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MCM APRIL 2008 Adding KLAC put spread 4-4-08

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We are recommending the selling of the KLAC put credit spread to slightly hedge our KLAC call position. When this position is put on we will in essence have a short straddle on the KLAC 40 strike price. ( we will be short the APRIL KLAC 40 put and call

We are recommending the following specific put spread for KLAC

KLAC $40.17

SELL KCQ-PH KLAC APR $40.00 PUT CREDIT= $0.80
BUY KCQ-PU KLAC APR $37.50 PUT DEBIT $0.30
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 $2,000.00
RETURN ON INVESTMENT= 25.00%
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 $40.00
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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