Option Investor
Newsletter

ADDITIONAL MCM RECOMMENDATIONS FOR DECEMBER 2008 - 12-06-08

HAVING TROUBLE PRINTING?
Printer friendly version

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

We are recommending credit spreads in the following issues:

VMI - Valmont Industries, Inc. produces fabricated metal products; metal and concrete pole, and tower structures; and mechanized irrigation systems in the United States and internationally. The company operates through four segments: Engineered Support Structures, Utility Support Structures, Coatings, and Irrigation. The Engineered Support Structures segment manufactures and markets engineered metal structures and components for the lighting and traffic, wireless communication, and international utility industries, as well as for other specialty applications. It offers steel and aluminum poles and structures to which lighting and traffic control fixtures are attached for a range of outdoor lighting applications, such as streets, highways, parking lots, sports stadiums, and commercial and residential developments.

WY - Weyerhaeuser Company engages in growing and harvesting timber, as well as in the manufacture, distribution, and sale of forest products primarily in the United States and Canada. The company manages approximately 6.4 million acres of self-owned and 0.7 million acres of leased commercial forestland in the United States; and has renewable long-term licenses on 15.1 million acres of forestland located in 5 provinces in Canada. It manufactures and distributes softwood lumber, engineered lumber, hardwood lumber, structural panels, veneer, plywood, and other specialty products for wood products dealers, do-it-yourself retailers, builders, and industrial users, as well as for the manufacturers of furniture and cabinetry

EMR - Emerson Electric Co., a diversified global technology company, engages in designing and supplying product technology and delivering engineering services to various industrial and commercial, and consumer markets worldwide. The company operates through five segments: Process Management, Industrial Automation, Network Power, Climate Technologies, and Appliance and Tools. The Process Management segment offers product technology, as well as engineering and project management services for precision control, monitoring, and asset optimization of plants that produce power, or that process or treat items, such as oil, natural gas, and petrochemicals; food and beverages; pulp and paper; pharmaceuticals; and municipal water supplies.

DOV - Dover Corporation, together with its subsidiaries, manufactures industrial products and components, as well as provides related services and consumables in the United States and internationally. It operates in four segments: Industrial Products, Engineered Systems, Fluid Management, and Electronic Technologies. The Industrial Products segment develops and manufactures material handling equipment, such as industrial and recreational winches; utility, construction, and demolition machinery attachments; hydraulic parts; industrial automation tools; four-wheel-drive and all-wheel drive powertrain systems; and other accessories for off-road vehicles. It also offers mobile equipment related products, including refuse truck bodies, tank trailers, compactors, balers, vehicle service lifts, car wash systems, internal engine components, fluid control assemblies, and various aerospace components.

We are recommending the following specific credit spreads

Call credit spreads - bearish call spreads

VMI $48.25


{{{ BUY VMI-LL VMI DEC $60.00 CALL DEBIT = $0.85
SELL VMI-LK VMI DEC $55.00 CALL CREDIT= $1.15
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: $51.00
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
VMI-LK EXIT >> = $4.60 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

DOV $27.21


{{{ BUY DOV-LG DOV DEC $35.00 CALL DEBIT = $0.10
SELL DOV-LF DOV DEC $30.00 CALL CREDIT= $0.40
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: $28.50
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
DOV-LF EXIT >> = $2.60 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

EMR $31.29


{{{ BUY EMR-LH EMR DEC $40.00 CALL DEBIT = $0.10
SELL EMR-LG EMR DEC $35.00 CALL CREDIT= $0.40
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: $33.50
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
EMR-LG EXIT >> = $2.60 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

WY $35.39


{{{ BUY WY-LI WY DEC $45.00 CALL DEBIT = $0.15
SELL WY-LH WY DEC $40.00 CALL CREDIT= $0.60
NET CREDIT = $0.45 }}}

INITIAL "NET- CREDIT TARGET= $0.45 or $45.00
POTENTIAL PROFIT (x 10 CONTRACTS @ $0.45 = $450.00
MARGIN REQUIRE. (x 10 CONTRACTS $4,550.00
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: $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
WY-LH EXIT >> = $3.20 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

Monthly Cash Machine Newsletter Archives