.35 and $2.93 from $2.30 and $2.85 for 1999 and 2000, respectively. They further state, "fundamentals for the telecom equipment group has improved over the past few months which improves visibility for Tellabs" and "Our checks with Tellabs will report fourth quarter 1998 results slightly better than our $0.58 earnings per share estimate, as well as having a positive outlook for 1999" (Reuters). Also, rumors surfaced last week that TLAB was a targeted buyout/merger candidate, but were quickly squashed. Not soon enough, though, to draw investor attention to the price move. BUY CALL FEB-80 TEQ-BP OI=3D1270 at $ 9.75 SL=3D 7.25 ATM BUY CALL FEB-85*TEQ-BQ OI=3D 965 at $ 7.00 SL=3D 5.75 OTM BUY CALL MAR-85 TEQ-CQ OI=3D 873 at $ 9.38 SL=3D 7.00 more time BUY CALL JUN-85 TEQ-FQ OI=3D 105 at $13.75 SL=3D11.00 OTM highest strike available Picked on Jan. 14th $80.69 PE=3D 39 Change since picked $ 5.25 52 week low =3D$31.38 Analysts Ratings 15-9-3-0-0 52 week high=3D$93.12 Last earnings on 09-98 est=3D.46 actual=3D.49 Next earnings on 01-25 est=3D.59 versus=3D.42 Chart =3D http://quote.yahoo.com/q?s=3DTLAB&;d=3D3m ******************************************** QCOM - Qualcomm, Inc. $63.88 (+3.63) QCOM develops, manufactures, markets, licenses, and operates advanced communications systems and products based on digital wireless technology. The Company's primary product areas are the OmniTRACS system (a geostationary satellite-based, mobile communications system providing two-way data and position reporting services), CDMA wireless communications systems and products and, in conjunction with others, the development of the Globalstar low-earth-orbit (LEO) satellite communications system. The company's CDMA technology has become the dominant wireless transmission standard in the US and Korea, and is gaining momentum in a host of other countries. Demand for CDMA phones is surging as the US wireless industry is migrating from analog to digital. In the news last week, QCOM, along with several other companies, purchased a concession to operate a fixed line telephone service in Brazil. QCOM has indicated, in the past, that it is lobbying China to adopt its CDMA technology. Since 1990, the average annual growth rate of mobile phone users in China has been about 160%, according to government figures. QCOM is building a global presence. It was also reported on CNBC on Friday that there is renewed interest in QCOM as a takeover candidate given the recent acquisition of ATI and the LU/ASND merger. If fact, the entire sector is expecting another round of takeovers given the competitive landscape. QCOM has been in a basing pattern since last November. It actually fell below its 200 day moving average in December, and then started its current run around the beginning of the year. QCOM reports earnings on Tuesday just before the close. As you know we don't recommend holding over earnings releases, but QCOM might make an interesting short term trade before the earnings release. Depending on the earnings release on Tuesday, we also like QCOM as a play after the release given the merger activity in the sector. After the earnings release, wait for a direction before initiating a play. BUY CALL FEB-60 QAQ-BL OI=3D1421 at $7.25 SL=3D5.25 BUY CALL FEB-65*QAQ-BM OI=3D1224 at $4.38 SL=3D2.75 BUY CALL FEB-70 QAQ-BN OI=3D 745 at $2.50 SL=3D1.25 BUY CALL APR-70 QAQ-DN OI=3D 401 at $5.13 SL=3D3.25 BUY CALL JUL-70 QAQ-GN OI=3D 37 at $7.88 SL=3D6.25 Picked on Jan 17th at $63.88 PE=3D22 Change since picked +0.00 52 week low =3D$37.75 Analysts Ratings 6-8-6-0-0 52 week high=3D$67.38 Last earnings 09-98 est=3D.50 actual=3D.54 Next earnings 01-19 est=3D.59 versus=3D.58 Chart =3D http://quote.yahoo.com/q?s=3DQCOM&;d=3D3m ******************************************** NOK.A Nokia $138.59 (+$3.59) Nokia is a supplier of telecommunications systems and equipment and is the world's leading maker of cellular phones. It's telecommunications and mobile phone sales are growing rapidly, and margins are higher as well. Nokia is increasing plant capacity to keep up with demand. We covered Nokia from Dec. 13th until Jan. 10th as both a split candidate and a momentum play. It climbed steadily for us into the first week of January, when the stock got ahead of itself. It had risen a little too quickly due to enthusiasm for the new Euro and to excitement over the ATI bids. When it began pulling back from its $142.25 close on Jan.6th, we feared a correction and became reluctant to recommend new positions, so we dropped it. With yesterday's $6.34 rebound, the correction appears to be over, and the stock remains well above its moving averages, so we are adding it back to our recommended plays. When NOKA announced a split in Feb. 1998, a long and steep split run followed. We have been unable to confirm the expected earnings release date for this foreign owned stock, but we will keep you posted, as that is a likely time for a new split announcement. Since we dropped it, Nokia has entered the pre-paid mobile phone market in an agreement with Topp Telecom, Inc., of Miami. Other recent news on this stock can still be found in previous newsletters posted on the O.I. website. When researching NOK.A, be aware that some sites require the dot and some won't allow it. BUY CALL FEB-135 NAY-BG OI=3D393 at $11.38 SL=3D 9.00 BUY CALL FEB-140*NAY-BH OI=3D241 at $ 8.88 SL=3D 6.75 BUY CALL APR-135 NAY-DG OI=3D299 at $17.00 SL=3D13.00 BUY CALL APR-140 NAY-DH OI=3D175 at $14.88 SL=3D11.75 BUY CALL JUL-140 NAY-GH OI=3D 14 at $ 9.25 SL=3D 7.00 Picked on Jan 17th at $138.59 P/E=3D n/a Change since picked $0.00 52 week low=3D 35.31 Analysts' ratings 10-6-0-0-0 52 weekhigh=3D142.50 Last earnings 9/98 est=3D $ .67 act=3D$.88 surprise=3D31% Next earnings 12/98 est=3D $1.01 Chart =3D http://quote.yahoo.com/q?s=3DNOKA&;d=3D3m ******************************************* Software - Sector ******************************************* MSFT - Microsoft $149.75 (-0.13)(+11.19)(-3.06)(P5W +28.13) From their own words, "Microsoft Rules." Although it's current reign is being rocked with revolution, the Evil M- pire (as some programmers and anti-Internet Explorer browser patriots call it), has been fighting the Federal government on anti-trust grounds for months. The line to take their turn and bad mouth the bully was long and distinguished. The fact is, MSFT is good at what they do. They are the world's #1 software company (Y2K compliant or not!) and their operating systems dominate the PC landscape. Extremely volatile, but almost no change from the previous week. Price range last week was $136 to $150 on above average volume for 4 of 5 trading days. Friday gave us an $8 gain following the Brazilian downdraft. CS First Boston said Microsoft "appears on track" to meet or beat estimate of 60 cents per share - an increase of 46 percent from the 42 cents in the same quarter last year. Sales are expected to increase 21 percent to $4.3 billion. With conviction, we still predict a stock split with the earnings announcement after the close January 19th (MSFT confirmed this date); only 1 trading day away. Historically, MSFT has split like clockwork at $140. MSFT has expressed optimism about their future and has every reason to split the stock. MSFT is trading just $3 off its all-time high of $152.50, set the previous week. Prudential last week set a price target of $175. We think their relative price compared to the market reflects strong investor confidence. A great play in the making. Unsavory news release late Thursday: A federal judge scolded Microsoft Corp. over new contract language requiring temporary workers to waive any awards from a pending lawsuit over the software giant's employment practices (Reuters). It had no affect on the stock, but raised eyebrows in the PR department. Conversely, a new Microsoft poll shows that 76 percent of American consumers believe that Microsoft has benefited both U.S. consumers and the computer software industry (Reuters). The real surprise was another press release stating Robert Bork believes Microsoft should be broken into 3 companies; an unusual comment from a free market champion, until you realize he's paid by Netscape to represent them in the Justice Departments case. Finally, MSFT appealed the Sun- Java infringement injunction citing that it believes the court mistakenly treated the case filed against it by Sun as a copyright issue, rather than a contract dispute. We reiterate, "no material effect on earnings". Everen Securities still has their price targets(0-6 months) of $161 and their long term (6-18 months) of $200 BUY CALL FEB-145 MSQ-BI OI=3D 7806 at $11.38 SL=3D9.00 ITM 4.75 BUY CALL FEB-150*MSQ-BJ OI=3D14655 at $ 8.75 SL=3D6.50 ATM BUY CALL APR-155 MSQ-DU OI=3D 3228 at $10.88 SL=3D8.75 BUY CALL APR-160 MSQ-DX OI=3D 3214 at $ 9.25 SL=3D7.00 Picked on December 8th at $133.63 PE =3D 70 Change Since Picked +$ 16.12 52 Week High=3D 152.50 Analysts Ratings 14-8-5-0-0 52 Week Low =3D 62.19 Last Earnings 09/98 est. 0.49 actual .56 surprise 14.29% Next Earnings 01-19 est. 0.58 versus .43 Chart =3D http://quote.yahoo.com/q?s=3DMSFT&;d=3D3m ******************************************* CHKPF Check Point Software $51.25 (+4.37)(+1.07) Network break-ins get doused with Check Point Software Technologies' firewall products -- software that protects corporate networks from unauthorized access, from both inside and outside the company. FireWall-1 authenticates remote users, controls access, and blocks viruses and other undesirable Web content. Its FloodGate-1 clears up traffic congestion on crowded Internet and intranet links by allocating available space to company-defined uses. Check Point's largest customer is Sun Microsystems' SunSoft, which accounts for about 20% of sales. Check Point operates subsidiaries in Europe, North America, and the Pacific Rim. CHKPF is a company that benefits from the explosion in the Internet. As companies increase their use of the web, CHKPF's services will be needed more and more. CHKPF has an incredible record of earning surprises. Next earnings are scheduled for January 21st. Holding over earnings is a risky proposition, but for those risk takers out there, it might pay off. There is a possibility that CHKPF might announce a stock split. They have plenty of shares, but have never announced a split in the past. MACD is positive and CHKPF price is above all moving averages. Between Tuesday and earnings after the close on Thursday, CHKPF could have a nice run. CHKPF, along with other networking security companies, will be holding a seminar in February. This seminar will outline the future of the business and the strategies these companies use and how they can help other companies with their information security. CHKPF has a consensus growth rate of 37.55%. Watch for a pullback and hang on for the ride. BUY CALL FEB-45 KEQ-BI OI=3D 153 at $8.75 SL=3D 6.50 ITM $6.25 BUY CALL FEB-50*KEQ-BJ OI=3D1034 at $5.63 SL=3D 3.75 ITM $1.25 BUY CALL FEB-55 KEQ-BK OI=3D 176 at $3.38 SL=3D 1.75 BUY CALL APR-50 KEQ-DJ OI=3D 89 at $8.50 SL=3D 6.50 ITM $1.25 BUY CALL APR-55 KEQ-DK OI=3D 35 at $6.50 SL=3D 4.75 Picked on Jan 17th at $ 51.25 PE=3D22 Change since picked +0.00 52 week low =3D$10.88 Analysts Ratings 3-8-3-0-0 52 week high=3D$52.63 Last earnings 10-98 est=3D.40 actual=3D.45 Next earnings 01-21 est=3D.47 versus=3D.37 Chart =3D http://quote.yahoo.com/q?s=3DCHKPF&;d=3D3m ******************************************* Semiconductor - Sector ******************************************* PRIA PRI Automation, INC. $34.50 (+4.87) PRIA designs, develops, manufactures, and markets factory automation systems for the cleanroom manufacturing operations of semi-conductor makers and OEM equipment suppliers. Last year's $178.2 million in revenues reflect the big downturn in the semi-conductor industry, but that is changing. The 1998 glut of chips has been depleted, and demand is strong again for these products. After hitting a high of $37.50 in Feb. 1998, PRIA stock had lost about 75% of its value by the time the market bottomed in October. However, it has been climbing fairly steadily ever since, except for a brief correction in December. With the chip industry recovering, it follows that a company such as PRIA will benefit. On January 12th, CIBC Oppenheimer upgraded PRIA to strong buy from buy. This as a momentum play in an improving industry. Earnings due out Jan. 28th. BUY CALL FEB-30*UXQ-BF OI=3D176 at $6.38 SL=3D4.75 BUY CALL FEB-35 UXQ-BG OI=3D 29 at $3.63 SL=3D1.75 BUY CALL MAY-30 UXQ-EF OI=3D107 at $9.00 SL=3D6.75 BUY CALL MAY-35 UXQ-EG OI=3D 25 at $6.63 SL=3D5.00 Picked on Jan 17th at $34.50 P/E=3D n/a Change since picked $ 0.00 52 week low=3D 9.56 Analysts' ratings 1-5-4-0-0 52 week high=3D37.50 Last earnings 9/98 act=3D-$.20 surprise=3D99% Next earnings 01-28 est=3D-$.26 Chart =3D http://quote.yahoo.com/q?s=3DPRIA&;d=3D3m ******************************************* MU Micron Technology $71.31 (+7.68) Micron makes semi-conductor memory products, PCs, circuit boards, memory modules, and system level assemblies, and has a market cap. of $17.6 billion. Revenues for MU=20 declined last year due to lower selling prices of PCs and semi-conductor products. This was a result of too much product industry wide and too little demand, but the company is recovering now, as demand increases. With the industry gaining steam, market expectations for Micron's earnings were high in December, and the stock pulled back when MU did not beat analysts' earnings by a wide enough margin. However, MU has lately begun climbing again and gathering momentum. Even in this past week's down market, the stock looked fairly strong. Chip prices climbed 6% last week as Koreans permanently slashed production and may actually swing the market from an overproduction last year to a scarcity in the coming year. The wild card in the future supply is Taiwan. Already, though, chip prices, which were $200 a year ago, and fell below $60 in May, have climbed to near $90. At the same time, sales for PCs and the chips that go in them are showing strong increases, and that will eventually show up in MU's bottom line. This is a momentum play. CBS Marketwatch screened stocks for 20 different characteristics and MU turned out in the top group. The five best characteristics: 1)Strong recent earnings/revenue growth, 2)Selling at a discount to its growth, 3)Consistently beats analysts expectations, 4)Earnings estimates continually revised upwards, 5)Short- and long- term relative strength. BUY CALL FEB-70*MU-BN OI=3D1757 at $ 7.25 SL=3D 5.25 BUY CALL FEB-75 MU-BO OI=3D1109 at $ 5.13 SL=3D 3.25 BUY CALL APR-70 MU-DN OI=3D 405 at $11.00 SL=3D 8.75 BUY CALL APR-75 MU-DO OI=3D 371 at $ 8.88 SL=3D 6.75 BUY CALL JUL-75 MU-GO OI=3D 252 at $12.63 SL=3D10.25 Picked on Jan 17th at $71.31 P/E=3D n/a Change since picked $ 0.00 52 week low=3D20.06 Analysts' ratings 10-4-6-0-1 52 week high=3D71.94 Last earnings 11/98 actual=3D -.19 surprise=3D39% Next earnings 03-22 est =3D -.10 Chart =3D http://quote.yahoo.com/q?s=3DMU&;d=3D3m ******************************************* JBL - Jabil Circuit, Inc. $73.88 (-1.00)(+.38)(+2.94)(+3.06) JBL is the third-largest US manufacturer of circuit board systems, trailing SCI Systems and Solectron. The company's products are used in PCs, printers, network hardware, cellular phones, and cars. JBL's major customers include Hewlett Packard, 3Com, and Cisco Systems with more than half of its revenues coming from telecommunications companies. JBL's customers use contract manufacturers, like JBL, to save money and improve production times. JBL has manufacturing facilities in Malaysia, Mexico, the UK, and the US. Insiders own approximately 41% of the company. In the news last week, Everen Securities initiated coverage on JBL with an intermediate term market perform and a long term outperform. The press release did note, that in the near-term they believe that JBL is close to fair value, but in the long term it should be an outperformer. The other bit of news that helped JBL was that Solectron announced a two for one stock split. As we have said on more than one occasion, this industry tends to move together. Last week, JBL bounced off of its 21 day moving average and closed right at its 10 day moving average on Friday. There also appears to be some support for JBL around $71. JBL has been on extended run since last September, and given the way the sector goes in and out of favor with the Street, you should keep a close eye on JBL if you are playing it. If JBL were to break below $71, in a significant way, we would be very cautious of the stock. Also, as with any sector, but more so with this one, you have to keep an eye on the sector when playing JBL. BUY CALL FEB-70 JBL-BN OI=3D150 at $8.00, SL=3D6.25 BUY CALL FEB-75*JBL-BO OI=3D598 at $5.25, SL=3D3.25 BUY CALL FEB-80 JBL-BP OI=3D808 at $3.25, SL=3D1.50 BUY CALL MAR-80 JBL-CP OI=3D152 at $5.00, SL=3D3.25 BUY CALL JUN-80 JBL-FP OI=3D109 at $9.25, SL=3D6.75 Picked on Dec 6th at $63.38 PE=3D33 Change since picked +10.50 52 week low =3D$23.00 Analysts Ratings 7-9-5-0-0 52 week high=3D$79.00 Last earnings 11-98 est=3D.43 actual=3D.50 Next earnings 03-17 est=3D.52 versus=3D.52 Chart =3D http://quote.yahoo.com/q?s=3DJBL&;d=3D3m ******************************************* Electronics/Peripherals/Hardware - Sector ******************************************* LXK Lexmark Intl. $98.06 (-2.50)(+.06)(+7.25)(+1.31) Lexmark has good peripheral vision. Lexmark International Group is a leading maker of computer printers and related products, which generate more than 80% of its sales. Its printer line includes laser printers (designed primarily for corporate networks and desktops) and ink-jet printers (for home and business use). Unlike many of its competitors, Lexmark develops and manufactures it's own printers, which results in fast product cycle times. The company also makes supplies for IBM and other name brand printers and typewriters. Lexmark's products are sold in more than 15,000 retail outlets in more than 150 countries. LXK consolidated this last week and is sitting right on its 20-dma. We still like LXK with earnings on the 26th of January. Remember, holding over earnings is risky. In the case of LXK, the risk might be justified if they announce a stock split. Each individual has to weigh out the risk themselves. LXK hasn't had any news the last few days. These last few weeks have seen LXK get recommended by many different professionals as a great stock to own for 1999. Remember, LXK has had an average earnings surprise of 11.75% over the last four quarters. This could help propel LXK higher before earnings on the expectation. There are different earnings dates listed on the web, but First Call does list the 26th of January. We will continue to try to get a fixed date from investor relations. BUY CALL FEB- 95 LXK-BS OI=3D 53 at $ 9.38 SL=3D6.75 ITM $3.06 BUY CALL FEB-100*LXK-BT OI=3D514 at $ 7.38 SL=3D5.25 BUY CALL FEB-105 LXK-BA OI=3D284 at $ 5.00 SL=3D3.25 BUY CALL APR-100 LXK-DT OI=3D 52 at $11.75 SL=3D9.25 BUY CALL APR-105 LXK-DA OI=3D 40 at $ 9.50 SL=3D7.00 Picked on Dec 15th at $88.38 P/E =3D 29 Change since picked: + 9.68 52 week low =3D$ 33.63 Analysts' ratings 1-4-1-0-0 52 week high=3D$103.50 Last earnings 10-98 est=3D $ .79 actual=3D $.81 Next earnings 01-26 est=3D $1.09 prior =3D $.78 Chart =3D http://quote.yahoo.com/q?s=3DLXK&;d=3D3m ******************************************* EMC - EMC Corporation $100.06 (+6.50)(+8.56)(+3.38)(+.13) EMC is a Fortune 500 company that designs, manufactures, markets an supports high performance storage products. The company's products store retrieve, manage, protect and share information from all major computing environments, including UNIX, Windows NT and mainframe platforms. EMC markets its memory products under the name Symmetrix. EMC and its enterprise storage systems have developed a clear cut technological edge over its competition. The company has been able to successfully leverage its leadership position in the mainframe storage area into the lucrative, faster growing open systems market. There really wasn't any news last week on EMC. We think the real story happened on Thursday, when the NASDAQ was down and EMC went up. This suggests that there are still a lot of buyers who want EMC stock. This was confirmed by the move EMC made on Friday. We continue to read articles that discuss EMC being in model portfolios of 20 to 30 growth stocks. There was an article in MSN MoneyCentral about EMC being one of the top 30 growth stocks. EMC has been, and is continuing to be, a great momentum stock. EMC took off again on Friday. It set a new 52 week high on Friday, and closed near the high. As we discussed above, EMC is one of those stocks that people keep buying. As long as there are buyers of the stock, we believe it will continue with it's momentum. EMC is also a split candidate. We know we keep saying this, but as it continues to move up, it only increases the probability of a split. A year ago this last November EMC split at around $63 after a strong move. FYI - EMC reports earnings before the open on 1/26. BUY CALL FEB- 95 EMC-BS OI=3D1072 at $10.75 SL=3D 8.50 BUY CALL FEB-100*EMC-BT OI=3D3511 at $ 8.25 SL=3D 6.25 BUY CALL APR- 95 EMC-DS OI=3D 540 at $15.50 SL=3D11.75 BUY CALL APR-100 EMC-DT OI=3D2619 at $12.88 SL=3D10.50 Picked on Nov 8th at $69.06 PE=3D58 Change since picked +31.00 52 week low =3D$ 23.50 Analysts Ratings 10-4-0-0-0 52 week high=3D$100.19 Last earnings 9-98 est=3D.36 actual=3D.38 Next earnings 1-26 est=3D.46 versus=3D.32 Chart =3D http://quote.yahoo.com/q?s=3DEMC&;d=3D3m ******************************************* XIRC Xircom Inc. $39.88 (+1.38)(+4.50)(+1.25) Xircom makes adapters that connect portable PCs to corporate networks, the Internet, and commercial online services. The company's products include adapter/modem cards (CreditCard Ethernet+Modem), network adapters for portable PCs (Pocket Ethernet Adapter, Pocket Token Ring Adapter), and modem-only PC cards (CreditCard Modem). Xircom sells its products to original equipment manufacturers and through a worldwide network of distributors, value-added resellers, and computer retailers. Over half of its income is from foreign sales. Intel owns 11% of Xircom; chairman and CEO Dirk Gates owns about 5%. XIRC is expecting to announce earnings that are 300% higher than the same quarter last year. With the large earning surprises XIRC has had the last four quarter, a nice run could develop into earnings. Though a split isn't likely, the company has enough shares to announced one. There is no split history for XIRC. XIRC reached a new 52-week high on Friday when it hit $40.50. XIRC was recently selected as one of the best mobile PC cards. Its product will be competing with 3COM and a few others for the best mobile PC card. This award ceremony is put on the Mobility Awards. 3COM is one of the biggest competitors of XIRC. BUY CALL FEB-35 XQR-BG OI=3D 41 at $6.63 SL=3D4.75 ITM $4.88 BUY CALL FEB-40*XQR-BH OI=3D467 at $3.75 SL=3D2.25 BUY CALL MAR-35 XQR-CG OI=3D127 at $7.50 SL=3D5.75 ITM $4.88 BUY CALL MAR-40 XQR-CH OI=3D116 at $4.88 SL=3D3.00 BUY CALL JUN-40 XQR-FH OI=3D 55 at $7.38 SL=3D5.50 Picked on Jan.9th at $38.50 PE =3D 28 Change since picked +1.33 52 week low =3D$ 9.25 Analysts Ratings 4-2-1-0-0 52 week high=3D$40.50 Last earnings on 10-98 est=3D.25 actual=3D.33 Next earnings on 01-21 est=3D.34 versus=3D.11 Chart =3D http://quote.yahoo.com/q?s=3DXIRC&;d=3D3m ******************************************* PLAYS CONTINUED IN SECTION FOUR. ******************************************* DISCLAIMER ******************************************* This newsletter is a publication dedicated to the education of options traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. The newsletter picks are not to be considered a recommendation of any stock or option but an information resource to aid the investor in making an informed decision regarding trading in options. It is possible at this or some subsequent date, the editor and staff of The Option Investor Newsletter may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. The newsletter staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control. ---------------------- Forwarded by Mark - ECT Legal Taylor/HOU/ECT on=20 01/18/99 08:27 AM --------------------------- =20 =09Enron Capital & Trade Resources Corp. =09 =09From: xtrials@optioninvestor.com (Option Investor Newsletter Trials= ) =20 01/17/99 06:18 AM =09 Please respond to xtrials@optioninvestor.com To: Option Investor Newsletter Trials <xtrials@optioninvestor.com< cc: (bcc: Mark - ECT Legal Taylor/HOU/ECT) Subject: Sunday - Option Investor Newsletter 5 of 7 (C.Calls/NkdPuts) The Option Investor Newsletter 1-17-98 Sunday 5 of 7 ***************************************** COVERED CALL SECTION FOR JANUARY 17, 1999 ***************************************** Trading lessons... This week we are going discuss one of the many pitfalls that you will eventually encounter as a trader; Incorrect Information... Occasionally, we will discover an error in a stock or option quote and usually it comes to us "the hard way". Last week, we offered a position on Reliance Bancorp (RELY) and it turns out that the option quoted was for another stock. It was not a research error or miss-type, just erroneous quote information provided to the trading public. One of our faithful readers had the unfortunate experience of buying into this play on the assumption that the option existed. We received permission to reprint portions of his remarks to educate our readers. Here is the general narrative; "I did my 'due diligence' on the options play with Reliance Bancorp but like a growing number of people this was all handled on-line with me as the only human in the food chain willing to take any chances. Oddly though, I did speak to two other people in this and got an interesting mix of answers. I used (two common brokerages; names deleted) for my information, perhaps using two separate entities was my downfall here. One stated just as you did that there was a Reliance, FEB25-Call at the same bid as you published. If fact, it showed an array of options for Reliance. However, come to find out they were Verio. I then bought shares of Reliance on-line through another broker in my IRA with the intention of selling calls against them the next day. When I entered the ticker symbol to 'sell calls to open', I was greeted by a statement about Verio. Calling the broker, I was told that the ticker symbol was in fact for Verio but only the Feb. call. I then contacted the option trading desk and found that the ticker symbol belonged to Verio and there were no options on RELY at all. I was fooled by the apparent presence of options at one brokerage, which tells me that I need to do all my research through the top name brokerage." The reader went on to point out that; "It turned out to be the systems that were fouled up and not the analysis, all information that is received on-line or through humans should be verified before investing...I sure plan to do so from now on!" Words of wisdom for sure! ************************** SUMMARY OF PREVIOUS PICKS: ************************** Stock Price Last Mon Strike Opt Profit ROI Monthly Sym Picked Price Price Bid /Loss ROI DOSE 4.06 7.06 Jan 5.00 0.50 *$ 1.44 40.4% 29.3% ITVU 17.69 24.50 Jan 15.00 3.25 *$ 0.56 3.9% 16.9% APLX 4.94 5.00 Jan 5.00 0.63 $ 0.69 16.0% 13.9% MCHM 8.44 8.63 Jan 7.50 1.38 *$ 0.44 6.2% 13.5% DBCC 17.81 21.75 Jan 15.00 3.63 *$ 0.82 5.8% 12.6% MCHM 8.25 8.63 Jan 7.50 1.63 *$ 0.88 13.3% 11.6% CYCH 20.69 19.75 Jan 17.50 3.63 *$ 0.44 2.6% 11.2% FILE 10.38 11.50 Jan 10.00 1.44 *$ 1.06 11.9% 10.3% NTKI 15.75 15.44 Jan 12.50 4.00 *$ 0.75 6.4% 9.2% CYCH 15.00 19.75 Jan 12.50 3.00 *$ 0.50 4.2% 9.1% NOVT 24.06 25.44 Jan 22.50 2.88 *$ 1.32 6.2% 9.0% WAVO 9.38 9.38 Jan 7.50 2.31 *$ 0.43 6.1% 8.8% SPYG 20.88 18.13 Jan 17.50 4.38 *$ 1.00 6.1% 8.8% BMP 24.56 24.25 Jan 20.00 6.00 *$ 1.44 7.8% 8.4% ITVU 13.25 24.50 Jan 10.00 4.13 *$ 0.88 9.6% 8.4% EGGS 20.88 23.25 Jan 17.50 4.00 *$ 0.62 3.7% 8.0% SYBS 7.81 8.28 Jan 7.50 0.94 *$ 0.63 9.2% 8.0% VRTY 22.50 35.06 Jan 20.00 4.13 *$ 1.63 8.9% 7.7% HDL 12.94 13.13 Jan 12.50 1.44 *$ 1.00 8.7% 7.6% PPRT 13.88 13.13 Jan 12.50 2.25 *$ 0.87 7.5% 6.5% EOG 16.94 16.81 Jan 15.00 2.75 *$ 0.81 5.7% 6.2% PPOD 6.75 8.25 Jan 5.00 2.13 *$ 0.38 8.2% 6.0% MANU 13.75 15.38 Jan 10.00 4.25 *$ 0.50 5.3% 5.7% VIRS 12.75 14.13 Jan 10.00 3.25 *$ 0.50 5.3% 5.7% VOLVY 23.75 27.75 Jan 20.00 4.75 *$ 1.00 5.3% 5.7% DBCC 17.81 21.75 Jan 12.50 5.63 *$ 0.32 2.6% 5.7% MICA 17.13 17.00 Jan 12.50 5.25 *$ 0.62 5.2% 5.7% MWHS 28.38 43.50 Jan 25.00 5.13 *$ 1.75 7.5% 5.5% VSVR 16.75 17.13 Jan 15.00 2.44 *$ 0.69 4.8% 5.2% SDTI 18.31 27.50 Jan 15.00 4.13 *$ 0.82 5.8% 5.0% PTVL 14.69 22.50 Jan 10.00 5.13 *$ 0.44 4.6% 5.0% ABTX 12.69 14.38 Jan 10.00 3.25 *$ 0.56 5.9% 4.3% SER 6.38 6.13 Jan 5.00 1.63 *$ 0.25 5.3% 3.8% CYLKE 4.31 3.81 Jan 5.00 0.50 $ 0.00 0.0% 0.0% TERA 7.88 6.63 Jan 7.50 1.19 $ -0.06 -0.9% 0.0% IMNR 13.13 10.25 Jan 12.50 2.00 $ -0.88 -7.9% 0.0% TDFX 16.44 12.38 Jan 15.00 2.44 $ -1.62 -11.6% 0.0% PSCX 11.31 8.00 Jan 10.00 2.19 $ -1.12 -12.3% 0.0% ------------------------------------------------------------- TOK 9.75 11.00 Feb 10.00 1.63 *$ 1.88 23.2% 14.4% MCRE 5.38 7.63 Feb 5.00 1.25 *$ 0.87 21.1% 13.1% ARTT 7.38 8.00 Feb 7.50 1.13 *$ 1.25 20.0% 12.4% BID 32.25 32.13 Feb 30.00 5.88 *$ 3.63 13.8% 8.5% DOSE 6.50 7.06 Feb 5.00 2.00 *$ 0.50 11.1% 8.0% SDTI 22.00 27.50 Feb 20.00 4.38 *$ 2.38 13.5% 7.3% PPOD 6.81 8.25 Feb 5.00 2.31 *$ 0.50 11.1% 6.9% ABTE 8.75 9.50 Feb 7.50 1.88 *$ 0.63 9.2% 6.6% GALTF 25.50 26.25 Feb 22.50 5.38 *$ 2.38 11.8% 6.4% CHRX 21.38 21.25 Feb 20.00 3.13 *$ 1.75 9.6% 6.0% NEWZ 11.63 13.00 Feb 10.00 2.44 *$ 0.81 8.8% 5.5% BNYN 14.44 15.75 Feb 10.00 5.13 *$ 0.69 7.4% 5.4% ARTT 7.38 8.00 Feb 5.00 2.75 *$ 0.37 8.0% 5.0% PTVL 22.19 22.50 Feb 15.00 8.13 *$ 0.94 6.7% 4.8% PTVL 18.38 22.50 Feb 12.50 6.88 *$ 1.00 8.7% 4.7% NSTA 26.25 24.00 Feb 25.00 4.13 $ 1.88 8.5% 4.6% OXHP 20.06 18.88 Feb 17.50 3.38 *$ 0.82 4.9% 3.6% OXHP 20.06 18.88 Feb 20.00 2.00 $ 0.82 4.5% 3.3% SYMM 8.56 6.75 Feb 7.50 1.88 $ 0.07 1.0% 0.8% -ROI is equal to the profit (or loss) divided by the cost-basis. Monthly ROI represents the return on a monthly basis. Example: a 10% return in 20 days equals 15.2% ROI for a month). -Margin is not used in any calculations. -Profit/Loss Column: Asterisk indicates stock price above strike price and should be called. Stock that will not be called is assumed sold at current price (for tracking purposes). *** LOSING PLAYS *** Determining when to exit a play is a matter of personal preference but we strongly recommended closing any play that falls more than 20% below the initial cost-basis. Some positions may eventually become profitable but it is generally more productive to exit a losing play and move your capital into another prospective trade. ********** NEW PICKS: ********** Definitions: OI - Open Interest CB - Cost Basis (Prc pd - Prm rec'd =3D CB, the break-even point) RC - Return Called RNC - Return Not Called (Stock Price Unchanged) ******************** Sequenced by Company ******************** Stock Price Mon Strike Option Opt Open Cost RC RNC Sym Price Symbol Bid Intr Basis ARTT 8.25 Feb 7.50 AOQ BU 1.44 375 6.81 10.13% 10.13% BTIM 18.50 Feb 15.00 QBO BC 4.88 109 13.62 10.13% 10.13% INFS 11.38 Feb 10.00 IQL BB 2.06 147 9.32 7.30% 7.30% ITVU 24.50 Feb 17.50 QYU BW 8.13 33 16.37 6.90% 6.90% MCHM 8.75 Feb 7.50 QQ BU 1.94 120 6.81 10.13% 10.13% MRVT 15.13 Feb 12.50 SQD BV 3.25 35 11.88 5.22% 5.22% MWY 10.88 Feb 10.00 MWY BB 1.50 537 9.38 6.61% 6.61% PLCM 25.88 Feb 25.00 QHD BE 3.00 109 22.88 9.27% 9.27% QNTM 26.88 Feb 25.00 QNQ BE 3.75 4697 23.13 8.08% 8.08% SPNSF 10.13 Feb 10.00 QHH BB 1.25 372 8.88 12.61% 12.61% ************************** Sequenced by Return Called *************************** Stock Price Mon Strike Option Opt Open Cost RC RNC Sym Price Symbol Bid Intr Basis SPNSF 10.13 Feb 10.00 QHH BB 1.25 372 8.88 12.61% 12.61% ARTT 8.25 Feb 7.50 AOQ BU 1.44 375 6.81 10.13% 10.13% BTIM 18.50 Feb 15.00 QBO BC 4.88 109 13.62 10.13% 10.13% MCHM 8.75 Feb 7.50 QQ BU 1.94 120 6.81 10.13% 10.13% PLCM 25.88 Feb 25.00 QHD BE 3.00 109 22.88 9.27% 9.27% QNTM 26.88 Feb 25.00 QNQ BE 3.75 4697 23.13 8.08% 8.08% INFS 11.38 Feb 10.00 IQL BB 2.06 147 9.32 7.30% 7.30% ITVU 24.50 Feb 17.50 QYU BW 8.13 33 16.37 6.90% 6.90% MWY 10.88 Feb 10.00 MWY BB 1.50 537 9.38 6.61% 6.61% MRVT 15.13 Feb 12.50 SQD BV 3.25 35 11.88 5.22% 5.22% ****************************** Sequenced by Return Not Called ****************
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