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[Weekend Summary]

Dear Member,

I successfully closed two positions this week. I sold the Mar 39 Puts on QQQQ and added 40 cents a share profit to an already profitable trade that started as a Mar 38 straddle. I adjusted once, later sold the Mar 38 calls to make the whole trade profitable and closed it out with the added 40 cents. Though straddles are a little pricey to enter, they have limited risk and unlimited reward. Generally, we just want some fairly quick movement in the stock (in either direction) and/or an increase in implied volatility to make some money. This one turned out well realizing over 7% per month return on risk for the time I was in it.

I was also stopped out of my position in Reynolds America (RAI) and sold my Jan '07 90 LEAPS calls for $1.60 a share profit before commissions. I realized an 18% return on risk in just 10 days with this one.

As the week wore on, I sent out an informational alert. That is unusual for me. In this case, the SP-500 was riding along resistance and my SPY Dec '06 LEAPS calls had 20 cents of profit. Instead of taking that profit, I decided to see what the index was going to do. Today, it seems to have given the answer as it dropped below the short term support. Unless there is a pop fairly early Monday, I'll probably pull the plug on this one. As of today's close, my options were down a dime from my purchase price.

CHINA was down 8 cents for the week, but has broken a support level. It is definitely on probation. BBH has also dropped right to the support level so I'll have to watch that as well.

More good news for my EBAY LEAPS as EBAY jumped $2.51 for the week and is nearing resistance. A break through that resistance would be quite bullish in my estimation. If it turns back down at resistance, it will provide a chance to create a bull call spread (or calendar spread) thereby bringing in some income and reducing risk in the position. Absent a big gap down, everything is quite positive with this position.

Micron (MU) where I already have a LEAPS bull call spread in position moved up 26 cents for the week. It remains in it's uptrend.

Have you completed your holiday preparations? I'm about done. Next week should have diminishing volume so the market may be a little more volatile.

Sincerely,
Bill Kraft for
CutLoss, Inc.


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