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Option Writer Portfolio - May

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WFR - MEMC Electronic Materials, Inc. is engaged in the design, manufacture and sale of silicon wafers. The Company provides wafers in sizes ranging from 100 millimeters (four inch) to 300 millimeters (12 inch). It offers wafers in three general categories: prime, epitaxial and test/monitor. Depending on market conditions, the Company also sells intermediate products, such as polysilicon, silane gas, partial ingots and scrap wafers to semiconductor device and equipment makers, solar customers, flat panel and other industries. The Company offers wafers with a variety of features to meet the customers’ requirements. The wafers are used as the starting material for the manufacture of various types of semiconductor devices, including microprocessor, memory, logic and power devices, as well as the starting material for solar cells. The last point is that the company makes chips that go into solar cells. The company serves as a clean energy play. However, there are better pure plays.

We are selling 2 contracts of the May 65s. Earnings are due next week on April 24th. Premium is a little higher prior to earnings. Something to note is that the premium usually peaks just ahead of a major corporate event. So the position may be showing a loss while the stock is moving up. We will monitor this occurance along with the other stocks we have that are about to report earnings. The max marginers can sell a total of 4 contracts. Support is at the 200 day moving average at around 70.

Risk Management for WFR
Strike Stop = $ 65.00
Cost Basis Stop = $ 63.30
Technical Stop = $ 69.68
Premium Stop = $ 68.45

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