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Enron Mail |
---------------------- Forwarded by Mark - ECT Legal Taylor/HOU/ECT on
02/01/99 10:35 AM --------------------------- Enron Capital & Trade Resources Corp. From: xtrials@optioninvestor.com (Option Investor Newsletter Trials) 01/28/99 08:59 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 1-28-99 Copyright 1999, All rights reserved. Redistribution in any form strictly prohibited. PICK NEWS - CALLS (continued) ******************************************************* SUNW $109.31 +3.88 (+11.31) SUNW is having an incredible week. On Monday and Tuesday it jumped $8.62. Profit taking and weakened markets set Sun back only -$1.19 on Wednesday. On Thursday, SUN heated up again and added $3.88 to finish just off its high for the day. Merrill Lynch raised its price target to $130 and maintained its buy rating on the company. In the news recently, Sun Microsystems, Lucent, Cisco, and Network Associates have joined forces to form the Security Research Alliance. This Alliance will be committed to helping organizations increase the security of their desktops and networks. Look for SUNW to head higher if the markets can stay the color of money. VIA.B $85.00 +2.13 (+2.44) After profit taking took its toll on the stock on Tuesday, VIA.B turned it right around. It has steam rolled ahead another +$2.88 since Wednesday. Some more articles have surfaced on the topic of VIA.B's earnings due on February 25th. The consensus seems to be that they will be better than last year's loss of 29 cents a share. One of SG Cowen & Co's analysts thinks they could come in at +0.16 a share. Some of Viacom's productions have been popular with viewers. The movie "Varsity Blues" and the TV programs "Becker" and "Dilbert" are all getting nice ratings. Watch for VIA.B to keep up its forward progress. WAG $60.25 +1.13 (+1.81) WAG took advantage of the volatility in the markets on Thursday and added +$1.31. Walgreen's is looking good and if the markets can positive, look for WAG's uptrend to continue. It is splitting it's stock 2:1 on Feb. 12th. LXK $110.31 +1.00 (+11.06) LXK continues to be a strong performer. A gain of $1.00 today in a good market is one thing, but a gain of $1.13 on Wednesday was very impressive. For the last three trading days LXK has reached an intraday high. The new high is now $111.88. We still see a stock split in LXK's future, but at this time a probable date is not known. Most likely an announcement would come as a result of a special board of directors meeting. We'll keep you updated. VOD $197.63 +4.00 (+10.25) VOD had a great day on Thursday. For the 4th time in 5 days, VOD closed at its high of the day. The merger between ATI and VOD is still a go and to insure the tax-free status of the merger, ATI has filed for a private-letter ruling. This is a ruling the IRS gives ATI to insure the tax-free status of the merger. Both companies feel that even if a private letter ruling isn't given in the positive, they can achieve the status they desire. This issue has been part of the cause for the discrepancy of the offer and the current prices. XIRC $45.00 +1.13 (+3.00) XIRC continues to move upward. One bullish sign on Thursday was the push and hold above the prior high of $44.50. We are in new high territory and see no reason, other than profit taking, that should keep this stock from heading higher. No recent news on XIRC, but the stock has outperformed the communications industry at a nice margin over the last couple of weeks. XIRC's PE ratio is also lower than the industry average. SNC $40.25 +.69 (+2.50) SNC continued to rise today, reaching an intraday high of $40.63. SNC is still $12 below its 52- week high. With a PE ratio below the industry average, SNC still has room to move toward prior highs. Earnings are in a few weeks and, market permitting, should see an earnings run. The last 7 earning surprises have been: 4,9,11,6,15,33, and 14%. XLNX $83.50 +3.69 (+5.32) XLNX has been on a yo-yo the last week or so. The bottom line is that XLNX is yo-yoing its way up. On Wednesday, XLNX fell just under $3, but came back strong with a gain of $3.69 on Thursday. Even with all the day up and day down movement, XLNX is still up over $5 on the week. With the stock split not until March, we are likely to see times of consolidation. This most likely occur when the NASDAQ itself decides to rest. Watch for pullbacks. XLNX's CEO did state that the past quarter earnings did exceed expectations. This should lead to a nice continued uptrend. PICK NEWS - PUTS ******************************************************* AMR - $54.50 1.25 (-.75) Airline Index (XAL) still trading below 50 day-moving average. Stock up fractionally after selling off over the last several days. Stock trading at lower end of consolidation range of $50-70. Airlines still under pressure. AXP - $100.50 1.00 (2.00) Stock trading at failed rally range of $100-105. Anticipate that stock will roll over and trade below 50 day moving average after failing twice with a double top (lower high) at $110. AVP - $35.63 -1.00 (-2.00) Stock still trading under 50-day moving average and soon to re-test key $35 support. AVT - $44.75 .50 (.00) Stock still trading below declining 50-day moving average and below key price point of $45. Tighten protective stop loss from $48 to 47. BAC - $64.88 2.75 (-.25) The financial sector still under pressure because of Brazil. Stock finally showed weakness on 1/27 but regained slightly on 1/28. Recommend staying with position while BAC stays below $65. BDX - $35.25 -.25 (2.50) Stocks relief rally fail just shy of our $38 protective stop loss. Fridays (1/22) precipitous sell-off continues to stay in tact. Stock still trading below 50-day moving average. Maintain protective stop loss - $38. BKB - $36.25 .75 (-1.25) Stock still trading below its declining 50-day moving average and financial sector continues to show weakness. Banking index (BIX) trading below key price point of 650. CPB $47.00 .88 (2.75) Stock continues to consolidate under considerable overhead. Tighten protective stop to $48. DD - $52.50 -.50 (-1.75) Stock still below declining moving averages and trading just below near-term support level of $54. Move protective sell stop to $54.25. PG - $87.75 1.50 (2.50) Stock still trading below 50-day moving average and top side overhead at $90 PHSYB - $70.38 1.50 (2.25) Stock trading below 50-day moving and key price point of $75. ****************** NEW CALL PLAYS ****************** CLX Clorox Co. $121.69 +2.50 (+7.31 for the week so far) Clorox Company manufactures non-durable consumer products. Brands include Clorox Bleach, Kingsford Charcoal, Formula 409, Pine-Sol, Combat ant & roach killers and Hidden Valley Ranch salad dressings. Products are sold primarily through grocery stores and other retail outlets. The company supplies products to the food service industry. The company's products are sold in over 90 countries in addition to the United States. CLX has been on a nice roll since its earnings announcement on the 19th of January. A bullish sign was the strong move above prior resistance at the $117. CLX today announced that it's buyout and merger with First Brands has been approved by First Brands shareholders and will officially take place on Friday the 29th. This news went over well with CLX investors as CLX traded as high as $124.38. Profit taking could take place on Friday, but pullbacks could be nice buying opportunities. The major news dealing with CLX of late has been the earnings announcement and the merger with First Brands. CLX also announced recently a $.36 dividend. CLX is a large company with close to 6000 employees. CLX is part of the S&P 400 Mid-Cap index. BUY CALL FEB-120*CLX-BD OI=341 at $4.88 SL=3.25 ITM $1.69 BUY CALL FEB-125 CLX-BE OI= 0 at $2.38 SL=1.25 BUY CALL MAR-120 CLX-CD OI= 6 at $7.00 SL=5.25 ITM $1.69 BUY CALL APR-125 CLX-DE OI= 0 at $6.25 SL=4.50 (125's are new strikes) Picked on Jan.28th at $121.69 PE = 38 Change since picked + 0.00 52 week low =$ 75.50 Analysts Ratings 5-4-3-0-0 52 week high=$124.38 Last earnings on 01/99 est=.54 actual=.55 Next earnings on 04-21 est=.83 versus=.72 Chart = http://quote.yahoo.com/q?s=CLX&;d=3m ************************************************************* CVC - Cablevision Systems Corp. $70.50 +2.63 (+7.62 for the week) Like its name suggests, Cablevision Systems Corporation is a cable company. It has approximately three million subscribers concentrated mostly in the northeast. Through its subsidiary Rainbow Media Holdings, CVC owns cable channels like American Movie Classics, Bravo, and the Independent Film Channel. It also owns 60% of Regional Programming Partners and 80% of Madison square Garden, the New York Knicks, and the New York Rangers hockey team. Cablevision is a steady mover. Since mid-December it has climbed $28 and it shows no signs of slowing down. CVC is up +$7.62 this week alone and has shown strength under the recent rocky and stable market conditions alike. On Monday Jan 25th, Merrill Lynch raised its price target for the stock to $85 a share which should only help the stock. Earnings reports are due for the company on February 18th. We are looking for Cablevision Systems to continue its well established uptrend. News on the week: Cablevision set another all time high in intraday trading on Thursday. The new record and resistance level for the company is now perched at $71.00 a share. BUY CALL FEB-65 CVC-BM OI=125 at $7.63 SL=5.75 BUY CALL FEB-70 CVC-BN OI= 53 at $4.63 SL=2.75 BUY CALL MAR-70*CVC-CN OI= 62 at $7.13 SL=5.25 no volume yet on MAR-75s Picked on January 28th at $70.50 PE= N/A Change since picked +$ 0.00 52 week low =$21.75 Analysts Ratings 3-3-1-0-0 52 week high=$71.00 Last earnings 09/98 est -0.84 actual -0.75 Next earnings 02-18 est -0.77 versus 1.82 Chart = http://quote.yahoo.com/q?s=cvc&;d=3m ****************** NEW PUT PLAYS ****************** None ***************************************************** COMBINATION PLAYS ***************************************************** The Bull's continue to run... Stocks moved lower Wednesday as nervous investors braced for the testimony on the economy by Fed Chairman Alan Greenspan. The main focus of the Thursday meeting could be the current high level of stock prices. The Dow Jones industrial average ended down 124 points at at 9,200. Technology stocks, the stalwart group in many recent sessions despite softer prices in most other sectors of the market, also faded and this despite a good morning session put in by the Internet issues. The performance of the broader market has also been a sore spot among market technicians for quite some time and Wednesday's poor showing only added fuel to those concerns. Our Tuesday plays were a raucious group. MSFT opened higher with most of the technology stocks but eventually it fell back and just a little patience allowed traders to achieve the suggested credit of $1.50 for the (MAR155P/160P) bull-put spread. DELL was also higher in the morning and some of you had to wait until a few minutes after 10 AM for the correct entry price of $0.81 on the MAR65P/70P credit spread. XRX was stable most of the day and the the calendar position (MAR120C/FEB120C) was available more than once at $2.87 debit and the lowest I saw was $2.75. IBM was the big mover and although we expected a pull-back, $7 was a bit much. We started the play (MAR175C/185C debit spread) with a reduced entry price of $5.50 but by the end of the day the spread was down to $4.50 so we decided to double-up, reducing our overall position to a nice round number. Those of you playing the spread could easily better our position, but that doesn't mean it won't fall further tomorrow. Eventually, we think IBM will make the split run to the $180-$190 range...Lets hope so! BGP appears destined to fall well short of our long position in February. After this week, we will no longer track the calendar spread and just be thankful that the debit spread had a positive outcome. SRCM continued lower but did not reach our target exit. The goal is still $1.00 for the FEB15P but with time running out, we make take the small profit soon. The JMED straddle started to show some activity the last few days. Any continued downward movement may help us exit the bearish side of the play shortly. Thursday, January 28 U.S. stocks rallied Thursday as Internet mania propelled the tech issues. Two mergers AOL's positive earnings helped the market move higher. Yahoo!'s planned purchase of GeoCities and Intel's stock split drove investors to a buying frenzy in the technology arena. The incredible performance by the technology sector lifted broad market averages to hearty gains in the process. The DJIA ended up 81 points at 9281.33. But the Nasdaq composite index was again the story of the day, rising 70 points to a record 2477.33. Observers continued to express concern over the deficient breadth of the market's advance of late, but most weren't ready to turn outright negative on U.S. shares and Greenspan may have put the icing on the cake when he said that Internet stocks, despite their high valuations, might have their place in the bull market. AOL, CTXS, DELL, EMC and SEPR were our big movers and even IBM finished positive. LVLT is now approaching the exit target but SRCM continued to hang-on with today's rally. Stocks that are approaching downside limits include RDRT and SCUR. We will keep a close eye on these plays. Shares of Centocor climbed past $44 after the company said fourth-quarter profit rose to 14 cents a share before charges, exceeding the average estimate of analysts. For those of you interested in the butterfly roll-out, today's move allowed an easy exit from the bullish part of the spread; APR35C/45C for a credit of $3.50. Now the plan would require the stock price to fall enough so that the APR45C/40C can be bought for less than $2.62 (the current cost basis). Butterfly spreads are an excellent neutral strategy and they have more flexibility than a straddle. ****************************************************************** - NEW PLAYS - ****************************************************************** INTC - Intel $137.19 *** More Splits *** INTC designs, manufactures and markets microcomputer components and related products at various levels of integration. INTC's principal components consist of silicon-based semiconductors etched with complex patterns of transistors. With about 85% of the microprocessor market, Intel is definitely inside. Its chips have been providing the brains for IBM-compatible PCs since 1981. The company also makes computer flash memory; microcontrollers; and networking, communications, and graphics products. Intel continues to expand and upgrade its products and facilities to maintain its dominance over rival chip makers such as Cyrix and Advanced Micro Devices. Intel is the most recent of several high tech companies that have announced stock splits this month, including Microsoft, IBM, Sun Microsystems, eBay and Yahoo. In a move widely anticipated by financial analysts, they announced a 2-for-1 stock split to make shares more affordable to investors. The split takes effect 4/11 and that gives us plenty of time for the stock to recover from any short-term pullback. There should be a dip in tomorrow's trading to help you improve the opening position. PLAY (very conservative/credit spread): BUY PUT MAR-115 INQ-OC OI=70 A=$2.00 SELL PUT MAR-120 INQ-OD OI=2476 B=$2.68 NET CREDIT TARGET=$0.81 ROI=19% PLAY (conservative/diagonal spread): BUY CALL APR-135 INQ-DG OI=1720 A=$13.50 SELL CALL FEB-140 INQ-BH OI=21568 B=$4.62 INITIAL NET DEBIT TARGET=$8.50 TARGET ROI=50% Chart = http://quote.yahoo.com/q?s=INTC&;d=3m ****************************************************************** DST - DST Systems $61.62 *** Technicals Only *** DST Systems provides information processing services and computer software products and services to mutual funds (it has about 30% of the market), insurance providers, and banks. Clients include Janus Capital and T. Rowe Price Corp. DST's Emerging Business unit consists of Argus Health Systems (prescription claims processing) and DBS Systems Corp. (cable television subscriber-mgmt. software). In 1998 DST, Boston EquiServe, and First Chicago Trust teamed up to form EquiServe, a provider of corporate stock transfers, the largest company of its kind in the US. The company has operations worldwide and about 16% of its sales are outside the US. Earnings are due soon but they are expected to be inline with most analyst's numbers and the chart looks healthy with some short-term support around $55. PLAY (conservative/credit spread): BUY PUT FEB-50 DST-NJ OI=147 A=$0.50 SELL PUT FEB-55 DST-NK OI=7 B=$1.06 NET CREDIT TARGET=$0.62 ROI=14% Chart = http://quote.yahoo.com/q?s=DST&;d=3m ****************************************************************** WLP - Wellpoint Health Network $72.62 *** Technicals Only *** WellPoint Health Networks, the #2 health insurer in California serves about 30 million members nationally through HMOs, PPOs, and specialty networks such as dental and mental health plans. The company operates as Blue Cross of California in its home state, where some two-thirds of its medical care members reside, and as UNICARE elsewhere. WellPoint also sells life insurance through subsidiary WellPoint Life Insurance and workers' compensation services through subsidiary UNICARE Financial. The company is a care contractor for Medi-Cal, California's Medicaid program, and provides third-party administration for self-insured companies. With most losses accounted for in earlier quarters and a clear sense of costs, HMOs are expected to post fourth quarter gains in line with Wall Street's expectations. However, even with an extremely positive report,(Wellpoint is expected to report an 18% jump in earnings) the recent chart history reflects a somewhat disappointing outlook. We think it will easily finish below the sold strike in February. PLAY (conservative/credit spread): BUY CALL FEB-85 WLP-BQ OI=139 A=$0.56 SELL CALL FEB-80 WLP-BP OI=14 B=$1.00 NET CREDIT TARGET=$0.50 ROI=11% Chart = http://quote.yahoo.com/q?s=WLP&;d=3m ****************************************************************** AZPN - Aspen Technology $17.06 *** Excellent Earnings *** Aspen Technology builds computer systems that assist process manufacturers in designing and automating their plant operations. Companies such as Chevron, Dow Chemical, Procter & Gamble, and Weyerhaeuser use Aspen's software to find more efficient methods of production and management. The company, which has facilities in more than 20 countries, has continued to extend its reach and product line through acquisitions of smaller firms with similar simulation and modeling technologies. On Wednesday, they reported favorable quarterly earnings, a very positive outlook with new contracts and license agreements. The company was also upgraded by SG COWEN and CO. The chart is bullish with a recent break-out from a long-term base on good volume and excellent buying pressure. PLAY (conservative/diagonal spread): BUY CALL MAR-15.00 ZQP-CC OI=10 A=$3.38 SELL CALL FEB-17.50 ZQP-BW OI=95 B=$0.93 NET DEBIT TARGET=$2.25 TARGET ROI=25% Chart = http://quote.yahoo.com/q?s=AZPN&;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 $10 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. 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It is possible at this or some subsequent date, the editor and staff of The Option Investor Newsletter may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. The newsletter staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control.
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