Option Investor
Newsletter

INITIAL MCM SEPTEMBER 2008 RECOMMENDATIONS 8-10-08

HAVING TROUBLE PRINTING?
Printer friendly version

Let's begin our MONTHLY CASH MACHINE EQUITY PORTFOLIO SEPTEMBER RECOMMENDED LIST with the following issues made up of a couple of our old friends

We are recommending credit spreads in the following issues:

AA - Alcoa, Inc. engages in the production and management of primary aluminum, fabricated aluminum, and alumina worldwide. The company involves in the technology, mining, refining, smelting, fabricating, and recycling of aluminum. Its products include precision castings, industrial fasteners, consumer products, food service and flexible packaging products, plastic closures, and electrical distribution systems for cars and trucks

SNDK - SanDisk Corporation designs, develops, manufactures, and markets NAND-based flash storage card products that are used in various consumer electronics products. Flash storage technology allows data to be stored using limited power in a compact format that retains the data after the power has been turned off. The company offers removable data storage solutions, universal serial bus flash drives, embedded flash memory drive solutions for data and code storage, flash-based digital media players, and MP3 players

WFMI - Whole Foods Market, Inc. and its subsidiaries engage in the ownership and operation of natural and organic foods supermarkets. It offers produce, seafood, grocery, meat and poultry, bakery, prepared foods and catering, specialty (beer, wine, and cheese), whole body (nutritional supplements, vitamins, body care, and educational products), floral, pet products, and household products. As of May 13, 2008, the company operated 269 stores in the United States, Canada, and the United Kingdom. Whole Foods Market was founded in 1978 and is based in Austin, Texas.


We are recommending the following specific credit spreads


call credit spreads - bearish call spreads

AA $31.76

BUY AA-IV AA SEP $42.50 CALL DEBIT = $0.14
SELL AA-IU AA SEP $37.50 CALL CREDIT= $0.46
NET CREDIT = $0.32

INITIAL "NET- CREDIT TARGET= $0.32 or $32.00
POTENTIAL PROFIT (x 10 CONTRACTS @ $0.32 = $320.00
MARGIN REQUIRE. (x 10 CONTRACTS $4,680.00
RETURN ON INVESTMENT= 6.84%

EXIT STRATEGY = 1. WATCH LIST 2. MAXIMUM LOSS SPREAD PRICE DIFFERENCE
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE RISES TO: $34.00
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
AA-IU EXIT >> = $2.25 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

`
SNDK $16.67

BUY SWQ-IX SNDK SEP $22.50 CALL DEBIT = $0.08
SELL SWQ-ID SNDK SEP $20.00 CALL CREDIT= $0.24
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 $2,340.00
RETURN ON INVESTMENT= 6.84%

EXIT STRATEGY = 1. WATCH LIST 2. MAXIMUM LOSS SPREAD PRICE DIFFERENCE
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE RISES TO: $18.00
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

` WFMI $18.65

BUY FMQ-IN WFMI SEP $24.00 CALL DEBIT = $0.07
SELL FMQ-IJ WFMI SEP $21.00 CALL CREDIT= $0.36
NET CREDIT = $0.29

INITIAL "NET- CREDIT TARGET= $0.29 or $29.00
POTENTIAL PROFIT (x 10 CONTRACTS @ $0.29 = $290.00
MARGIN REQUIRE. (x 10 CONTRACTS $2,710.00
RETURN ON INVESTMENT= 10.70%

EXIT STRATEGY = 1. WATCH LIST 2. MAXIMUM LOSS SPREAD PRICE DIFFERENCE
1. STOCK WILL BE PLACED ON WATCH LIST IF STOCK PRICE RISES TO: $19.50
2. ON SPREADS WITH 3.00 or less difference in STRIKE PRICES
THOSE POSITIONS 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