Option Investor
Newsletter

MAY ADDITIONAL RECOMMENDATIONS 4-23-06

HAVING TROUBLE PRINTING?
Printer friendly version

We are recommending the following six (6) positions to our MAY RECOMMENDED LIST

We are recommending credit spreads in the following issues:

EBAY - eBay, Inc., together with its subsidiaries, provides online marketplaces for the sale of goods and services, online payment services, and online communication offerings to a diverse community of individuals and businesses in the United States and internationally. The company operates in three segments: eBay Marketplace, Payments, and Communications.

GENZ - Genzyme Corporation operates as a biotechnology company in the United States and internationally. It operates in five segments: Renal, Therapeutics, Transplant, Biosurgery, and Diagnostics/Genetics. The Renal segment manufactures products to treat renal diseases. It also sells Renagel for the control of serum phosphorus in kidney disease patients and Hectorol for the treatment of secondary hyperparathyroidism.

AMR - AMR Corporation (AMR), through its principal subsidiary, American Airlines, Inc., operates as a scheduled passenger airline. The company operates scheduled air freight carriers, as well as provides freight and mail services to shippers. AMR, through its AMR Eagle Holding Corporation subsidiary, also owns two regional airlines, which do business as the American Eagle carriers. It also contracts with three independently owned regional airlines that do business as the American Connection.

MDR - McDermott International, Inc., through its subsidiaries, operates as an energy services company worldwide. It operates in three segments: Marine Construction Services, Government Operations, and Power Generation Systems.

EEM - iShares MSCI Emerg Mkts Index (EEM)

SHLD - Sears Holdings Corporation, through its subsidiaries, operates as a retailer in the United States and Canada. The company operates through three segments: Kmart, Sears Domestic, and Sears Canada. The Kmart segment operates stores that offer general merchandise, including products sold under labels, such as Jaclyn Smith, Joe Boxer, and Martha Stewart Everyday, as well as in-store pharmacies.

We are recommending the following specific credit spreads

CALL CREDIT SPREADS:

EBAY $35.09

BUY XBA-EV EBAY MAY $42.50 CALL DEBIT = $0.05
SELL XBA-EU EBAY MAY $37.50 CALL CREDIT= $0.45
NET CREDIT = $0.40
INITIAL "NET- CREDIT TARGET= $0.40 or $40.00
POTENTIAL PROFIT (x 10 CONTRACTS @ $0.40 = $400.00

MARGIN REQUIRE. (x 10 CONTRACTS $4,600.00
RETURN ON INVESTMENT= 8.70%

EXIT STRATEGY = 1. WATCH LIST 2. MAXIMUM LOSS= STRIKE PRICE DIFFERENCE
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE RISES TO: $36.30


2. 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:
XBA-EU STOP LIMIT EXIT >> = $1.80
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


GENZ $61.26

BUY GZQ-EU GENZ MAY $67.50 CALL DEBIT = $0.25
SELL GZQ-EM GENZ MAY $65.00 CALL CREDIT= $0.45
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
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE RISES TO: $63.13
2. ON SPREADS WITH 2.50 or less difference in STRIKE PRICES
MAXIMUM EXPOSURE is: $2.50 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


AMR $22.46

BUY AMR-EF AMR MAY $30.00 CALL DEBIT = $0.20
SELL AMR-EE AMR MAY $25.00 CALL CREDIT= $0.65
NET CREDIT = $0.45
INITIAL "NET- CREDIT TARGET= $0.45 or $45.00
POTENTIAL PROFIT (x 10 CONTRACTS @ $0.45 = $450.00
MARGIN REQUIRE. (x 10 CONTRACTS $4,550.00
RETURN ON INVESTMENT= 9.89%

EXIT STRATEGY = 1. WATCH LIST 2. MAXIMUM LOSS SPREAD PRICE DIFFERENCE
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE RISES TO: $23.73


2. 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:
AMR-EE STOP LIMIT EXIT >> = $2.60
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 CREDIT SPREADS:

MDR $60.85

SELL MDR-QK MDR MAY $55.00 PUT CREDIT= $0.45
BUY MDR-QJ MDR MAY $50.00 PUT DEBIT $0.15
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 $5.00
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE DROPS TO: $57.00

2.STOP LIMIT will be placed on the SHORT STRIKE PRICE:
MDR-QK STOP LIMIT EXIT >> = $1.20
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

EEM $106.90

SELL EEM-QT EEM MAY $100.00 PUT CREDIT= $0.75
BUY EEM-QS EEM MAY $95.00 PUT DEBIT $0.45
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 $5.00
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE DROPS TO: $103.00



2.STOP LIMIT will be placed on the SHORT STRIKE PRICE:
EEM-QT STOP LIMIT EXIT >> = $1.80
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

SHLD $140.06

SELL KTQ-QY SHLD MAY $130.00 PUT CREDIT= $0.80
BUY KTQ-QE SHLD MAY $125.00 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 $4,650.00
RETURN ON INVESTMENT= 7.53%
EXIT STRATEGY = 1. WATCH LIST 2. MAXIMUM LOSS SPREAD PRICE DIFFERENCE $5.00
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE DROPS TO: $136.00


2.STOP LIMIT will be placed on the SHORT STRIKE PRICE:
KTQ-QY STOP LIMIT EXIT >> = $1.90
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


When these positions are filled this will bring our total MAY RECOMMENDED LIST to Ten (10) positions.

Monthly Cash Machine Newsletter Archives