Sponsored By:

There Are Winners, And Then There are Winners!

January 10, 2007

Dear Fellow Options Trader,

I remember the excitement of being a young man and going with my father to watch a fabulous fighter named Cassius Clay. Like many others, I marveled at his skill, and was terribly despondent when he stopped fighting.

It was back in 1966 that I, as an 8-year-old, first knew the adrenaline rush of anticipation for a sporting event. As they say, absence makes the heart grow fonder and so, in 1970, I greeted my adrenaline friend again when I finally got to see my favorite fighter in the ring once again. This time, he fought under the name Muhammad Ali.

It didn't matter to me what he called himself -- the man was the best fighter I ever saw, and nothing made my heart pound like it did in anticipation of Ali fighting in a heavyweight championship. Even just thinking back to those days, my palms still sweat and my pulse still races.

Other than having a great trading opportunity work out in my favor, the main thing that makes my heart race and my palms sweat these days is football. High school, college or professional football -- it didn't and still doesn't matter, because I look forward to them all. But as with boxing matches, not every game lives up to the hype. In truth, only a small minority ever do, but I'd hoped that the recent Bowl Championship Series game between Florida and Ohio State would become one of the select few.

Instead of the match of the century when the teams battled it out Monday night, I saw a repeat of the 1976 match between Muhammad Ali and Kanji "Antonio" Inoki, in which the World Boxing champion was severely defeated by Japan's then-top wrestler. With all due respect to the Florida Gator fans, who do deserve to call themselves national champions, the Bowl Championship Game was a bore in comparison!

Like Ali fighting a wrestler, the Florida/Ohio State match was not a balanced heavyweight fight. If you never saw the Inoki fiasco, it was an instance of the best boxer in the world fighting a combo wrestler/martial artist. Ali tried to box and Inoki lay on his back in the middle of the ring and kicked Ali in the hamstrings. If that sounds bad, then I'm not doing it justice. It was HORRIBLE!

Thirty years later, the Ohio State Buckeyes didn't even have the good sense to kick Florida in the hamstrings, as that would have been an improvement over what they did or, better yet, didn't do. They failed miserably in their feeble attempt to stop the Florida passing attack and steadfastly refused to cover or rotate their defensive coverage of the Gators' four receiver sets.

Ohio State also failed to "dance with the one who brung 'em," a football expression for sticking with the strategy that got you to the big game in the first place. All year, the Buckeyes ran a spread offense that let their Heisman Trophy quarterback (Troy Smith) use his feet and arms to make plays. OSU may have run some spread offense against Florida, but I saw precious little of it in the 41-14 runaway!

SPEAKING OF INDUSTRY HEAVYWEIGHTS …

Although not every Ali fight lived up to the hype, every once in awhile the hype actually is justified. Such was the case this week with Apple's (AAPL) long-awaited announcement of the iPhone.

We knew Apple CEO Steve Jobs had the iPhone ready to go. Toby Smith was pounding the table on the sell-off in AAPL shares last week, screaming to all of ChangeWave that the bears were gonna get whipped in AAPL. And so, Toby, this Bud's for you!

On my CBS Radio show, I've spoken incessantly about the U.S. Patent and Trademark sightings of the iPhone and the stories on Engadget.com. I've also cited the outright massive call-option buying, which our HeatSeeker found -- and both the Dow Jones and Reuters newswires reported our proprietary option-tracking system's bullish findings.

In fact, we didn't even have to look at a calendar this week to know that the company's much-anticipated Macworld conference was in gear. Just yesterday (Tuesday, Jan. 9), trading in AAPL calls and puts for the day topped 746,000 contracts, with more than 500,000 on the call side alone.

Investors had good reason to be bullish. Before Apple CEO Steve Jobs was set to unveil Apple's latest addition to its orchard of savvy tech products, there was an information leak that the company had picked Cingular as its wireless provider (which Jobs later confirmed), and that was the last piece of the puzzle we needed to know that the deal was done!

Mercifully, after all the hype, after all the rumors and denials, Mr. Jobs took the stage at Macworld and showed the world the iPhone. To the strains of "Lovely Rita," from the Beatles -- an ironic choice, given that the band's music isn't available for purchase in Apple's iTunes Music Store -- he showed us a patented "multi-touch" handset.

And in true Jobs fashion, he proclaimed the Apple iPhone would use a pointing device that "we're all born with" -- that is, our fingers -- because it features a touchscreen.

The phone automatically synchs your media into one convergence device -- movies, music, photos, e-mail content, Web bookmarks and nearly any type of digital content stored on your computer. And just for good measure, Apple threw in a 2-megapixel digital camera -- talk about the ultimate one-stop shop where you can take photos, store and share them all in the same device.

Sure, there will be improved versions of the iPhone in the future -- that's a given. But in a world where the total consumption of digital music and video iPod sales has just nudged past the 70 million mark, the iPhone is joining a much bigger club: the billion handsets that are sold in the wireless space every year.

Apple's brand and ease of use are key differentiators from other players in the wireless world, which in turn led to the huge vote of confidence in the stock. It'll be interesting to watch how the shares of its partners and competitors fare going forward, because I wouldn't be surprised to see them move in tandem when the phone becomes available and its success can be measured.

Like the prizefighter Ali, Jobs might not win every time he enters the ring. But in the future when we look back on the people, products and companies that revolutionized our world, Jobs and his empire will no doubt come out near the top of the list of champions.


Jon "Doctor J" Najarian
Editor
ChangeWave Options Trader