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[Weekend Summary]

Dear Member:

The market fizzled a bit today after a four day movement up. There is still some positive for the bulls in that today's volume was relatively light. Frequently light volume on a down move is a down day is bullish since the direction of the move is not strongly supported by the volume. The NASDAQ did stop at a little resistance and the Dow Industrials couldn't hold above a new all time high. I suspect the bulls are still in control, but they certainly aren't raging.

I had a fairly busy week with option trades. I closed the short legs (the legs I had sold) on both SPY and BBH as the markets moved up. When I am selling a call against another long call (one I own) I generally don't want to be called out or assigned since I would lose the time premium in the long position. I will often take a loss on buying back the short position as I did on these two plays to avoid assignment. However, since I am usually buying "in the money" calls and selling shorter term "out of the money" calls against them, the long call I own usually has a greater delta so I make more on the long call I keep than I lose on the short call I have to buy back.

I closed the Micron (MU) spread for a 6.9% gain before commission as Micron appeared to be losing steam.

The Sepracor (SEPR) spread continues to do well and requires no adjustment so far. Time is on my side and I will be able to keep all of my original credit if I don't have to adjust and the stock stays below $52.50 until October expiration.

I bought puts on Carmax (KMX) a week ago Thursday, and the stock is down $1.59 over the past seven days, but pretty much flat-lined this week (actually down 13 cents for the week). I also have puts on RIG and though it moved up this week, it is staying below resistance. I'd really like to see it drop to the support level around $66.10.

XLK, the tech ETF moved up for the week so it wasn't yet time to sell any shorter term calls against my long term position yet.

Sirius Satellite Radio (SIRI) is at support which means my short $5 call leg is making money as time passes. Nothing to do with that one for now.

Have a good weekend and thanks for subscribing.

Bill

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