Option Investor
Newsletter

ADDITIONAL MCM JUNE 2008 recommendations 5-18-08

HAVING TROUBLE PRINTING?
Printer friendly version

We are adding the following credit spreads to our MCM JUNE 2008 recommended list

We are recommending credit spreads in the following issues for the EQUITY PORTFOLIO. We will issue additional Index, ETF and Holder recommendations later this week

ANDE - The Andersons, Inc. is a diversified company operating in three segments. The Agriculture Group engages in grain merchandising, operates grain elevator facilities, distributes wholesale agricultural fertilizer and operates retail farm centers. The Processing and Manufacturing Group includes the processing of lawn and corn-cob based products; the purchase, sale, repair and leasing of railcars; and the operation of automotive service centers.




COMMENTARY:

ANDE - Overall ills facing the economy will not go away over night. all three phases of this company will face those challenges at least short term

===============================================================

ZHN - China Southern Airlines
is one of the leading air transportation enterprises in China, especially in passenger volume and the total amount of tax and profit for the past three years. 27% market share in 1996 made it the biggest airlines in China. With the head office in Guangzhou, the southern entrance into China, it has branch fleet bases in the provinces of Henan, Hubei, Hunan, Hainan and the Special Economic Zone of Shenzhen. It is also the 60% shareholder of four regional airlines - Xiamen Airlines, Shantou Airlines, Guangxi Airlines and Zhuhai Airlines.





COMMENTARY:

ZHN - High valuation and escalating oil prices can only continue to hurt the profit margins of this airline. Unless we get some Oil Price relief this issue will continue to struggle as will most airlines

===============================================================

SHPGY - Shire Pharmaceuticals Group plc
is a specialty pharmaceutical company focused primarily on two therapeutic areas: central nervous system disorders and metabolic bone diseases.







COMMENTARY:

SHPGY - An old friend from last month, that will continue to face the same rising costs and therapeutic scutiny by the FDA. Central nervous system solutions, like other health care issues, will continue to face the difficult task of coping with raising costs

============================================================

WFMI - Whole Foods Market is the largest purveyor of natural foods in the world. They own and operate the country's largest chain of natural food supermarkets. They are like an old-fashioned neighborhood grocery store, an organic farmer's market, a European bakery, a New York deli, and a modern supermarket all rolled into one!






COMMENTARY:

WFMI - Even with their health conscience following, Whole foods still will face the same problems all food retailers will face. Higher food prices, slower consumer spending, especially in the form of consumption. People that are eating healthy are going to continue to eat healthy, but they will look for ways to cut back on overall cash outlays and find more creative ways to maintain their diets, but at a lower expensive cost.

==============================================================


We are recommending the following specific credit spreads


Call credit spreads ( bearish call spreads )


ANDE $40.53

BUY AQA-FJ ANDE JUN $50.00 CALL DEBIT = $0.15
SELL AQA-FI ANDE JUN $45.00 CALL CREDIT= $0.45
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 $4,700.00
RETURN ON INVESTMENT= 6.38%

EXIT STRATEGY = 1. WATCH LIST 2. MAXIMUM LOSS SPREAD PRICE DIFFERENCE
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE RISES TO: $42.50
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
AQA-FI EXIT >> = $2.80 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

ZNH $31.67

BUY ZNH-FH ZNH JUN $40.00 CALL DEBIT = $0.65
SELL ZNH-FG ZNH JUN $35.00 CALL CREDIT= $1.15
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: $33.00
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
ZNH-FG 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

SHPGY $50.08

BUY UGH-FZ SHPGY JUN $62.50 CALL DEBIT = $0.15
SELL UGH-FY SHPGY JUN $57.50 CALL CREDIT= $0.45
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 $4,700.00
RETURN ON INVESTMENT= 6.38%

EXIT STRATEGY = 1. WATCH LIST 2. MAXIMUM LOSS SPREAD PRICE DIFFERENCE
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE RISES TO: $53.00
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
UGH-FY EXIT >> = $2.50 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

WFMI $29.06

BUY FMQ-FT WFMI JUN $34.00 CALL DEBIT = $0.16
SELL FMQ-FB WFMI JUN $32.00 CALL CREDIT= $0.34
NET CREDIT = $0.18

INITIAL "NET- CREDIT TARGET= $0.18 or $18.00
POTENTIAL PROFIT (x 10 CONTRACTS @ $0.18 = $180.00
MARGIN REQUIRE. (x 10 CONTRACTS $1,820.00
RETURN ON INVESTMENT= 9.89%

EXIT STRATEGY = 1. WATCH LIST 2. MAXIMUM LOSS SPREAD PRICE DIFFERENCE
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE RISES TO: $30.50
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



Orders to purchase or sell securities through your account with optionsXpress, Inc., an independent registered broker-dealer ("optionsXpress"), shall be accepted and executed solely by optionsXpress, subject to the terms and conditions of your individual account agreement with optionsXpress. optionsXpress makes no investment recommendations and does not provide financial, tax or legal advice. All inquiries regarding your optionsXpress account, including any disputes or trading errors, should be directed to optionsXpress. Option Investor, Inc is not a registered broker-dealer and is not in the business of transacting trades. Furthermore, Option Investor, Inc is not a registered investment adviser, does not provide financial, tax or legal advice, and is not recommending that you buy or sell any particular security. optionsXpress has made its services available to you via Option Investor, Inc as a courtesy. optionsXpress and Option Investor, Inc are separate and unrelated entities. optionsXpress is not affiliated with and does not endorse or warrant the products or services of Option Investor, Inc.

Monthly Cash Machine Newsletter Archives