Option Investor

Portfolio Update

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Summary of June Trades (July Expirations)

ALL of the BULLISH PUT SPREADS should expire worthless with NONE being in any danger


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

CNX 50.59 53.51 JUL 40.0 45.0 0.50 44.50 $2250 $250
CME 246.19 305.95 JUL 200.0 210.0 0.65 209.35 $4675 $325
GM 34.51 34.17 JUL 27.5 30.0 0.20 29.80 $2300 $200
LSCP 39.95 41.91 JUL 30.0 35.0 0.45 34.55 $2275 $225
CHIR 37.69 35.11 JUL 30.0 32.5 0.15 32.35 $1175 $75
Totals $12675 $775


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

AAPL 38.24 36.37 JUL 47.5 45.0 0.25 45.25 $2250 $250
FFIV 48.70 46.22 JUL 60.0 55.0 0.40 55.40 $2300 $200
CAI 61.10 63.40 JUL 70.0 65.0 0.45 65.45 $2275 $225 64.90
TTC 45.95 38.54 JUL 55.0 50.0 0.20 50.20 $7125 $50
QLGC 30.03 30.79 JUL 35.0 32.5 0.25 32.75 $2250 $250 32.20
WBSN 45.82 48.89 JUL 55.0 50.0 0.55 50.55 $2225 $275 51.80
BBH 135.25 168.00 OCT 180.0 175.0 0.25 175.25 $4875 $125 177


The above bearish spreads on the call side need to be closed out or watched extremely closely as we approach expiration this week. expiration.


Once the spread wass open, traders should have place a (contingent) order to close the short ($50.00) call options if the stock price moves above $50.50 on an intra-day basis. A "net-debit" order of $0.85-$0.90 to exit the entire spread may also be appropriate for some portfolios. THE position was closed out for a net debit of $0.90

Although we can't rescind the recommendation, it's obvious that readers who entered the position (for a much larger credit) were faced with an early exit or adjustment in the position. Considering the possible transition to a lateral or bullish trend, our alternate suggestion was to contemplate the purchase of longer-term calls (AUG-$50 or OCT-$50) to "cover" the short options, rather than closing the play for a loss. However, a close out for a debit of $0.90 would have been appropriate..

QLGC -. We were stopped out of our QLGC position at $32.50

CAI - The company expects some of the work it's going to bid on to be submitted in the second quarter of fiscal 2006 instead of the first quarter, and the announcement gave investors a perfect excuse to take profits from the recent rally last month, however with the only uncertainty hanging over the market is crude prices CAI has crept back to really put us in a "tight" position with 3 days to expiration. Once thought there was little near-term catalyst to support the lofty stock price, that original spread should have been easily able to remain profitable until expiration, however recent short term strength in the stock has pushed what was a "sure" winner last week into a "nail biter during this last week before expiration.

Last month the issue seems destined to test the upper limits of the recent trading range and the company's fiscal year guidance, however, the stock bull back, probably was the only event that could have derailed the near-term bullish activity. However, the action after the conference call did not improve the outlook for the underlying stock, as the stock fell back, although we considerd using a "covering" order, which involves the purchase of longer-term (SEP-$65) calls, to adjust the position it was only, contingent on the stock price moving above $65, which would have been a viable strategy then to attempt to profit from the change in (technical) character, however the event resulted in a "sell the news" mentality among investors, so we remained in the original spread. However, recent activity has us looking at CAI at $64.80, just $0.20 from the strike' This is one of those calls where you earned $0.45 on the spread, but because of the closeness to the strike and the short time remaining to expiration the premium is bid $0.60 - $0.75 for the JUL 65 CALLS -(CAI-GM) and you have NO BID on the JUL 70 Calls (CAI-GN). The only thing holding the market right now is the uncertainty of crude. Any drop in crued prices could surely bring CAI to the door step and easily into the money. However, an increase in crude could stall out the premium with only 3 days andmaybe left you extremely conservatives close out for $0.25- $0.40, but that is only if you get a pull back or stall if CAI's current momentum. Tough call. Let's take a chance and watch the opening. If CAI breaks $65, Look to take anywhere from a $0.75- $0.85 hit for a NET LOSS of $0.30 - $0.40. But watch the opening, any pull back and the air goes out of that JUL 65 with only 3 days left, a flat opening could have the option down in the $0.40 =$0.45 cent range. WATCH the opening If CAI breaks $65, Look to take anywhere from a $0.75- $0.85 hit for a NET LOSS of $0.30 - $0.40. But watch the opening, any pull back and the air goes out of these overpriced calls

BBH - needs to be examined carefully, not so much for the time factor or the expiration, but because you are in the money 2 months and have until October. Possibly taking a several point loss doesn't sound too attractive, however, it is better then a 5 point loss if this stock continues until Oct. You could wait and roll up and out and eventually breakeven if we get this stock to slow down.

Everything else is okay in so much as July expiration is concerned and should expire in the next few days

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