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[Weekend Summary]

Dear Member:

It looks as though Santa may have taken a wrong turn as far as the bulls are concerned the past week. All the major averages were down and the Nasdaq, at least, has formed a head and shoulders. Both the S&P 500 and the Dow are also showing head and shoulder-like formations as well. That combined with increasing volatility may well be forecasting another bearish leg.

I am glad expiration is approaching next week on my Russell 2000 (RUT)iron condor. It remains profitable and, thankfully, the index still has a pretty long way to fall before hitting my short put at 710. I will definitely be looking at the put spread of the condor as we get into the early part of next week so that I can attempt to capture as much profit as possible and to attempt to avoid a loss.

I sold some naked puts on Genitope (GTOP) this week in a trade that looks almost too good to be true (and we all know what that can mean). Selling the Jan 2.50 puts brought me a credit of $1.35 a share so even if the worst happens and the stock goes to zero overnight, I couldn't lose more than $1.15 a share. Don't get me wrong, I don't expect the stock to go to zero, I'm just considering a worst case scenario. All I sold was time value and the passage of time definitely favors the play. If the stock stays above $2.50 a share (currently $3.57)and I make no adjustment, the return on risk could be 117% which isn't bad for 5 weeks.

Citigroup (C) shares dropped again today putting more profit into the short leg of my spread. I'll be looking at the possibility of rolling that leg down next week to bring in more income and reduce risk in the long leg as well.

The spreads on Sirius Satellite Radio (SIRI) and SPY have plenty of time to go and nothing to do for now.

The put spread on QQQQ is also OK for the moment, but may require adjustment if the market decline continues next week.

Thanks for subscribing. I suspect we may find some strong bearish plays next week if Santa doesn't soon find his way.

Bill Kraft

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