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---------------------- Forwarded by Mark - ECT Legal Taylor/HOU/ECT on
01/15/99 09:20 AM --------------------------- Enron Capital & Trade Resources Corp. From: xtrials@optioninvestor.com (Option Investor Newsletter Trials) 01/14/99 09:28 PM Please respond to xtrials@optioninvestor.com To: Option Investor Newsletter Trials <xtrials@optioninvestor.com< cc: (bcc: Mark - ECT Legal Taylor/HOU/ECT) Subject: Thursday - Option Investor Newsletter 2 of 2 The Option Investor Newsletter Thursday 1-14-98 Copyright 1998, All rights reserved. Redistribution in any form strictly prohibited. PICK NEWS - CALLS (continued) ******************************************************* AOL $144.50 -$1.25 (-2.00) Hmmmmm-AOL flat for the week? NOT!! We deliberated whether to keep or drop AOL today, but decided to keep it. Read on. AOL spiked up to close at $165 earlier this week and has shed $20 in the last 3 trading days since. Especially noted was the drop of $9 yesterday on 25 million shares (10 million more than average-not a good sign). Today though, AOL held up well in the face of strong down-market forces on lower than average volume. It is, after all, the most stable of the Internet stocks and is not going away. While AOL feels comfortable like a family pet, remember it's a trade that's gone against us, and normally we would get out. But with the shaky Brazilian market perhaps drastically affecting the rest of Latin America, we think the bad news and fear is already in this stock. We think of it more like a rubber band stretched in reverse where the farther it's stretched back, the harder it will snap forward. It's nerve-racking waiting for the bounce, but AOL is a split candidate over $120 and should give us a great performance once it snaps. With a record breaking Christmas and 22,000 new users every day, AOL's earnings should be great. Look for the split announcement any day, or at the latest, with earnings due Feb. 9 per Zack's. (There has been some confusion on the actual date; Motley Fool board says as early as Jan. 27. We'll keep you posted.) Still an Internet-guts required. Play with caution. WCOM $71.00 $2.94 (-4.00) In this type of trading environment where the "big picture" whollops the average company press release, it pays to sit on the sidelines. We warned in Tuesday's letter that WCOM may need to consolidate a bit before moving up, and urged discipline before entering another trade. We hope you waited. WCOM is still a great play, but we still need to wait for the recovery before playing this pick. They are now at their 30 day moving average and should bounce off it, market permitting. $70 is their support price. Wait for the bounce. If it breaks below $70 and holds, we'll re- evaluate and likely drop it. WCOM is in high-bandwidth content delivery tests with AOL, which should be successful and more fully implemented through Bell Atlantic and SBC's DSL services. Remember too, they just won the FTS2000 contract (worth $5 billion)to provide the U.S. Government with voice and data services for the next 8 years T $82.13 -$2.63(-$2.93) AT&T is holding up quite well given the market retrenchment this week. The need to move voice and information throughout the world will not diminish, even in a down market. AT&T could actually become a low cost producer who benefits from cost-conscious users exercising corporate belt-tightening. It behaves like a safe haven in a down market and a tech stock in an up market. Volume has been heavy over the last 2 days. If investors wanted to dump this stock, we'd have seen more damage to the price. Support is at $82 with better support at $80. AT&T's prospects are still great with the integration of TCI helping to complete the "last mile" of service availability to your home. AT&T continues to melt the copper in favor of fiber replacement at every turn. Wait for the bounce and confirm market direction before playing. DELL $77.63 -$1.69 (-$0.18) Dell is holding up nicely this week given the weak market performance. Dell's volume has also been weak. We spoke with investor relations and are now able to determine that volatility has greatly diminished, and since their split in September, volume too. Dell used to trade 50 million shares per day on average. As the daily average is figured, the high numbers drop off and new, lower numbers replace them. This will naturally reduce the average until it more closely resembles the actual daily trades currently taking place. It should not be long until these 2 more closely resemble each other. In other words, the low volume is no longer cause for alarm and supports our original assessment that huge daily price swings are a thing of the past. Dell's story is still the same-big sales increases, more markets served, higher margins. When Dell's news season picks up (Feb.-March according to investor relations), Dell will again be on investors' radar screens. Nothing's changed; they're just a little quieter. Still on our favorites list, consider the slight retrenchment as a buying opportunity when the market gets over its jitters. Now's a good time to scale into the trade, but confirm market direction first. LXK $97.00 3.25 (-3.56) LXK fell with the rest of the market on Thursday. We still like LXK with earnings coming up on the 19th of January and the strong possibility of a stock split. The Open Buying on the Internet(OBI) standard has taken another leap forward with the adoption of Lexmark Interna- tional's new OBI-compliant Internet purchasing system. The Kentucky-based printing solutions company has adopted a new system that eliminates many of the manual processes Lexmark previously used to purchase indirect materials. Lexmark has partnered with SupplyWorks, a Web-based purchasing services company. For the first time, buyers are not required to purchase software to manage supplier connections. LOW $51.38 -.31 (-3.31) LOW showed some nice strength today with a loss of .6%. The DOW went down over 2%. LOW was listed as one of the stocks picked in the dartboard contest. Whether the professionals picking LOW is good or not is a decision you'll have to make (just kidding). Look to last Sunday for why LOW is a pick. LOW's has earnings in mid- February. No new news. ATI $78.81 +1.56 (-.19) ATI bucked the trend on Thursday, and went up. Rumors continue to circulate about ATI being merged with either BellAtlantic or Vodaphone. It's rumored that VOD is offering in the range of $90 a share. The question now is whether Bell is willing to raise its bid to match VOD. Thursday's price increase was mainly due to this speculation. Bell did just get notice from the SEC that its bid would classify as a pooling of interests. ATI is still $11 away from the rumored bid by Vodaphone. LU $105.93 +1.69 (-9.32) LU is a great company, with stock split possibilities, and earnings coming up: so why are we dropping it? We aren't. We have re-added LU to the pick list. Last Tuesday we dropped LU because of the buyout situation with Ascend. On Wednesday, the deal went through and it seems LU has finished dropping. LU opened on Wednesday at $98.50, yet closed at $104.50. LU is scheduled to report earnings on January 21st. This date is in debate. We will try to get the official date from LU directly. Though they are just short of shares necessary to do a 2-1 stock split, they could announce a split with earnings, contingent to the vote on increasing shares in February. BUY CALL FEB-105 LU-BA OI=1395 at $ 9.25 SL=6.75 BUY CALL FEB-110 LU-BB OI=4290 at $ 6.75 SL=5.00 BUY CALL APR-110 LU-DB OI=2978 at $11.25 SL=8.50 BUY CALL APR-115 LU-DC OI=3300 at $ 9.00 SL=6.50 XIRC $38.13 .50 (-.37) XIRC has held up pretty well through this market debacle. Earnings are on January 21st and XIRC has announced earnings with surprises of no less than 10% over the last four quarters. This normally will help XIRC to have an earnings run into the announcement. XIRC's 10-dma is at $37.00. Watch for upward movement before initiating new plays. PICK NEWS - PUTS ****************** PUT PICK NEWS WAS NOT AVAILABLE BY PRESS TIME DUE TO TECHNICAL PROBLEMS AT PINNACLE. ****************** NEW CALL PLAYS ****************** COF Capital One Financial $127.18 1.18 (-.12 for this week) Capital One Financial, a financial services holding company, is the parent for Capital One Bank, one of the US's top 10 credit card companies. Using the information on consumers in its massive databases, the company solicits Visa and MasterCard customers by mail. The company's 3,000 variations of annual percentage rates, credit limits, finance charges, and fees range from platinum and gold cards for preferred customers to secured and unsecured cards for customers with limited credit histories. Other subsidiaries include a federally chartered savings bank that offers credit cards, consumer lending, and deposit services and a company that provides internal support services. COF is near its 52-week high and when this stock breaks out, it tends to really go. We feel with earnings coming up on the 19th of January and the possibility of a stock split, this could end up being a great play. COF is sitting right on its 20-dma and held up pretty well compared to the market. Watch for upward movement and then jump on for the ride. Preliminary numbers for credit card numbers are looking very positive for the holiday season. An analyst at JP Morgan feels that COF outperformed its peers. An analyst at Goldman Sachs stated; "The combination of strong fees driven by account growth improvement in core credit is likely to produce very strong earnings visibility at both Capital One and Providian." Earnings are expected to come in strong. BUY CALL FEB-125 COF-BE OI=118 at $9.38 SL=6.75 ITM $2.18 BUY CALL FEB-130 COF-BF OI=188 at $6.75 SL=5.00 BUY CALL MAR-130*COF-CF OI=916 at $9.75 SL=7.50 BUY CALL MAR-135 COF-CG OI= 0 at $7.88 SL=6.00 (NEW STRIKE) Picked on Jan 14th at $127.18 PE=30 Change since picked +0.00 52 week low =$ 50.56 Analysts Ratings 9-4-3-0-0 52 week high=$132.50 Last earnings 10-98 est=1.00 actual=1.00 Next earnings 01-19 est=1.04 versus= .86 Chart = http://quote.yahoo.com/q?s=COF&;d=3m ************************************************************ TLAB - Tellabs $80.69 -$0.44(+$6.38 this week)(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. TLAB spiked up $13 last Tuesday to $78 on 11 million shares, $8 higher than resistance previously set at $70. We thought it would quickly fall back; we were wrong. 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. Technical indicators are positive, so is the chart indicating a small correction already taking place. 3.5 million shares traded daily; 147 million shares in float; $3.14 per share in cash; 34% return on equitystrong fundamentals. TLAB will be a winner when the market turns. We expect them to announce more contracts in the coming weeks. Recent news is capturing investors' eyeballs, making for a good story. Here goes. Monday, Warburg, Dillion Read raised ther 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 stat, "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-75 TEQ-BO OI= 776 at $9.63 SL=6.75,ITM BUY CALL FEB-80 TEQ-BP OI=1267 at $7.00 SL=5.25,ATM BUY CALL FEB-85 TEQ-BQ OI= 885 at $4.63 SL=2.75,OTM BUY CALL MAR-80 TEQ-CP OI= 603 at $8.75 SL=6.50,ATM-more time BUY CALL MAR-85 TEQ-CQ OI= 851 at $6.63 SL=4.75,OTM-more time Picked on Jan. 14th $80.69 PE= 38 Change since picked $00.00 52 week low =$33.38 Analysts Ratings 15-11-3-0-0 52 week high=$93.12 Last earnings on 09-98 est=.46 actual=.49 Next earnings on 01-26 est=.59 versus=.42 Chart = http://quote.yahoo.com/q?s=TLAB&;d=3m ************************************************************ DIS - Disney $36.06 -.06 (+3.50) Striving to be the premier entertainment company, Disney has revenues of $10,055.1 million. It is involved in movies, television, theme parks and resorts, home video, travel, books, music, theater, and creative design. Recently, It has added an internet portal in a joint venture with Infoseek, in which it has a 43% stake. The past year has been tough for Disney, due to high programming costs at its ABC division, and to weak demand for its products in Asia. Last week Merrill Lynch's Jessica Reif Cohen lowered earnings estimates for the current fiscal quarter from .27 to .23, and for the fiscal year ending Sept. 1999 from .91 to .86. She cited softness in consumer products and broadcasting operations, and continued weakness in Asia. However, three other analysts believe the stock is oversold and that DIS is experiencing a recovery. On Jan.12th, Goldman Sachs raised their rating from Neutral to Outperform, and Salomon Smith Barney raised theirs from Neutral to Buy. On Jan. 11th, ING Baring Furman Selz upgraded DIS to Buy from Hold. On Jan. 12th, Disney and Infoseek launched their new Internet portal site, Go Network (www.go.com). Numbers show that it will be one of the top 5 sites on the Internet. Following the upgrades and the new portal launch, Disney stock has performed well. Its chart looks good and it has pushed through the major moving averages. Although it was down today along with a lot of other stocks, it is still up $3.50 for the week, showing strength. Disney is still ironing out final details for production and technical workers to return to work following a one day strike on Nov. 3rd. Their contract had expired 3/97. The company has named Thomas Schumaker a new president and put him in charge of its animated movie and theater business. Also, DIS may acquire Goldenbooks and is interested in Livent Inc., a theater co. When the market resumes its upward movement, look for Disney to move back up. Earnings are due out by next Thursday (1/21) according to First Call. BUY CALL FEB-35 DIS-BG OI=2699 at $3.13 SL=$1.50 BUY CALL FEB-40 DIS-BH OI=1061 at $1.00 SL=$0.00 BUY CALL APR-35 DIS-DG OI=7780 at $4.13 SL=$2.50 BUY CALL APR-40 DIS-DH OI=6098 at $2.00 SL=$1.00 Picked on Jan 14th at $36.06 P/E=33 Change since picked: + 0.00 52 week low =$22.50 Analysts' ratings 2-10-11-0-0 52 week high=$42.78 Last earnings on 9/98 est=.15 act=.16 surprise=7% Next earnings 01-21 est=.26 versus .36 Chart = http://quote.yahoo.com/q?s=dis&;d=3m ************* NEW PUT PLAYS ************* Adobe Systems, Inc. (ADBE) - $47.69 Software Adobe Systems, Inc. (ADBE) is a leading provider of publishing and imaging software technologies, and the second largest desktop software company in the world with annual revenues approaching $1 billion. Adobe develops, markets and supports computer software products that enable users to create, display, print and communicate all forms of electronic documents. Computer application products accounted for 78% of fiscal 1997 revenues and licensing, 22%. The Company continues to be cautious about licensing revenue in the short term due to weak Japanese market conditions and uncertain timing of OEM customer introductions of products incorporating Adobe's latest technologies. The Company is coming out of a recent restructuring and trying to focus its resources on high growth revenue opportunities in digital color, color inkjet, short-run on-demand digital printing, and digital copiers... although licensing revenue is likely to be flat in the short-term. Other risks include product shipment delays, market acceptance of new products and upgrades, declines in printer licensing business. Stock likely to fail at key resistance point of $48. Declining relative strength and aggressive earnings projections may disappoint. Many analysts have a hold on the stock. Slight distribution taking place among top institutional shareholders. Likely to test 52 week lows. Play: Failed Rally BUY PUT FEB-50 AEQ-NJ OI=123 @ $4.63 SL=3.00 BUY PUT FEB-45 AEQ-NI OI=6 @ $2.06 SL=1.00 Chart = http://quote.yahoo.com/q?s=ADBE&;d=3m COMBINATION PLAYS Bang! Booommm! Craaash!...What was that??? ****************************************************************** January 13, 1999 update U.S. stocks crumbled at the opening on Wednesday morning on news that Brazil's central bank president had resigned, sparking an across-the-board flight to quality that rocked world stock markets. The Dow was off 136, the Nasdaq down 113 and many issues had not yet begun to trade. By mid-morning, stocks were on the rebound, lifted by a recovery in Brazil and massive bargain hunting. By noon, the panic was gone and many traders were selling partial positions to lock-in gains. At the close, the Dow fell 125 points to 9349.56 and recouped more than half its early losses. Even so, the decline was viewed as a reminder of market vulnerability after a series of record highs. Our portfolio was very active. We will begin with the new plays: LU was the focus of our attention and it dropped hard with the rest of the high visibility techs. The stock traded as low as $96 but the first option prices available for the FEB105C/110C left us with a debit of $1.75. Morgan Stanley raised its rating of LU to a "strong buy" late in the morning and that helped the stock move higher through the day. LUV was the next offering and it was also significantly lower at the open. The first few trades on the FEB22C/25C went through at about $1.25 debit. LEVL was far less affected by the morning activity and the best we could do on the FEB30C/35C was $3.25 debit. DIS was our personal play-of-the-day and we managed to trade along with everyone else (fighting the overwhelmed internet brokerages) with a $4.00 opening cost-basis for the JAN00-40C/FEB40C LEAPS/Calendar spread. In other portfolio plays; It was a great opportunity to double-up (reducing the cost-basis) on some of the more favorable debit positions. AOL and OXHP were our candidates and these stocks were down at the open. The prices were: AOL, FEB155C/160C at $1.50 and OXHP, FEB17C/20C at $1.00. We will reflect these separate trades in the monthly summary. Of course, some of the calendar spreads were in need of a correction and we used the opportunity to pare losses from the recent run-up. Short positions were closed on: ATI; JAN70C at $7.00, GM; JAN70C at $11.00, and PCS; JAN22C at $2.38. T was quite a mover! In the morning melee, we purchased the JAN80C at $2.50 (with the stock price near $82) and subsequently closed the FEB80C during the midday rebound for $8.50. One other opportunity arose on the NXTL straddle. The MAY35P could have been closed for $5.25, leaving the long (call) option; MAY30C at cost of $2.87. January 14, 1999 update U.S. stocks tumbled Thursday afternoon as the impeachment trial against the President added pressure to an already shaken market. Political instability is a catalyst for investor uncertainty and that was evident as the DJIA fell 228 points to 9120, erasing all the big gains for 1999. The Nasdaq Composite Index was also lower, down 40 points at 2276. Stocks have been poised for a downturn following the recent run-up in prices but some thought the strong U.S. economy would protect the stock market from the impeachment drama. However, the trial opened in an investment climate that had already been shaken by the devaluation of Brazil's currency and jittery investors flocked to the exits. On Thursday, we used the morning bounce to fill some of our open calendar positions: On ATI, we rolled up to the FEB75C at a bid price of $7.25; GM was also moved to a diagonal spread with the sale of the FEB75C for $8.50 and PCS was moved to the next higher strike with a FEB25C at $2.87. These spreads are no longer neutral and are now more aggressive with the new strike positions but we expect all of these stocks to remain at-or-above current prices. For Friday, we still have a number of suspect issues. CPQ and CD are near the sold strikes and we may need to close those positions before the day is over. FTU is fading as the merger speculation dwindles and LU is still "one to watch" as the ASND deal unfolds and the company earnings report aproaches. Good Luck! - NEW PLAYS - ****************************************************************** CIEN - Ciena Corp. $18.68 Merger Speculation CIENA Corporation designs, manufactures and sells architecture, dense wavelength division multiplexing systems for fiberoptic communications networks. In September, Ciena and Tellabs cancelled their merger agreement and shares in the rival equipment makers fell sharply after Ciena's financial outlook soured, primarily because an expected contract from AT&T fell through. In early January, coverage was initiated by Prudential as the telecom sector started to soar. Then the share price spiked on speculation the telecommunications equipment-maker might find a merger partner after the announced purchase of Ascend by Lucent. Some say there is a market rumor that Cisco Systems is preparing a bid of $25-$28 per share for Ciena. Technically, the stock price is back in a recent trading range around $17 (November-early December) and we will use this previous support and the excellent OTM premiums to create a favorable play. PLAY (very conservative): BUY CALL FEB-12.50 EUQ-BV OI=351 A=$6.75 SELL CALL FEB-17.50 EUQ-BW OI=4098 B=$3.25 NET DEBIT TARGET=$3.38 ROI(max)=47% PLAY (conservative): BUY CALL FEB-12.50 EUQ-BV OI=351 A=$6.75 SELL CALL FEB-20.00 EUQ-BD OI=281 B=$2.12 NET DEBIT TARGET=$4.38 ROI(max)=71% Chart = http://quote.yahoo.com/q?s=CIEN&;d=3m ****************************************************************** SDTI - Security Dynamics $25.50 Put-Credit Spread SDTI provides enterprise network and data security solutions to help companies conduct business securely, protect corporate assets and facilitate electronic commerce. Most of the recent lawsuits have been forgotten and the analyst upgrades have had a positive effect. The company started a market trial program designed to simplify implementation of higher levels of security for customers like IBM and also introduced SecurWorld, a new flexible program for delivering two-factor authentication on the web. Just a good technical play with Internet bias. The stock price is trading above all recent resistance and the current trend remains bullish. PLAY (aggressive): BUY PUT FEB-17.50 QSD-NW OI=25 A=$0.87 SELL PUT FEB-20.00 QSD-ND OI=12 B=$1.38 NET CREDIT TARGET=$0.62 ROI=33% Chart = http://quote.yahoo.com/q?s=SDTI&;d=3m ****************************************************************** SRCM - Source Media $20.87 Put-Credit Spread SRCM is a provider of on-demand information and programming through cable television and telephone lines, using the company's proprietary digital operating systems to mass market consumers. Source Media delivers more than 15,000 advertiser-driven audio programs. Customers can subscribe to Source Media audio content and have it featured on their web site as a type of Internet radio show. The company has launched new audio programming with online broadcaster, Broadcast.com which includes weather, sports and stock news. SRCM says the roll-out of Internet audio shows means it now has content and advertising on personal computers, digital cable TV and telephones. A rumored deal with American Online may also be causing some of the buying pressure and the stock has good technical suppport around $17. PLAY (aggressive): BUY PUT FEB-15.00 SQ-NC OI=2 A=$1.38 SELL PUT FEB-17.50 SQ-NW OI=280 B=$2.00 NET CREDIT TARGET=$0.75 ROI=$42% Chart = http://quote.yahoo.com/q?s=SRCM&;d=3m ****************************************************************** AAPL - Apple Computers $41.38 Put-Credit Spread AAPL designs and manufactures and markets personal computers and related personal computing and communicating solutions for sale to business, education, home and government customers. A few weeks ago, shares of Apple jumped after its iMac consumer PC was named the top-selling personal computer at the retail level during the month of November. Not only was the iMac the leading product, it has been the number one selling PC since its introduction back in August. The iMac has captured 5.9% of retail unit sales and it was the only PC to break into the top five best-sellers group in four months. Now the bad news; one day after reporting excellent earnings, APPL dropped $5.12 when an analyst voiced concerns about the pricing of its iMac. This surprise downgrade comes even as the computer maker reported revenues that easily surpassed Wall Street expectations. The APPL chart looks negative from a short-term perspective but there is still a long history of support around $37. Play this one on downward momentum by opening the long position first. Then sell the short position when the stock price firms, to create the credit spread. PLAY (aggressive): BUY PUT FEB-$35.00 AAQ-NG OI=400 A=$1.18 SELL PUT FEB-$37.50 AAQ-NU OI=400 B=$1.75 NET CREDIT TARGET=$0.75 ROI=42% Chart = http://quote.yahoo.com/q?s=AAPL&;d=3m ****************************************************************** REFER TO THE MID-WEEK PLAY OF THE DAY...SUNW... ****************************************************************** SUNW - Sun Microsystems $94.50 Calendar Spread/LEAPS SUNW supplies enterprise network computing products including desktop systems, servers, storage subsystems, network switches, software, microprocessors and a full range of services. Personally, I just like this company from long-term perspective and the "Covered-calls on LEAPS" strategy is a favorable way to take advantage of the extreme near-term option premiums. Please refer to the January 12, newsletter article concerning SUNW for more information: http://www.optioninvestor.com/playoftheday/index.asp PLAY (conservative/long-term): BUY CALL JAN00-100 LSU-AT OI=1580 A=$19.63 SELL CALL FEB-100 SUQ-BT OI=3181 B=$5.87 NET DEBIT TARGET=$13.50 ROI TARGET=100% Note: In the long-term calendar spread, we are reducing the net cost of the LEAP by the amount of credit from the sale of the nearer term call. If the near-term call expires worthless, we will sell the MAR call to further reduce our debit. If your short-term position is ITM on the last day of the strike, you need to buy it back so that you DON'T have to exercise the long-term position. In that case, your LEAP is going up in value also and on the last day of the strike period, the short call will shrink down to intrinsic value so you will be ahead in the play even after you buy it back. Chart = http://quote.yahoo.com/q?s=SUNW&;d=3m FREE TRIAL READERS ***************************************************** If you like the results you have been receiving we would welcome you as a permanent subscriber. The monthly subscription price is 39.95. The quarterly price is 99.95 which is $20 off the monthly rate. We would like to have you as a subscriber. You may subscribe at any time but your subscription will not start until your free trial is over. To subscribe you may go to our website at www.optioninvestor.com and click on "subscribe" to use our secure credit card server or you may simply send an email to "subscribe@optioninvestor.com" with your credit card information,(number, exp date, name) or you may call us at 303-797-0200 and give us the information over the phone. You may also fax the information to: 303-797-1333 ************************************************************* 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 01/15/99 09:20 AM --------------------------- Enron Capital & Trade Resources Corp. From: trials@optioninvestor.com (Option Investor Newsletter Trials) 01/14/99 09:18 PM Please respond to trials@optioninvestor.com To: Option Investor Newsletter Trials <trials@optioninvestor.com< cc: (bcc: Mark - ECT Legal Taylor/HOU/ECT) Subject: Thursday - Option Investor Newsletter 1 of 2 The Option Investor Newsletter Thursday 1-14-98 Copyright 1998, 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 Published three times weekly, Sunday, Tuesday, Thursday evenings. ************************************************************ MARKET WRAP (view in courier font for table alignment) ************************************************************ 1-14-98 High Low Volume Advances Decline DOW 9120.93 -228.63 9359.08 9087.72 797,953k 880 2,145 Nasdaq 2276.82 - 39.99 2338.29 2276.36 1015,400k 1,898 2,175 S&P-100 600.85 - 11.98 614.39 599.06 Totals 2,778 4,320 S&P-500 1212.19 - 22.21 1236.81 1209.48 39.1% 60.9% $RUT 420.10 - 4.76 426.99 420.10 $TRAN 3080.28 - 89.14 3180.96 3077.42 VIX 34.74 + 3.48 36.79 31.33 Put/Call Ratio .70 ************************************************************* Japan, Asia, Russia, Brazil. Who is next?? Another day, another excuse for profit taking. The market sold off again with the Brazilian flu along with a dose of impeachment blues. The market started down early and showed little interest in turning around. The rumors from Brazil were all negative. Coupled with the resignation of yet another government official the rumor that the Central Bank was set to let the Real float knocked the Brazil market for another -10% loss. Floating the Real, the Brazilian currency, would be a drastic devaluation since the currency would then be free to find its own level. Floating could start the domino theory fall of all the surrounding Latin American countries that depend on Brazil for trade. Chile and Argentina would be the first to go. If South America were to devalue as a group then the countries who export to South America would be put on a diet. The U.S., depending on who you talk to and what area they reference, exports to South America account for between 17-25% of our total. Companies like Colgate derive 40% of their revenue from Latin countries. If the feared event happened then the results would be drastic. The companies who derive a large percentage of their business from there would suffer huge earnings shortfalls. Layoffs could occur, plant closings, etc. That would be the extreme but it is possible. Possible but not probable. There are many things that can and will happen before we get to that point. Rest assured that every Fed head in the world is concerned about the Brazil problem. The IMF will be very interested in preventing this scenario. Cardosa is very interested. Power and pressure are being brought to bear. The Brazil Central Bank issued a strongly worded press release stating they would use every means at their disposal to prevent floating the Real. They said they would use their $50 bln in reserves to protect the Real. This was only minimally comforting to the market this afternoon. Memories of many other countries last minute claims to the same intent, and then immediate devaluation, are fresh. Russia was the latest. While analysts feel there could be serious impacts from a possible worst case, they also feel that the market has now discounted the most likely scenario which is months of protracted, painful, negotiations ending in an agreement of some sort to yet another bail out. No harm, no foul. Just uncertainty. Meanwhile the market has now "corrected" five percent off its record high of just last week. My how short our memory can be. 9643, only five trading days ago. Champagne was already being ordered for the Dow 10,000 celebration. Should we cancel the order? Not hardly. As I have said many times the market cycles. Remember last week when I kept warning you about an impending bout of profit taking. Its' here and I don't think it is over. Fear of darkness is only beaten out by one other thing. Fear of a long holiday weekend. Yep, closed Monday for MLK day. I have already had one of my brokers call me to ask if I want some currency positions left open over the long weekend. Seems the currency market closes at 1:PM on Friday. Now if you were a country that needed to manipulate some currency to benefit your country, a U.S. holiday would be the perfect time. Don't laugh. Japan does it all the time. The same thing on a smaller scale can happen to stock profits held over a holiday. Events happen, mass exodus at Tuesday's open. Remember Wednesday morning? You may think I have put on a fur coat. Far be it from the truth. I am long several hundred contracts of tech stocks and I am looking for a recovery soon. Again, being long does not make me right, just very interested in the outcome. I have not elaborated on the market impact from the impeachment trial and won't because I don't think there is any impact. As I have said before, the chances of a guilty vote are about zero and the market knows this. If you watched any market TV today then you know the Internet stocks are finally starting to weave. They are getting beat from all sides. Brokers are cutting the ratings on the high flyers left and right. Funny how the smell of blood brings out the crowd. Nobody would cut them last week when they were adding $20 a day. It is dogpile time now. To add insult to injury the online brokers are now starting to prevent customers from actually buying the stocks. I am not kidding. Some have taken them off the margin list. If you want to buy you have to pay cash, 100%. Others will not let you buy them online. You have to call a broker and wait on the line while they verify your eligibility to purchase high risk investments! Others refuse to execute the trades at all. You might hurt yourself. Does it strike you strange that Internet brokers will not let you buy Internet stocks??? What ever happened to the concept of "it is your money not theirs." In the face of this conspiracy to protect you from yourself the Internets are losing ground quickly. Except AOL. AOL has somehow avoided the label of "overpriced" and actually garnered several honorable mentions from analysts downgrading other Internet stocks. Guess where Internet money will go now? For you technicians out there the pendulum has swung from overbought to oversold in a very short period of time. The Dow is now down -522 points in the last five days. Both the Dow and the Nasdaq have corrected about 5%. Just as the sharp run up last week was begging for a dip, this sharp dip is now begging for a rally. The big drop today was on the lightest Dow volume in over a week. Not as much conviction today just a lack of buyers. This was also the third triple digit loss in a row. As I mentioned earlier I think the odds for a down day Friday are still pretty good. The wild card again is the options expiration which normally provides an upward bias. I can't build a case for a strong move upward because of Brazil and the holiday but I can see a strong Tuesday coming as long as Brazil does not meltdown over the weekend. Earnings will be on us in earnest next week with MSFT, LU, SUNW announcing along with dozens of others. I think the focus on Brazil will have dimmed and the anticipation of upside surprises will take center stage. Good Luck Jim Brown Market Posture ******************************************************* As of Market Close - Thursday, January 14, 1999 Major Support Broad Market /Resistance Last Posture/Since Alert **************************************************************** DOW Industrials 9,400 9,730 9,121 BEARISH 1.14 * SPX S&P 500 1,200 1,280 1,212 Neutral 1.12 OEX S&P 100 580 635 601 Neutral 1.12 RUT Russell 2000 400 435 420 Neutral 1.12 NDX NASD 100 1,900 2,010 1,906 Neutral 1.08 MSH High Tech 870 980 931 Neutral 1.08 Major Support Technology /Resistance Last Posture/Since Alert **************************************************************** XCI Hardware 800 875 836 Neutral 1.08 CWX Software 600 665 619 Neutral 1.08 SOX Semiconductor 360 400 392 Neutral 1.08 NWX Networking 400 450 427 Neutral 1.08 INX Internet 425 570 474 Neutral 1.08 Major Support Financial /Resistance Last Posture/Since Alert **************************************************************** BIX Banking 660 710 647 BEARISH 1.14 * XBD Brokerage 545 725 638 Neutral 1.14 * IUX Insurance 600 620 588 BEARISH 1.14 * Major Support Other /Resistance Last Posture/Since Alert **************************************************************** RLX Retail 800 860 814 Neutral 1.08 DRG Drug 720 795 740 Neutral 1.08 HCX Healthcare 710 780 726 Neutral 1.08 XAL Airline 310 350 312 Neutral 1.12 OIX Oil & Gas 245 260 240 BEARISH 1.14 * Posture Alert After tumbling more than 350 points over the past two days, we have turned BEARISH across the Dow Jones 30 and select industry sectors including Banking, Insurance and Oil & Gas. A detailed description of our Market Posture and its applications can be found at: www.optioninvestor.com/marketposture Market Sentiment - By Pinnacle Capital Advisors ****************************************************************** Stay Focused on the Pinnacle Index After selling off precipitously over the past couple of days, it is very important to keep in eye on the Pinnacle Index and other put/call ratios for clues as to whether the sell-off is a major reversal or profit taking. Based upon the early returns, it appears that most option speculators are viewing the sell-off as profit taking and this could be prove BEARISH over the near-term. Despite the negative economic news from Brazil, the Pinnacle Index actually climbed and other put/call ratios indicate increased call buying. Add this to the latest Bullish figures from Investors Intelligence (60% Bullish 1/14) you get the impression that investors are ignoring economic and corporate earnings pressures. Pinnacle's short-term indicators are still flashing bearish overtones over the near-term so we advise subscribers to tightly protect their long positions. Any questions regarding market sentiment can be directed at: pinnacle@optioninvestor.com Market Sentiment at a Glance ******************************************************************** Friday Tues Thurs Indicator (1/8) (1/12) (1/14) Alert ******************************************************************** Pinnacle Index (OEX): ----------------------------------------------------------------- Overhead Resistance (620-635) 1.3 2.3 Underlying Support (595-610) 2.4 2.4 Put/Call Ratios: ----------------------------------------------------------------- CBOE Total P/C Ratio .5 .5 .5 CBOE Equity P/C Ratio .4 .4 .4 * OEX P/C Ratio 1.2 1.2 1.2 Peak Open Interest (OEX): ----------------------------------------------------------------- Puts 575 575 575 Calls 620 630 630 P/C Ratio 1.3 1.0 1.0 Market Volatility Index (VIX): ----------------------------------------------------------------- CBOE VIX 24.8 26.4 34.0 * Investors Intelligence: ----------------------------------------------------------------- Bullish 58.3% 58.3% 60.0% * Bearish 30.0% 30.0% 30.0% The Power of Expectation Analysis It has often been said that the crowd is right during the market trends but wrong at both ends. Measuring and evaluating the sentiment of the crowd, therefore, can give savvy option traders a decided edge. Pinnacle Index ----------------------------------------------------------------- OEX Friday Tues Thurs Benchmark (1/8) (1/12) (1/14) ----------------------------------------------------------------- (630-635) 1.9 3.8 (620-625) .8 1.5 Overhead Resistance (620-635) 1.3 2.3 OEX Close 636.0 616.5 600.9 Underlying Support (595-610) 2.4 2.4 (605-610) 1.5 1.7 (595-600) 4.1 4.1 Average ratings: Resistance levels 2.0 / Support .5 What the Pinnacle Index is telling us: Overhead sentiment resistance is Moderate at the OEX 620/635 level while the underlying support is moderately firm. Put/Call Ratio ----------------------------------------------------------------- Friday Tues Thurs Strike/Contracts (1/8) (1/12) (1/14) ----------------------------------------------------------------- CBOE Total P/C Ratio .50 .49 .52 CBOE Equity P/C Ratio .38 .36 .38 OEX P/C Ratio 1.16 1.19 1.23 Peak Open Interest (OEX) ----------------------------------------------------------------- Friday Tuesday Thurs Strike/Contracts (1/8) (1/12) (1/14) ----------------------------------------------------------------- Puts 575 / 12,419 575 / 13,004 575 / 13,896 Calls 630 / 10,341 630 / 12,009 630 / 14,349 Put/Call Ratio 1.20 1.03 .97 Volatility Index (VIX) ----------------------------------------------------------------- Major Date Turning Point VIX ----------------------------------------------------------------- October 97 Bottom 54.60 July 20, 1998 Top 16.88 October 8, 1998 Bottom 60.63 January 11, 1998 Top 26.38 January 14, 1999 34.01 Investors Intelligence Survey ----------------------------------------------------------------- Major Percent Percent Date Turning Point Bullish Bearish ----------------------------------------------------------------- October 97 Bottom 22.0 48.3 July 20, 1998 Top 52.0 24.0 October 8, 1998 Bottom 38.5 42.7 January 11, 1999 Top 58.3 30.0 January 14, 1999 60.0 30.0 * Please view this in COURIER 10 font for alignment ***************************************************** RESULTS THIS WEEK Index Last Mon Tue wed Thu Week Dow 9121 -23 -145 -125 -229 -522.39 Going for five in a row. Nasdq 2277 40 -64 -4 -40 -67.59 $OEX 601 -7 -13 -4 -12 -35.17 $SPX 1212 -11 -24 -5 -22 -62.9 $RUT 420 2 -6 -3 -5 -11.13 $TRAN 3080 -74 -80 -37 -89 -280 $VIX 34.74 2.5 3.3 4.9 3.5 Stock Price Mon Tue wed Thu Week CMGI 105.0 71.75 -5.25 -17.3 -8.44 40.75 Dropped ASND 82.13 5.25 -1.75 5.38 1.81 10.69 Dropped..bought by LU. TLAB 80.69 5.19 -2.00 3.63 -0.44 6.38 New pick, Showing strength SUNW 94.50 3.13 -0.63 3.44 -2.31 3.63 IBM and SUNW-in your dreams DIS 36.06 2.69 2.75 -1.87 -0.06 3.50 New pick EMC 93.88 1.31 -4.38 1.81 1.56 0.30 Momentum still strong COF 127.1 -0.81 2.19 -0.31 -1.19 -0.12 New pick, Split Candidate ATI 78.81 1.00 -0.50 -2.25 1.56 -0.19 Got to decide: Bell or VOD DELL 77.63 4.19 -1.56 -1.13 -1.69 -0.19 Showing strength for the week XIRC 38.13 1.25 -1.88 0.75 -0.50 -0.38 Earnings are next week. MYG 63.25 0.25 -0.25 -0.06 -0.69 -0.75 This may break its winning streak FTL 17.06 0.44 -1.31 -0.50 -0.06 -1.43 Still waiting for that bid AOL 144.5 18.63 -11.5 -7.88 -1.25 -2.00 One tough Internet T 82.13 0.31 -1.13 0.50 -2.63 -2.95 No real sellers LOW 51.38 -1.44 -0.06 -1.47 -0.31 -3.28 Show of strength today GDT 103.6 10.94 -5.81 -5.13 -3.38 -3.38 Dropped JBL 71.31 0.56 -2.69 -0.75 -0.69 -3.57 Holding up under pressure LXK 97.00 1.75 -1.94 -0.13 -3.25 -3.57 Earnings next Tuesday WCOM 71.00 0.00 -2.50 1.44 -2.94 -4.00 Consolidating SLR 83.56 -1.06 -0.06 -3.44 -1.50 -6.06 Announced 2:1 and did nothing UTX 108.5 -2.50 -0.94 -1.31 -2.31 -7.06 Dow sensitive MSFT 141.7 -2.38 -5.31 1.63 -2.06 -8.12 Still a split candidate LU 105.9 -2.31 -5.06 -3.63 1.69 -9.31 Looking strong, watch out CSCO JPM 102.0 0.00 -2.63 -5.25 -4.56 -12.44 Dropped..Brazilian exposure AMZN 138.0 24.38 -21.2 -15.3 -10.0 -22.25 Dropped Puts XCIT 65.13 * * -5.75 -4.25 -10.0 Internet sell-off MRK 144.7 -3.13 -2.75 -0.56 -2.63 -9.07 Dow dropper BAC 62.50 * * -1.50 -2.94 -4.44 S. American worries? WLA 71.13 -3.25 -1.88 -0.06 1.44 -3.75 ERTS 44.00 -0.69 -1.00 -0.69 -0.88 -3.26 DD 54.88 * * -0.81 -2.13 -2.94 BMCS 37.75 0.69 -0.94 -0.38 -1.88 -2.51 Picking up speed? BDX 39.25 -0.50 -0.44 -0.63 -0.75 -2.32 CBE 43.25 * * -0.50 -0.50 -1.00 Consistent AVT 45.69 0.56 -2.25 3.06 -2.13 -0.76 HSY 59.81 * * -0.81 0.38 -0.43 PKN 93.50 * * -0.06 -0.31 -0.37 CPB 45.94 * * 0.69 0.38 1.07 LLY 81.50 -2.69 0.31 4.19 0.81 2.62 PICKS WE DROPPED **************** When we drop a pick it doesn't mean we are recommending a sell on that play. Many dropped picks go on to be very profitable. We drop a pick because something happened to change its profile. News, price, direction, etc. We drop it because we don't want anyone else starting a new play at that time. We have hundreds of new readers with each issue who are unfamiliar with the previous history for that pick and we want them to look at any current pick as a valid play. CALLS: ****** CMGI $105.00 -8.44 (+40.75) After being derailed by the Brazilian devaluation bomb midweek, the market when into a tailspin and the Internets were no exception. After Monday's earth shaking surge of $71.75, CMGI has dwindled away 31 points in the last 3 days ($62 pre-split). With a host of downgrades raining down on several of the big hitters in the Internet sector, we figure it is time to dodge the bullet before some valuation happy analyst sets their sights on CMGI. We are cutting CMGI loose and hopefully it's consolidation will be quick. AMZN $138.00 -10.00 (-22.25) Brazilian devaluation. Analysts' downgrades due to valuation. Bearish short-term remarks. Impeachment proceedings. Option expirations. What else can we add to the mixture in this pot of volatility?? Amazon had been doing just fine when it popped up over +$75.00 last week. Not this week! On Thursday in a sign of weakness, Amazon finished only two and a half points off its low for the day to close at $138.00. Even earnings reports from companies such as Yahoo that beat estimates weren't enough to carry sympathy plays like Amazon into positive territory. We are dropping Amazon as a pick. This is not to say that Amazon won't turn around- and soon. But in light of current circumstances, we feel there are safer plays to be in. ASND $82.13 +1.81 (+10.69) We finally got the price that LU is paying for ASND, and it is .825 shares of LU for each share of ASND. The reason we are dropping ASND is because it has effectively turned into a LU play since the purchase price has been announced. There is a little more room for ASND to move given the share ratio, but typically the acquiree does not close the gap completely because of the uncertainty of the deal being closed. There is no hint of competing bids, but ASND would be a current play again if a bidding war started for it. SLR $83.56 -1.50(-6.07) We are dropping SLR with the idea we might pick it back up closer to the earnings report and stock split date. As predicted, SLR announced a 2-1 stock split this week. They announced after close on Wednesday. Unfortunately, with the market volatility, SLR went down on the day. We did see an opening that sent SLR up a few dollars, but this faded into a loss by days end. SLR could definitely see a split and earnings run, but we feel it's better to wait for confirmation. JPM $102.00 4.56 (-12.44) The comeback in financial stocks was derailed this week. Hammered by the problems in Brazil, JPMorgan lost another $4.56 today. When we initiated this play, JPM had momentum and its chart looked good. However, it's exposure to Brazil is too great, and given the seriousness of the political and economic troubles in that country, we have to drop JPM as a play. GDT $103.63 3.38 (-3.37) Guidant has lost ground since setting an intra-day high of $119.75 on Monday. With just 13 days to go before it splits, GDT should be cruising into a split run. It tried on Monday, but weakness in the overall market has held it back. If the market turns positive again, so will Guidant. However, with the questionable market footing we are going to cut Guidant loose until things firm up PUTS: ****** NONE PICK NEWS - CALLS ******************************************************* FTL $17.06 -.06 (-1.44) FTL was added as a possible take over play this week. Something is going on but what? We are constantly pouring over news and rumor mongers only to discover on Wednesday morning wires, trading was halted for a block of shares (73,100) to trade at $16.06 down $-1.56. Then we read about 100,000 shares being crossed by Goldman Sachs. Plus another 100,000 was traded at $17 today by Salomon Smith Barney. Unlike the techs' FTL did not suffer in todays' trading, opening $17.69, taking a little off the table to $16.69 then closing at $17.06. Not providing a great warm a fuzzy feeling, but enough of a feeling to keep this as a play. Remember, rumors are predicting a buyout at $23 or more. MYG $63.25 -0.69 (-0.75) Between Tuesday and Wednesday, MYG seemed to be holding its own and only lost thirty-one cents as the market dropped a combined -270.33 points. But Brazilian woes continued and the market plummeted another -228.63 on Thursday. Maytag fought and fought but finally, the market scored a point with a knock-down. Maytag was stunned and conceded -$0.69. MYG is normally a strong play and is still one of our split candidates. But, the market is extremely volatile and we suggest waiting for things to turn around before starting any new plays. SUNW $94.50 -2.31 (+3.62) Sun is one of the brightest stocks on Wall Street even though the Brazilian storm continues to darken the market. Sun is up +$3.62 on the week from positive press releases and rumors of a possible take-over by IBM. On Wednesday, CNBC presented the rumor which ended up being dismissed as smoke but option trade volume increased none the less. We will keep you posted of any changes in the scenario. In other news, Morgan Stanley Dean Witter raised its 12-month price target for SUNW to $132, up from the previous price of $104. Not only does Sun have the only end to end computing platform used in telecommunications services, it is also working on incorporating its Java technology into the digital TV industry. Even though SUNW got ruffled by the market and dropped -$2.31 on Thursday, SUNW is still a strong play. Earnings for the company are scheduled for Jan 21st (not the 15th as we had previously reported), a prime time to announce a possible split. Look at the additional dip as a buying opportunity but wait for some signs of a turn around before entering. Trying to catch a falling knife tends to damage fingers and trading capital. EMC $93.88 +1.56 (+.31) EMC is a pretty amazing momentum stock. The NASDAQ is down 1.7% today, and EMC goes up. On Wednesday, EMC's gap down went as low as $84, but it was such a fast market it probably was not a price you could have gotten easily. During the first 15 minutes of trading on Wednesday 1 million shares were traded. This was almost half of Wednesday's volume, and one-third of EMC's average daily volume. There hasn't been any news on EMC, but then again, it doesn't look like we need any. FYI In our Sunday write-up we had EMC's earnings release date as 1/28, but we have since learned that the release date is either 1/25 or 1/26. JBL $71.31 -.69 (-3.56) JBL held up pretty well today considering the action in the market. I am sure that the coverage initiated on JBL by Everen Securities helped. The press release did note, however, 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 probably 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, but JBL appears to be the upper crust of a volatile group. UTX $108.56 2.31 (-6.13) UTX is very Dow sensitive. Let's illustrate it. The Dow is down 2.3% today and UTX was down 2.1%. It has been that way all week. The only thing at this point that would probably change UTX's price movement is a pre- earnings announcement one way or the other. UTX announces earnings next week. On the news side, we are amazed at the number of varied businesses of UTX. For example, today UTX announced that its Hamilton Standard unit signed a letter of intent to joint venture with KLM Royal Dutch Airlines to focus on the maintenance of pneumatic aircraft components. In the press release it indicated that it's Hamilton unit also makes space suits for the NASA shuttle program. Only play UTX if the Dow is moving up. MSFT $141.75 -$2.06 (-8.13) Like we said, don't try to catch a falling knife. Though, we shrugged off an ugly beginning to finish over 1 point positive yesterday, today we gave it back, and then some. We're still positive on MSFT given their trial has begun to produce positive news, like their appeal of the Judge's decision to force MSFT to use Sun's version of Java in its Windows operating system, and a new stream of MSFT-friendly witnesses on the stand. Furthermore, Prudential Securities said analyst Doug Crooke initiated coverage of Microsoft Corp. with a rating of accumulate and a price target of $175 a share. MSFT is still a split candidate at over $140 and will announce earnings January 19 after the close. We realize that trading options is inherently risky and caution to wait for a reversal in the stock and the overall market before starting another play. If it falls another day, let it fall. The point is to catch a good entry on the way up, not on the way down. ***** Play updates continued in section two ***** FREE TRIAL READERS ****************** If you like the results you have been receiving we would welcome you as a permanent subscriber. The monthly subscription price is 39.95. The quarterly price is 99.95 which is $20 off the monthly rate. We would like to have you as a subscriber. You may subscribe at any time but your subscription will not start until your free trial is over. To subscribe you may go to our website at www.optioninvestor.com and click on "subscribe" to use our secure credit card server or you may simply send an email to "subscribe@optioninvestor.com" with your credit card information,(number, exp date, name) or you may call us at 303-797-0200 and give us the information over the phone. You may also fax the information to: 303-797-1333 ************************************************************* 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. 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