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Addition November Recommendations 11-08-06

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We are recommending the following 3 credit spread for our November Position

We are recommending credit spreads iin the following issues:


KBH - KB Home operates as a builder of single-family homes in the United States and France. The company operates in two segments, Construction and Financial Services. The Construction segment's activities include acquisition and development of land for residential purposes and offering a variety of homes for entry-level, move-up, luxury, and active adult homebuyers

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.

SEPR - Sepracor, Inc., a research-based pharmaceutical company, engages in the discovery, development, and commercialization of products primarily for the treatment of respiratory and central nervous system disorders in the United States. The company manufactures and commercializes three proprietary products, LUNESTA (eszopiclone); XOPENEX (levalbuterol HCl) Inhalation Solution; and XOPENEX HFA (levalbuterol tartrate) Inhalation Aerosol, a hydrofluoroalkane (HFA) metered-dose inhaler (MDI).

We are recommending the following specific credit spreads


Call Credit Spreads


KBH $43.05

BUY KBH-KJ KBH NOV $50.00 CALL DEBIT = $0.05
SELL KBH-KI KBH NOV $45.00 CALL CREDIT= $0.20
NET CREDIT = $0.15
 

INITIAL "NET- CREDIT TARGET= $0.15 or $15.00
POTENTIAL PROFIT (x 10 CONTRACTS @ $0.15 = $150.00
MARGIN REQUIRE. (x 10 CONTRACTS $4,850.00
RETURN ON INVESTMENT= 3.09%
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE RISES TO: $44.00
2.EQUITY INDEXES
A STOP LIMIT will be placed on the SHORT STRIKE PRICE on any EQUITY OPTION that has a STRIKE PRICE DIFFERENCE OF $5.00 or MORE.
THE STOP LIMIT ON THIS POSITION IS NOTED BELOW:
BUY POSITION STOP BELOW
KBH-KI EXIT >> = $1.20 STOP LIMIT

If and when the STOP LIMIT IS EXECUTED - A contingency order should be in place to then 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


SNDK $46.58

BUY SWF-KX SNDK NOV $52.50 CALL DEBIT = $0.10
SELL SWF-KJ SNDK NOV $50.00 CALL CREDIT= $0.25
NET CREDIT = $0.15
 

INITIAL "NET- CREDIT TARGET= $0.15 or $15.00
POTENTIAL PROFIT (x 10 CONTRACTS @ $0.15 = $150.00
MARGIN REQUIRE. (x 10 CONTRACTS $2,350.00
RETURN ON INVESTMENT= 6.38%

EXIT STRATEGY = 1. WATCH LIST 2. MAXIMUM LOSS SPREAD PRICE DIFFERENCE $2.50
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE RISES TO: $48.00
2. ON SPREADS WITH 2.50 or less difference in STRIKE PRICES
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



Put credit spreads


SEPR $53.37

SELL ERU-WJ SEPR NOV $50.00 PUT CREDIT= $0.60
BUY ERU-WW SEPR NOV $47.50 PUT DEBIT $0.30
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 $2,200.00
RETURN ON INVESTMENT= 13.64%
EXIT STRATEGY = 1. WATCH LIST 2. MAXIMUM LOSS SPREAD PRICE DIFFERENCE $2.50

1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE DROPS TO: $52.00
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






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