Monthly Cash Machine Newsletter, Saturday, 08/06/2005 12:57:34 AM ET
KBH Spread Close Out
by Steve Gail
HAVING TROUBLE PRINTING?
EXIT of KHB spread position
Homebuilders' shares were rattled Friday after a strong employment report for July suggested interest rates may be going still higher.
The Dow Jones U.S. Home Construction index was lower by 5.5%, reflecting the pressure on individual names in the sector.
KBH was under a extreme selling pressure and broke through support because of this pressure along with the threat of rising interests rates, tied with the lower U.S home construction index.
This selling pressure along with rumors of an impending housing bubble
forced us to be stopped out of our KBH spread position for a net debit of $0.85 and a NET LOSS of $0.45
SELL KBH-TO KBH August 75 PUT
BUY KBH-TN KBH August 70 PUT
Exit Strategy= If NET DEBIT = $0.85 STOP