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[Weekend Summary]

Dear Member,

My existing trades did quite well this week. I was satisfied to sit tight with them for the time being. The market now looks fairly bullish to me so I'm looking for some directional plays with fairly close initial stops next week.

CHINA moved up 9% on Friday putting my Jan '07 2.50 calls $1.14 in the money. CHINA looks strong to me for such a cheap stock. If it can break resistance at $3.80, it looks like it could give me a really good run.

My strangle on QQQQ is doing quite well. I originally started this play as a Mar 39 straddle, but adjusted to a strangle (owning the Mar 38 calls and the Mar 39 puts) when the stock dropped before this upward move. The Q's have since had a good upside move increasing the value of the calls pretty dramatically. In the same time, the value of the puts diminished, BUT NOT AT AS FAST A RATE AS THE VALUE OF THE CALLS INCREASED. On a directional move, that is how straddles and strangles usually work. The option in the direction of the move increases in value faster than the option in the opposite direction loses money so there is at least a theoretical gain. In other words, the delta of the option in the direction of the move (i.e. calls if the stock is going up or puts if the stock is dropping)increases at a rate greater than the losing option. My QQQQ strangle is now profitable overall.

Micron (MU) where I hold a bull call position (long the Jan "07 10 calls and short the Jan '07 15 calls) is looking good as MU continues to show strength.

EBAY gained another 78 cents this week and remains in the uptrend. It did close at an area of light resistance Friday so I wouldn't be surprised to see a little pull back to the trend line.

For the first time in a long time, the markets seem to be confirming a bullish move. I always look for a dip the first couple weeks in December as some tax selling invariably takes place, but this year that may present some entry opportunities.

Have a wonderful weekend.

Bill

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