Option Investor
Newsletter

Four plays to be added to our January Recommendation list

HAVING TROUBLE PRINTING?
Printer friendly version

FOUR (4) ADDITIONAL CREDIT SPREADS TO BE ADDED TO JANUARY RECOMMENDED LIST.

We are adding the following four (4) additional credit spreads to our recommended list for January.

This will bring our total positions to eight (8).

We are recommending two (2) call credit spreads and two (2) put credit spreads on the following underlying issues:

GTRC - Guitar Center, Inc.
operates as a retailer of guitars, amplifiers, percussion instruments, keyboards, live-sound/DJ, and recording equipment in the United States. As of October 26, 2005, it operated 157 Guitar Center retail stores, with 124 stores in 50 major markets and 33 stores in secondary markets. In addition, its Music & Arts division operated 79 retail locations and 8 educational support centers specializing in band
instruments for sale and rental, serving teachers, band directors, college professors, and students. The company also operates as the direct response retailer of musical instruments in the United States through its wholly owned subsidiary, Musician's Friend, Inc., and its catalog and Web site. Guitar Center was founded in 1964 and is based in Westlake Village, California.

SEPR - Sepracor, Inc.,
a research-based pharmaceutical company, engages in the discovery, development, and
commercialization of differentiated products primarily for the treatment of respiratory and central nervous system disorders. It commercializes two proprietary products, LUNESTA eszopiclone for the treatment of insomnia in patients who experience difficulty falling asleep, as well as for the treatment of patients who have difficulty sleeping through the night; and XOPENEX levalbuterol Inhalation Solution, a short-acting bronchodilator, for the
treatment or prevention of bronchospasm in patients with reversible obstructive airway disease, such as asthma.

XAU- Philadelphia Gold and Silver Index
comprised of the following components:
ABX - BARRICK GOLD CP
AEM - AGNICO EAGLE MINES
AU - ANGLOGOLD ASHANTI LT
FCX - FREEPORT MCMORAN B
GFI - GOLD FIELDS LTD ADS
GG - GOLDCORP INC
GLG - GLAMIS GOLD LMT
HMY - HARMONY GOLD MNG A
MDG - MERIDIAN GOLD INC.
NEM - NEWMONT MIN CP HLDG
PAAS - PAN AMER SILVER CO
PDG - PLACER DOME

SNDK - SanDisk Corporation
engages in the design, development, and market of flash storage card products used in
various consumer electronics worldwide. Its products include flash cards, Universal Serial Bus, flash drives, and digital audio players. The company's flash storage allows data to be stored in a compact format that retains the data for an extended period of time after the power has been turned off. Its products are used in digital cameras, feature phones, and other digital consumer devices.

We are recommending the following specific credit spreads as listed below:


Call Credit Spreads

GTRC $50.77

BUY UGR-AL GTRC Dec $60.00 CALL DEBIT = $0.20
SELL UGR-AK GTRC Dec $55.00 CALL CREDIT= $0.50
NET CREDIT = $0.30
INITIAL "NET- CREDIT TARGET= $0.30 or $30.00

POTENTIAL PROFIT (x 10 CONTRACTS @ $0.30 = $300.00
MARGIN REQUIRE. (x 10 CONTRACTS $4,700.00
RETURN ON INVESTMENT= 7.53%
EXIT STRATEGY = NET DEBIT STOP = $1.20

SEPR 52.13

BUY ERU-AM SEPR Dec $65.00 CALL DEBIT = $0.25
SELL ERU-AL SEPR Dec $60.00 CALL CREDIT= $0.50
NET CREDIT = $0.25
INITIAL "NET- CREDIT TARGET= $0.25 or $25.00
POTENTIAL PROFIT (x 10 CONTRACTS @ $0.25 = $250.00
MARGIN REQUIRE. (x 10 CONTRACTS $4,750.00
RETURN ON INVESTMENT= 7.53%
EXIT STRATEGY = NET DEBIT STOP = $1.00

Put Credit Spreads


XAU $122.36

SELL XAVMB XAU DEC $110.00 PUT CREDIT= $0.80
BUY XAV-MA XAU DEC $105.00 PUT DEBIT $0.45
NET CREDIT = $0.35
INITIAL "NET- CREDIT TARGET= $0.35 or $35.00
POTENTIAL PROFIT (x 10 CONTRACTS @ $0.35 = $350.00
MARGIN REQUIRE. (x 10 CONTRACTS $5,350.00
RETURN ON INVESTMENT= 6.54%
EXIT STRATEGY = NET DEBIT STOP = $1.40


SNDK $58.04

SELL SWFMJ SNDK DEC $50.00 PUT CREDIT= $0.50
BUY SWF-MW SNDK DEC $47.50 PUT DEBIT $0.20
NET CREDIT = $0.30
INITIAL "NET- CREDIT TARGET= $0.30 or $30.00

POTENTIAL PROFIT (x 10 CONTRACTS @ $0.30 = $300.00
MARGIN REQUIRE. (x 10 CONTRACTS $2,800.00
RETURN ON INVESTMENT= 7.41%
EXIT STRATEGY = NET DEBIT STOP = $1.20

We will keep you informed of any additional recommendations or any issue that needs to be placed on the WATCH LIST. The Watch List is used to monitor any issue that might need to be closed out or adjusted iat a later date.

Monthly Cash Machine Newsletter Archives