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INITIAL MCM MAY 2008 recommendations 4-13-08

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As I announced in an earlier blog last week, we would be initiating Two (2) portfolios, ,in addition to our DJX monthly position(s).

The First Portfolio is our Equity Monthly Cash Machine and the Second is our Index, Holder, EFT's, Spyder Portfolio

Here are the initial recommendations for each:


We are starting off our May Portfolio #1: Equities portfolio with the following recommendations

We are recommending credit spreads in the following issues

AA - Alcoa Inc. is the world's leading producer and manager of primary aluminum, fabricated aluminum and alumina facilities, and is active in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers.



COMMENTARY:

AA -
After its disappointing earnings, everal other DJIA stocks followed. AA doesn't look to make any big hay until this economy at least bottoms out.


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JCG - J. Crew Group, Inc. operates as a multi-channel specialty retailer of women's, men's, and children's apparel and accessories in the United States. Its retail products include wedding and special occasion attire, weekend clothes, swimwear, loungewear, outerwear, shoes, bags, belts, hair accessories, and jewelry. The company also sells its products through catalogs and Internet. As of February 2, 2008, it operated 199 retail stores and 61 factory stores in 40 states and the District of Columbia. The company was incorporated in 1988 and is headquartered in New York, New York.



COMMENTARY:

JCG -
Retail, women's, men's, specialty...I need say no more. Unless those stimulus checks are earmarked for spending and not paying off debt; retail could have another rough quarter. Besides it will take at least to the end of the month before those checks even start fully arriving to provide any impact if at all.


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We are starting off our May Portfolio #2: Indexes, Holders, ETF's portfolio with the following recommendations

We are recommending credit spreads in the following issues

IWM - ISHARES RUSSELL 2000 INDEX FUND (IWM)

COMMENTARY:

IWM - After a nice move up, the small cap index may have run out of steam and may have run into some strong resistance at these levels

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SPY - Standard and Poor's Depository Reciepts trust is involved in the financial services industry. Their holdings are comprised of the 500 stocks in the S&P 500 Index, which is designed to capture the price performance of a large cross-section of the U.S. publicly traded stock market.

COMMENTARY:

SPY - The major index should continue to trade in a trading range.

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RECOMMENDATIONS:

We are recommending the following specific credit spreads for our Portfolio #1: Equities

Call credit spreads ( bearish call spreads )


AA $35.15

BUY AA-EI AA MAY $45.00 CALL DEBIT = $0.14
SELL AA-EH AA MAY $40.00 CALL CREDIT= $0.45
NET CREDIT = $0.31
 

INITIAL "NET- CREDIT TARGET= $0.31 or $31.00
POTENTIAL PROFIT (x 10 CONTRACTS @ $0.31 = $310.00
MARGIN REQUIRE. (x 10 CONTRACTS $4,690.00
RETURN ON INVESTMENT= 6.61%

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.
THE STOP LIMIT ON THIS POSITION IS NOTED BELOW:
BUY POSITION STOP BELOW
AA-EH EXIT >> = $2.00 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


JCG $42.69

BUY JCG-EJ JCG MAY $50.00 CALL DEBIT = $0.40
SELL JCG-EW JCG MAY $47.50 CALL CREDIT= $0.65
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

We are recommending the following specific credit spreads for our Portfolio #2: Indexes, ETF's, Spyders, Holders, etc

Call credit spreads ( bearish call spreads )

IWM $68.74

BUY IOW-EY IWM MAY $77.00 CALL DEBIT = $0.13
SELL IOW-EW IWM MAY $75.00 CALL CREDIT= $0.29
NET CREDIT = $0.16
 

INITIAL "NET- CREDIT TARGET= $0.16 or $16.00
POTENTIAL PROFIT (x 10 CONTRACTS @ $0.16 = $160.00
MARGIN REQUIRE. (x 10 CONTRACTS $1,840.00
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: $71.50
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

INDEX OPTIONS, ETFS 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

SPY $133.38

BUY SFB-EP SPY MAY $146.00 CALL DEBIT = $0.17
SELL SFB-EN SPY MAY $144.00 CALL CREDIT= $0.30
NET CREDIT = $0.13
 

INITIAL "NET- CREDIT TARGET= $0.13 or $13.00
POTENTIAL PROFIT (x 10 CONTRACTS @ $0.13 = $137.00
MARGIN REQUIRE. (x 10 CONTRACTS $1,870.00
RETURN ON INVESTMENT= 6.95%

EXIT STRATEGY = 1. WATCH LIST 2. MAXIMUM LOSS SPREAD PRICE DIFFERENCE
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE RISES TO: $138.00
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

INDEX OPTIONS, ETFS 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




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