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Portfolio Review

HAVING TROUBLE PRINTING?
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Back In A Trading Range...

The major equity averages ended mixed Friday as investors showed little interest in stocks with inflation on the rise and the cost of oil pressuring profits in many of the industrial sectors. Analysts said the new "economic realities" are the primary catalyst for the recent bearish activity and the return to a 5-month trading range in the broad S&P 500 index appears to confirm a less-than-stellar outlook for the market in the coming months.

Although the overall trend has been somewhat difficult to predict, the MCM Portfolio performed very well during the short (4 week) options expiration period between February and March. In fact, all of the spreads originally offered for the model portfolio finished at maximum profit. However, we can not take full credit for the available gains as the position in Netease.com (NASDAQ:NTES) was closed early to limit potential losses. In addition, the short calls in the LM Ericsson (NASDAQ:ERICY) spread were "covered" with shares of the underlying stock to illustrate one of the possible adjustment techniques for in-the-money options. In order to accurately reflect the outcome of the strategy, the adjusted (covered-call) position will be carried forward in the current portfolio until the issue is sold. The cost of the stock after the sale of the JUL-$30 call is $28.85 and the potential profit (if called at $30) is 13%, based on $1.15 per share potential gain and margin requirement of $4336 (30%).

Here is the new data for the position, as listed in the portfolio summary:

Stock Pick Last Exp Sold Bid Cost Margn Gain
Symbol Price Price Mon Call Price Basis Maint (Loss)

ERICY 30.55 28.91 JUL 30.00 1.70 28.85 $4336 $30

The final results for the positions expiring on Saturday (3/19/05), which does not include "bonus" or "supplemental" plays, are listed below:


FEBRUARY'S CASH MACHINE TRADES

BULLISH SPREADS

Stock Pick Last Exp Long Sold Spread Cost Margn Gain
Symbol Price Price Mon Put Put Credit Basis Maint (Loss)

TTWO 38.54 41.00 MAR 32.5 35.0 0.35 34.65 $1075 $175
INFY 74.00 75.60 MAR 60.0 65.0 0.50 64.50 $2250 $250
PD 99.67 107.01 MAR 85.0 90.0 0.50 89.50 $2250 $250
CTSH 45.52 44.55 MAR 35.0 40.0 0.35 39.65 $2325 $175
WPI 32.11 31.66 MAR 25.0 30.0 0.50 29.50 $2250 $250

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Totals $10150 $1100

BEARISH SPREADS


Stock Pick Last Exp Long Sold Spread Cost Margn Gain
Symbol Price Price Mon Call Call Credit Basis Maint (Loss)

NTES 41.19 45.35 MAR 55.0 50.0 0.55 50.55 $ 0 $125 *
AMZN 35.72 34.08 MAR 42.5 40.0 0.25 40.25 $1125 $125
CECO 35.91 37.50 MAR 45.0 40.0 0.30 40.30 $2350 $150
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Totals $3475 $400

Overall Profit =11.01%

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