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INITIAL MCM SEPTEMBER 2007 recommendations 8-12-07

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We are starting our SEPTEMBER recommendations with the following credit spreads

We are recommending credit spreads in the following issues


AA - Alcoa, Inc. engages in the production and sale of primary aluminum, fabricated aluminum, and alumina worldwide. The company involves in technology, mining, refining, smelting, fabricating, and recycling of aluminum. It offers flat-rolled products, such as sheet and plate, foil products, and can reclamations; extruded and end products, such as extrusion, tube, and architectural extrusions; engineered solutions that comprise aerospace products, automotive components, AFL automotives, castings, auto engineering products, and fasteners; and packaging and consumer products, which include flexible packaging, foodservice packaging, closures, and polymerization and extrusions

JPM - JPMorgan Chase & Co., through its subsidiaries, provides a range of financial services worldwide. The company operates through six segments: Investment Bank, Retail Financial Services, Card Services, Commercial Banking, Treasury and Securities Services, and Asset Management. The Investment Bank segment offers investment banking products and services, such as advising on corporate strategy and structure, capital raising in equity and debt markets, risk management, market-making in cash securities and derivative instruments, and research

MER - Merrill Lynch & Co., Inc., together with its subsidiaries, provides broker-dealer, investment banking, financing, wealth management, advisory, asset management, insurance, lending, and related products and services worldwide. Its Institutional Business segment provides equity, debt, and commodities trading; capital market services; investment banking; and advisory services to corporations, financial institutions, governments, and institutional investors. This segment also provides clients with financing, securities clearing, settlement, and custody services; and engages in principal and private equity investing

SNDK - SanDisk Corporation designs, develops, manufactures, and markets flash storage card products used in various consumer electronics products. Its products include removable cards, universal serial bus flash drives, and flash-based MP3 players. The company's flash storage technology allows data to be stored in a consumption format, as well as a durable and compact format that retains the data after the power has been turned off. Its products are used in digital cameras, mobile phones, universal serial bus drives, gaming consoles


We are recommending the following specific credit spreads

Call credits spread ( bearish call spreads )

` AA $34.69

BUY AA-II AA SEP $45.00 CALL DEBIT = $0.35
SELL AA-IH AA SEP $40.00 CALL CREDIT= $0.85
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
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE RISES TO: $37.50
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.
BE UTILIZED BY BLOG. THE STOP LIMIT ON THIS POSITION IS NOTED BELOW:
BUY POSITION STOP BELOW
AA-IH EXIT >> = $3.40 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


` JPM $44.25

BUY JPM-IX JPM SEP $52.50 CALL DEBIT = $0.25
SELL JPM-IJ JPM SEP $50.00 CALL CREDIT= $0.50
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: $47.50
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

MER $74.12

BUY MER-IR MER SEP $90.00 CALL DEBIT = $0.60
SELL MER-IQ MER SEP $85.00 CALL CREDIT= $1.15
NET CREDIT = $0.55
 

INITIAL "NET- CREDIT TARGET= $0.55 or $55.00
POTENTIAL PROFIT (x 10 CONTRACTS @ $0.55 = $550.00
MARGIN REQUIRE. (x 10 CONTRACTS $4,450.00
RETURN ON INVESTMENT= 12.36%

EXIT STRATEGY = 1. WATCH LIST 2. MAXIMUM LOSS SPREAD PRICE DIFFERENCE
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE RISES TO: $78.00
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.
THE STOP LIMIT ON THIS POSITION IS NOTED BELOW:
BUY POSITION STOP BELOW
MER-IQ EXIT >> = $4.00 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


Put credit spreads ( bullish put spreads )

SNDK $57.13

SELL SWF-UW SNDK SEP $47.50 PUT CREDIT= $0.45
BUY SWF-UI SNDK SEP $45.00 PUT DEBIT $0.30
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 DROPS TO: $53.00
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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