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[Weekend Summary]

Dear Member:

The heights were reached Monday for each of the major indices. Since then coming into this holiday weekend, it has been mostly downhill with the Dow, Nasdaq Composite, and S&P 500 each breaking down through the uptrend line that began in March. The now almost nonsensical continuation of the speculative price of crude oil seems to be one of the major impediments to forward movement of the stock market. Though some have suggested that crude oil is now in a "tulip craze" type bubble, but so far the climb continues. In my view this was not a week to jump into bullish plays, particularly with the three day weekend ahead.

This week though bearish turned out fairly well for Option Trader. I sold some calls on SPY against my long call position and already what I sold had dropped from the price I was paid ($0.64 a share) by more than half so I am potentially in a position to buy to close those calls and reap a nice short term profit on that leg.

Citigroup (C) is another case where I have sold calls as a covering position for calls I already own. The Jan 2010 $30 calls I sold on C are currently showing a nice unrealized gain and I am just waiting for what I believe is a good time to buy them back to close that short leg.

Cognizant (CTSH) on which I own puts has been unable to break up through a down trend line that began around the 1st of May. If that pattern continues, I am looking forward to a potential profit on those puts as well.

I hold a November 12.50 straddle on Stec, Inc. (STEC) and the price has been dealing with some resistance. I am looking for an increase in implied volatility to put some extra premium in both the calls and the puts as overall market volatility increases. Aside from that, a sharp directional move (either up or down) would likely be beneficial overall.

I am waiting for a spot to sell calls against my long call position in Sirius Satellite (SIRI) as I have done with C and SPY so that I can generate some income and reduce risk in my long legs.

I hope you have a wonderful Memorial Day and weekend.

Bill

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