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ATTENTION MODIFY YOUR NET CREDIT to $0.60 from $0.20 on the SOX spread

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We are adding the following three (3) spread recommendations to our February list

We are recommending one(1) call spread and two (2) put spreads in the following issues: The two put spread recommendations are index plays


DSL - Downey Financial Corp.
operates as the holding company for Downey Savings and Loan Association, F.A. (bank), which offers various banking and financial services to individual and corporate customers primarily in California. The bank attracts funds from the general public and institutions; and originates and invests in loans, such as residential real estate mortgage loans, investment securities, and mortgage-backed securities. It primarily focuses on the origination of adjustable rate single family mortgage loans, including subprime loans

SOX - SOX BD IND GEN IN (^SOX) INDEX

XAU - PHLX GOLD AND SILVER SECTOR INDEX

We are recommending specifically the following spreads


Call spread

DSL $65.82

BUY DSL-BO DSL FEB $75.00 CALL DEBIT = $0.25
SELL DSL-BN DSL FEB $70.00 CALL CREDIT= $0.55
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= 6.38%

EXIT STRATEGY = 1. WATCH LIST 2. MAXIMUM LOSS SPREAD PRICE DIFFERENCE
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE RISES TO: $67.91
2. ON SPREADS WITH 2.50 or less difference in STRIKE PRICES
MAXIMUM EXPOSURE is: $5.00 Which is the difference between the strike prices
THIS WILL BE OUR MAXIMUM EXPOSURE - WE WILL NOT USE STOPS ON
THOSE POSITIONS. THEY WILL GO ON THE WATCH LIST AND BE FOLLOWED WITH INSTRUCTIONS
AS TO HOW TO PROCEED OR/WHAT EXIT POINT NEEDS TO BE ESTABLISHED

3. IF THE DIFFERENCE BETWEEN THE SPREAD STRIKE PRICES IS 5 points or more the STOP LIMIT is below
will be placed on the SHORT STRIKE PRICE:
DSL-BN STOP LIMIT EXIT >> = $2.20
If and when the STOP LIMIT IS EXECUTED - A contingency order should be in place to than SELL the LONG SIDE
of the Spread and close the position with a Market Order if and when the SHORT side needs to be STOPPED OUT

Put spreads:


^SOX 520.71

SELL SXX-NR ^SOX FEB $490.00 PUT CREDIT= $3.70
BUY SWA-NR ^SOX FEB $487.50 PUT DEBIT $3.50
NET CREDIT = $0.20
INITIAL "NET- CREDIT TARGET= $0.20 or $20.00
POTENTIAL PROFIT (x 10 CONTRACTS @ $0.20 = $200.00
MARGIN REQUIRE. (x 10 CONTRACTS $2,300.00
RETURN ON INVESTMENT= 8.70%
EXIT STRATEGY = 1. WATCH LIST 2. MAXIMUM LOSS SPREAD PRICE DIFFERENCE $2.50
1. STOCK WILL BE PLACED ON WATCH LIST IF INDEX PRICE DROPS TO: 505
2. ON SPREADS WITH 2.50 or less difference in STRIKE PRICES the Difference
IN THE STRIKE PRICE WILL BE OUR MAXIMUM EXPOSURE - WE WILL NOT USE STOPS ON THOSE POSITIONS. THEY WILL GO ON THE WATCH LIST AND BE FOLLOWED WITH INSTRUCTIONS AS TO HOW TO PROCEED OR/WHAT EXIT POINT NEEDS TO BE ESTABLISHED

XAU $141.29

SELL XAV-NF XAU FEB $130.00 PUT CREDIT= $1.25
BUY XAV-NE XAU FEB $125.00 PUT DEBIT $0.75
NET CREDIT = $0.50
INITIAL "NET- CREDIT TARGET= $0.50 or $50.00
POTENTIAL PROFIT (x 10 CONTRACTS @ $0.50 = $500.00

MARGIN REQUIRE. (x 10 CONTRACTS $4,500.00
RETURN ON INVESTMENT= 11.11%
EXIT STRATEGY = 1. WATCH LIST 2. MAXIMUM LOSS SPREAD PRICE DIFFERENCE $5.00
1. STOCK WILL BE PLACED ON WATCH LIST IF INDEX PRICE DROPS TO: 136
2. ON SPREADS WITH 2.50 or less difference in STRIKE PRICES the Difference
IN THE STRIKE PRICE WILL BE OUR MAXIMUM EXPOSURE - WE WILL NOT USE STOPS ON
THOSE POSITIONS. THEY WILL GO ON THE WATCH LIST AND BE FOLLOWED WITH INSTRUCTIONS
AS TO HOW TO PROCEED OR/WHAT EXIT POINT NEEDS TO BE ESTABLISHED

3. IF THE DIFFERENCE BETWEEN THE SPREAD STRIKE PRICES IS 5 points or more the STOP LIMIT is below
and will be placed on the SHORT STRIKE PRICE:
XAV-NF STOP LIMIT EXIT >> = $3.00
If and when the STOP LIMIT IS EXECUTED - A contingency order should be in place to han SELL the LONG SIDE of the Spread and close the position with a Market Order if and when the SHORT side needs to be STOPPED OUT

If these spreads are filled this will bring our February Recommended postions to nine (9).

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