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Initial January Recommendation List 12-12-06

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We are recommending the following four (4) credit spreads to start off the JANUARY RECOMMENDATION list

We are recommending credit spreads in the following issues:

GM - General Motors Corp. designs, manufactures, and markets automotive vehicles. General Motors also has substantial interests in digital communications, financial and insurance services, locomotives, and heavy-duty automatic transmissions.

WMT - Wal-Mart Stores, Inc. is the world's largest retailer. They are engaged in the operation of mass merchandising stores, which serve their customers primarily through the operation of three segments, which are the Wal-Mart Stores segment, the SAM'S Club segment and the International segment.

SNDK - Sandisk Corporation designs, manufactures, and markets flash memory storage products that are used in a wide variety of electronic systems. The company have designed flash memory storage solutions to address the storage requirements of emerging applications in the consumer electronics and industrial/communications markets.

SEPR - Sepracor Inc. is a leading specialty pharmaceutical company focused on the cost-effective development of safer, purer and more effective drugs that are improved versions of widely-prescribed pharmaceutical compounds. Typically, these Improved Chemical Entities are patented, single-isomer or active-metabolite forms of the parent compound.

We are recommending the following specific credit spreads

Call Credit Spread


GM $29.86

BUY GM-AG GM JAN $35.00 CALL DEBIT = $0.20
SELL GM-AZ GM JAN $32.50 CALL CREDIT= $0.40
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: $31.00
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

WMT $45.65

BUY WMT-AJ WMT JAN $50.00 CALL DEBIT = $0.10
SELL WMT-AW WMT JAN $47.50 CALL CREDIT= $0.35
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 $2,250.00
RETURN ON INVESTMENT= 11.11%

EXIT STRATEGY = 1. WATCH LIST 2. MAXIMUM LOSS SPREAD PRICE DIFFERENCE
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE RISES TO:$46.50
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


SNDK $42.48

BUY SWF-AJ SNDK JAN $50.00 CALL DEBIT = $0.55
SELL SWF-AW SNDK JAN $47.50 CALL CREDIT= $0.80
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 $2,250.00
RETURN ON INVESTMENT= 11.11%

EXIT STRATEGY = 1. WATCH LIST 2. MAXIMUM LOSS SPREAD PRICE DIFFERENCE
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE RISES TO: $45.00
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 Spread


SEPR $57.23

SELL ERU-MJ SEPR JAN $50.00 PUT CREDIT= $0.70
BUY ERU-MW SEPR JAN $47.50 PUT DEBIT $0.45
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 $2,250.00
RETURN ON INVESTMENT= 11.11%
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: $55.00
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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