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Initial MCM May 2007 recommendations 4-15-07

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We are recommending the following (4) credit spreads to start our MAY recommended list

We are recommending credit spreads in the following issues:

LEN - Lennar Corp is one of the nation's leading builders of quality homes for all generations, building affordable, move-up and retirement homes. Under the Lennar Family of Builders banner, the Company includes the following brand names: Lennar Homes, U.S. Home, Greystone Homes, Village Builders, Renaissance Homes, Orrin Thompson Homes, Lundgren Bros., Winncrest Homes, Sunstar Communities, Don Galloway Homes, Patriot Homes, NuHome, Barry Andrews Homes, Concord Homes, Summit Homes, Cambridge Homes, Seppala Homes, Genesee and Rutenberg Homes

BBY - Best Buy operates in a single business segment, selling personal computers and other home office products, consumer electronics, entertainment software, major appliances and related accessories principally through its retail stores. They operate retail stores and commercial Websites under the brand names Best Buy, Media Play, On Cue, Sam Goody, Suncoast, Magnolia Hi-Fi and Future Shop. They also operate in three segments: Best Buy, Musicland and International.

TOL - TOLL BROTHERS INC. designs, builds, markets and arranges financing for single-family detached and attached homes in middle and high income residential communities in thirteen staes and five regions around the country. The communities are generally located on land Co. has developed, although, due to the poor economic conditions during the early 1990's, Co. has been able to acquire a number of fully approved parcels and often improved subdivisions.


XAU - PHLX GOLD SILVER SECTOR INDEX (XAU)

We are recommending the following specific credit spreads

Call Credit spreads ( bear call spreads )

LEN $41.11

BUY LEN-EJ LEN MAY $50.00 CALL DEBIT = $0.05
SELL LEN-EI LEN MAY $45.00 CALL CREDIT= $0.40
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
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE RISES TO: $43.00

2.EQUITY ISSUES
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.
BUY POSITION STOP BELOW
LEN-EI EXIT >> = $1.25 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

BBY $46.52

BUY BBY-EX BBY MAY $52.50 CALL DEBIT = $0.10
SELL BBY-EJ BBY MAY $50.00 CALL CREDIT= $0.30
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 STOCK PRICE RISES TO:$48.50
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


TOL $27.74

BUY TOL-EZ TOL MAY $32.50 CALL DEBIT = $0.10
SELL TOL-EF TOL MAY $30.00 CALL CREDIT= $0.40
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 RISES TO: $28.75
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 ( bull put spreads)

XAU $147.02

SELL XAV-QG XAU MAY $135.00 PUT CREDIT= $1.05
BUY SWO-QG XAU MAY $132.50 PUT DEBIT $0.85
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 STOCK PRICE DROPS TO: $140.00
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

INDEX OPTIONS AND HOLDER ISSUES:
In ADDITION IF WE ARE USING A INDEX OR HOLDER OPTION WE WILL RECOMMEND WHEN A STOP SHOULD BE ADDED, IF THAT TIME BECOMES NECESSARY as with XAU above



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