by Bill Baker, J.D. -
SINL Editor and Publisher –

Don’t fight the tape. I don’t, you  shouldn’t. That being said, always hedge your bets so you don’t end up being a bagholder.

Although I have had 4 times as many long equity positions as short positions during January and February 2012, as I said in a February 5, 2012 SINL article:

“It doesn’t matter that this rally is built on fiction. The money being made has been and is real. The potential to make more money is also real. It has been a nice ride so far and, based on what has been happening, it looks like we might see this rally continue for awhile.”

I think that the all good news is great news, all bad news is good news cycle may be starting to turn. Today, Fitch ratings agency downgraded Greek debt from CCC to C with the admonition, “that default is highly likely in the near term”.

For the following reasons, the rally that we have seen in the equity markets during the past few months has been fabricated from whole cloth:

1). The Bureau of Labor Statistics has manipulated the numbers in their reports to produce outrageously optimistic employment reports.

2). The mainstream media has been pumping out stories that would lead investors to believe that the European financial crisis has been resolved when, in fact it is actually getting worse.

3). The negative impacts of skyrocketing oil and gas prices has been downplayed or ignored.

4). Te Fed’s infusion of massive amounts of borrowed money into the economy that has helped drive this rally has also driven up the U.S. National Debt to approximately $15.3 trillion.

5). The serious consequences of the very real possibility of war in Iran has been downplayed by the mainstream media.

For the above stated 5 reasons and many more, not unlike the U.S. economy, this equity market rally we are seeing is living on borrowed time. It would be prudent for those people who are profiting from this rally to start paring down their long equity positions by retreating to cash or more aggressively hedging their long positions.

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by Bill Baker, J.D. -
SINL Editor and Publisher –

The equity markets rallied on today’s jobs report. The S&P 500 closed up 19.36 (1.46%) to 1,344.90. The DJIA closed up 156.82 (1.23%) to 12,862.23. The NASDAQ closed up 45.98 (1.61%) to 2,905.66.

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by Bill Baker, J.D. -
SINL Editor and Publisher -

I warned you about the “vampire rally” in my January 6, 2012 article titled:

“Mainstream media talking heads try to sell inexperienced investors on Vampire Rally –> downplay and minimize the bad news and pump the good news“

From January 1, 2012 until today’s close, the S&P 500 has moved up from the 1259 area to the 1325 area. The DJIA has moved up from the 12,220 area to the 12,705 area. The NASDAQ has moved up from the 2,655 area to the 2,859 area.

Not spectacular moves. However, just enough for the mainstream media that has worked overtime to pump this “rally”, to attract more sucker money into the equity markets with the promise of more gains. The media spin machine pumps the good news and ignores or downplays the bad news.

The average investor believes the hype, doesn’t want to miss the rally and buys more stocks. Market pros, who have seen this before, buy the hype on the way up and get out before the truth sets in and the equity markets correct themselves. The amateur hour stock buyers are left holding the proverbial bag saying that the “stock market” is unfair and calling on the government to enact more regulations to protect them from their own ignorance and stupidity. This is the stock market gambling rinse and repeat cycle that makes some people rich while leaving other folks broken and poor.

The mainstream media’s latest market pump job centers around tomorrow’s (02/03/2012 before the market open) U.S. Government Nonfarm Payrolls report published by the Bureau of Labor Standards. The media talking heads are going to be out in force spinning this report in an attempt to pump more life into the vampire rally they have created. Good news will be pumped and bad news will be downplayed or ignored.

Although the report mentioned in the previous paragraph does not reflect an accurate or true picture of the real unemployment situation in the United States, it is good Kabuki that can be used by any interested party to pump or drag down the equity markets. So, there you have it, an inaccurate, misleading report to pump inaccurate and misleading perceptions promoted by a mainstream media that does not serve the public interest.

That being said, tomorrow’s payroll report will be a good indicator, telling us if the sucker money is still in play. If the suckers are still buying, the media spin will work.

If the jobs report looks good and the mainstream media is able to spin the numbers out of proportion to their significance and spark a big rally, we know the suckers are still buying. If the report looks bad and the media is able to downplay the numbers and stop a correction, we know that the suckers are still buying the spin. On the other hand, if the report is good and the mainstream media spin is only able to produce a modest upside market response or even a correction, we know that the sucker money is drying up. If the reports are not good or really bad and there is a serious market correction, we know that the suckers have gotten smart and this vampire rally is dying down or over.

Look at tomorrow as a stock market version of Groundhog Day; if the media spin holds, expect the rally to last a few more weeks. If the media spin fails, expect a correction.

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by Bill Baker, J.D. -
SINL Editor and Publisher -

As things stand today, a “rally” consists of equities moving towards the top of their 52week range, melting back toward the bottom of their 52 week range then floating around in a narrow range until the next “rally”.

Fed Chairman Ben Bernanke recently pledged to keep interest rates low through the later part of 2014 extending his previous pledge to keep interest rates low through mid 2013.

Bernanke’s statement provided a tepid boost to the equity markets followed by lower prices as investors realized that although lower interest rates are good for equity prices, interest rates are already low and the reason why Bernanke is extending the low rate regime through late 2014 is that the economy is still in bad shape. In other words, the good news for equity markets is that interest rates will remain low, the bad news for equity markets is that interest rates will remain low because the economy is still in bad shape.

In the foreseeable future, the equity markets will probably remain range bound, pushed and pulled by the bad news – worse news, good news – better news cycle we are stuck in.

4 Covered Call Ideas:

1). YINN - according to the direxionshares web site:

“The Direxion Daily China Bull 3x ETF seeks daily investment results, before fees and expenses, of 300% of the performance of the BNY Mellon China Select ADR Index (the “China Index”). There is no guarantee the fund will meet its stated investment objective.“

YINN closed at 23.389 / share on Friday, 01/29/2012.

YINN’s 52 week range is 13.431 – 59.52 per share.

You may want to consider writing the following call options against YINN shares:

YINN Apr 21 ’12 $24 Call (01/27/2012 close price) 2.45 x 3.20
YINN Apr 21 ’12 $25 Call (01/27/2012 close price) 2.00 x 2.75

YINN Jul 21 ’12 $24 Call (01/27/2012 close price) 3.60 x 5.00
YINN Jul 21 ’12 $25 Call (01/27/2012 close price) 3.20 x 4.60

2). ERX - according to the direxionshares web site:

“The Energy Bull 3X ETF seeks daily investment results, before fees and expenses, of 300% of the performance of the Russell 1000® Energy Index (“Energy Index”). There is no guarantee the fund will meet its stated investment objective.“

ERX closed at 50.68 / share on Friday, 01/29/2012.

ERX’s 52 week range is 24.82 – 93.27 per share.

You may want to consider writing the following call options against ERX shares:

ERX Mar 17 ’12 $51 Call (01/27/2012 close price) 4.10 x 4.40
ERX Mar 17 ’12 $52 Call (01/27/2012 close price) 3.70 x 3.90

ERX Apr 21 ’12 $51 Call (01/27/2012 close price) 5.50 x 5.90
ERX Apr 21 ’12 $52 Call (01/27/2012 close price) 5.10 x 5.30

ERX Jul 21 ’12 $51 Call (01/27/2012 close price) 7.90 x 9.40
ERX Jul 21 ’12 $52 Call (01/27/2012 close price) 7.60 x 8.50
ERX Jul 21 ’12 $53 Call (01/27/2012 close price) 7.20 x 8.10
ERX Jul 21 ’12 $54 Call (01/27/2012 close price) 6.80 x 7.60

3). NUGT - according to the direxionshares web site:

“The Daily Gold Miners Bull 3x shares seeks daily investment results, before fees and expenses, of 300% of the performance of the NYSE Arca GoldMiners Index (“Gold Miners Index”). There is no guarantee the fund will meet its stated investment objective.“

NUGT closed at 25.97 / share on Friday, 01/29/2012.

NUGT’s 52 week range is 17.09 – 43.647 per share.

You may want to consider writing the following call options against NUGT shares:

NUGT Mar 17 ’12 $26.98 Call (01/27/2012 close price) 2.40 x 2.80
NUGT Mar 17 ’12 $27.98 Call (01/27/2012 close price) 2.05 x 2.35

NUGT Jun 16 ’12 $26.98 Call (01/27/2012 close price) 4.10 x 5.00
NUGT Jun 16 ’12 $27.98 Call (01/27/2012 close price) 3.60 x 4.60
NUGT Jun 16 ’12 $28.98 Call (01/27/2012 close price) 3.00 x 4.30

4). TNA - according to the direxionshares web site:

“The Small Cap Bull 3X ETF seeks daily investment results, before fees and expenses, of 300% of the performance of the Russell 2000® Index (“Small Cap Index”). There is no guarantee the fund will meet its stated investment objective.“

TNA closed at 56.20 / share on Friday, 01/29/2012.

TNA’s 52 week range is 26.67 – 96.25 per share.

You may want to consider writing the following call options against TNA shares:

TNA Mar 17 ’12 $57 Call (01/27/2012 close price) 4.70 x 4.80
TNA Mar 17 ’12 $58 Call (01/27/2012 close price) 4.20 x 4.30

TNA Apr 21 ’12 $57 Call (01/27/2012 close price) 6.20 x 6.40
TNA Apr 21 ’12 $58 Call (01/27/2012 close price) 5.70 x 5.90
TNA Apr ’21 ’12 $59 Call (01/27/2012 close price) 5.20 x 5.40

TNA Jul 21 ’12 $57 Call (01/27/2012 close price) 7.80 x 10.10
TNA Jul 21 ’12 $58 Call (01/27/2012 close price) 8.20 x 9.00
TNA Jul ’21 ’12 $59 Call (01/27/2012 close price) 7.90 x 8.80

======================================

Note: 

The author of this article holds NUGT shares and has written covered calls [other than those calls appearing in this article] against those shares.

======================================

DISCLAIMER

Opinions expressed in this SINL article are those of the author of the article and independent of any subject company (i.e., a company whose stock underlies any stock option position presented in this article). All information is obtained from the public domain and is deemed reliable but is not guaranteed as to accuracy, reliability, or completeness.

The information contained in this article is provided to readers and purchasers for informational purposes only and is provided “as is” without warranty of any kind, either expressed or implied, including, but not limited to, the implied warranties of merchantability and fitness for a particular purpose. The entire risk as to the quality and performance of the information contained in this article is with the reader or purchaser of this article. Past performance may not be indicative of future performance and does not guarantee future results.

The subscriber or reader of this article, and not the author of the article or SINL, assumes the entire cost of the trading and/or other implementation of investment strategies subscriber or reader chooses to engage in. Neither the author of the article nor SINL is responsible for phone line transmission or other equipment failure.

Trading stocks and/or stock options is a high risk investment strategy. Therefore, due diligence must be exercised and additional research should be conducted before acting on any information contained in this article.

If you have not invested in stock options or are a novice stock option investor we STRONGLY SUGGEST that you thoroughly familiarize yourself with the information contained in the booklet titled, CHARACTERISTICS AND RISKS OF STANDARDIZED OPTIONS which can be found online on the Chicago Board Options Exchange WWW site at:

http://www.optionsclearing.com/about/publications/character-risks.jsp

This article is an information service and is neither a recommendation nor an offer to buy or sell securities. The publisher of this article is not a broker and is not acting in any way to influence the purchase of any security.

Information contained in this article is not intended to be used as the primary or sole basis of investment decisions nor should it be construed as advice designed to meet the particular investment needs of any investor or trader.

The author of this article will disclose if they have positions in stock or stock options that are presented in this article.

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by Bill Baker, J.D. -
SINL Editor and Publisher -

AA reported a fourth quarter loss from continuing operations of $193 million or 18 cents a share when they reported their earnings after market hours on January 9. This was Alcoa’s first quarterly loss since 2009. AA has a 52 week low-high of $8.45 – $18.47 and closed at $9.44/share (up .015) on 01/10/2012.

Bottom line, aluminum supply is exceeding demand and aluminum inventories are skyrocketing.

And, in the current all news (even bad news) is good news 2012 Vampire Market Rally we are having, the Dow (of which Alcoa moved up 69.78 points (.56%) to 12,462.47 and the S&P 500 moved up 11.38 (.89%) to 1,292.079. The mainstream media talking heads actually got some suckers to believe that Alcoa’s earnings were one reason to buy stocks. That’s like telling people to jump into an empty pool because the water

Alcoa’s (AA’s) earnings are an important part of the earning’s season equation that provides us with a measurement of economic activity. AA is the world’s leading integrated aluminum company and aluminum is used in the following industries that include, but are not limited to: automobile, aerospace, electronics, oil and gas, building and construction, and commercial transportation.

In a January 6, 2012 SINL story I included a link to a Barron’s article titled, “Alcoa Falls After Announcing Capacity Cuts” in which Alcoa Chairman and CEO Klaus Kleinfeld was quoted as saying:

“….Alcoa’s alumina production will be reduced across the global refining system to reflect the final curtailments in smelting as well as prevailing market conditions.”

If you go to the Alcoa-Rockdale website you will see the following statement posted:

“Lines 3 and 4 to be permanently closed at Rockdale smelter. Alcoa is announcing the permanent closure of lines 3 and 4 at the Rockdale smelter. The smelter was temporarily curtailed in 2008, and has six lines. These two lines are being permanently closed and decommissioned because current power contracts only allow for the operation of four lines. Lines 3 and 4 are the oldest lines at Rockdale. The remaining 4 lines will continue in a curtailed state……”

The information presented in the previous paragraph provides an example of how Alcoa’s curtailment in smelting operations can impact the economy. When smelting lines are decommissioned or operated in a curtailed state there is less demand for employees.

Alcoa’s alumina production facility in Point Comfort, Texas will also be less active with a reduction in alumina production.

While it is not 100% correct to say ‘as Alcoa goes, so goes the U.S. economy”; it is correct to state that there is a very strong correlation between Alcoa’s success and strength and that of the U.S. economy.

As far as Alcoa’s stock is concerned, the dividend is not high enough to justify the risk of holding the stock long. On the other hand, a long term covered call strategy might pay off if you believe that things can’t get worse than they already are.

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by Bill Baker, J.D. -
SINL Editor and Publisher -

The mainstream media was hard at work this morning spinning a December jobs report junk number in an attempt to manipulate investor sentiment to invite new sucker money into the equity markets. The real truth is that from an economic standpoint, things are very bad and getting much worse as the U.S. and world economies continue to contract as a result of being buried under a growing mountain of debt and interest.

The headline news being hyped is that nonfarm payrolls rose by 200,000 in December and that the unemployment rate dropped to 8.5% in December 2011. These U.S. Government Bureau of Labor Statistics (BLS) job reports are notoriously unreliable.

The main problem with the BLS unemployment number is that it measures unemployment claim data. A 12/08/2011 Smart Money article titled, Is the Real Unemployment Rate 22.6% points out that the BLS numbers do not include tens of millions of unemployed workers who are no longer receiving unemployment benefits.

The BLS nonfarm payroll numbers can also be misleading in that they don’t tell you if high paying or low paying jobs are being created. For all we know, the 200,000 nonfarm payroll increase number (which is not correct) could be reporting 200,000 new minimum wage jobs wrapping Christmas gifts or handling Christmas gift returns.

One Bureau of Labor Statistics report that hasn’t seen a lot of play in the mainstream media is the 12/22/2011 MASS LAYOFFS — NOVEMBER 2011 report. In this report, the BLS reported:

“Employers took 1,331 mass layoff actions in November involving 129,887 workers, seasonally adjusted, as measured by new filings for unemployment insurance benefits during the month, the U.S. Bureau of Labor Statistics reported today.”

That report didn’t make front page headlines.

Some other important stories buried in the news are:

January 6, 2012 – Alcoa Falls After Announcing Capacity Cuts

January 6, 2012 – Best Buy December sales fall

January 6, 2012 – ECB Steps in as Italian Yields Hit 7%

January 6, 2012 – Euro-Zone Fears Grow on New Data

Once again, the mainstream media is buying into and headlining the same types of lies, half-truths and market manipulation being promoted by the vile Wall Street hype merchants looking for fresh sucker money and a failing, desperate President who will quite literally do or say anything he can to get re-elected. On the other hand, the mainstream media is burying the bad news.

As long as inexperienced investors buy into Wall Street’s big lies; the cycle of pain, suffering and retribution will never end. Perhaps, it is time to require all stock market investors to take a series of stock investment courses and be certified as investors before they are allowed to spend one penny of their money on a share of stock.

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by Bill Baker, J.D. -
SINL Editor and Publisher -

The vampires on Wall Street need fresh blood to stay alive. The blood the Wall Street vampires seek is in the form of mainstream, inexperienced investor money. This gives a whole new meaning to the term blood money.

The Wall Street ghouls and their mainstream media mouthpieces have been doing everything in their power to attract new sucker money into the equity markets in an attempt to get a 2012 Vampire Rally started.

If you are an inexperienced investor and like losing money. Here’s some advice for the new year; invest in stocks.

The Wall Street hucksters are looking for new sucker money. They hope that the new sucker money will come from inexperienced investors who do not hedge their bets and put large amounts of money on the long side of the market during the sucker rallies so that this money can be taken away from them when the markets fall back to their true value or lower when the hype subsides.

The talking head market hypesters are in everybody’s face with their same scatterbrained advice, half truths and other nonsense trying to lure fresh money into the flat equity markets where investors and taxpayers have already lost trillions of dollars.

The latest bait being used to separate main street American investors from their money is the old scam of appealing to people’s greed by telling people that their money isn’t earning much interest because interest rates are low and that they should be plowing their money into the dead end equity markets.

As Will Rogers once observed, “I’m more concerned about the return of my money than with the return on my money”. You may not be earning much interest from your bank certificate of deposit of savings account. However, getting 1% or 2% interest is still better than losing most or all of your money in the stock market.

As we open 2012, there is a bunch of happy talk centering on the U.S. jobs reports. Incremental percentage moves in the numbers produced by these specious jobs reports, put out by the U.S. Government, are meaningless because the jobs reports are grossly inaccurate, do not include tens of millions of Americans who no longer collect unemployment and are heavily manipulated to promote the political agenda of the political appointees who approve and control the reports.

Market rallies are sparked by the way these numbers are spun by the talking heads put in front of the public by the mainstream media outlets. Investors chase the rallies sparked by these bogus reports and are soon disappointed when the rally dies and the markets retreat as real news dampens the lies and half-truths.

If you watch the equity markets, you know the drill. One day the equity markets go up, the next day they go down by almost the same amount they went up the previous day. Sometimes market action changes and equities go up for a few days and then down, by almost the same amount, for a few days. One most days, the equity markets trade flat.

It’s the same old story; one day Europe is going to Hell in a handbasket and the next day there is hope, followed the next day by bad news, followed the next day by more rays of hope followed the next day by more bad news, so on and so forth.

Day after day, it’s a news spin game taking the same basic set of facts and putting either a positive or negative spin on said facts.

The net result is that the markets move up and down usually ending up in about the same place they started; flat and out of steam after expending a lot of energy. You could say that this is the functional equivalent of financial masturbation.

Year after year, month after month, day after day; new investors continue to fall for the same old Wall Street gimmicks and tricks that have visited disaster on the U.S. economy and inexperienced stock market investors. Markets are hyped, markets crash, people are cheated, investigations are launched, laws are passed. After a time, the Wall Street hucksters return with new promises, new scams, and more hype that inevitably leads to billions, even trillions of dollars lost with nobody knowing how all of that money evaporated or where it went to.

As long as inexperienced investors buy into Wall Street’s big lies; the cycle of pain, suffering and retribution will never end. Perhaps, it is time to require all stock market investors to take a series of stock investment courses and be certified as investors before they are allowed to spend one penny of their money on a share of stock.

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by Bill Baker, J.D. -
SINL Editor and Publisher -

DMND and GRPN are two extreme examples of the being in the wrong place at the wrong time and the right place at the right time.

DMND shares fell from their 52 week high of 96.13 on 09/21/2011 to a low of 26.37 on 12/07/2011. The fall in Diamond’s share price resulted from accounting questions about the payments made by Diamond to walnut growers and the specious allegations that the payments were made to intentionally confuse farmers and manipulate earnings. The accounting issue also led to speculation that Diamond’s deal to buy the Pringles brand from Procter & Gamble Co. (PG) would be adversely impacted.

According to a 12/09/2011 report in Barron’s:

“Keybanc analyst Akshay Jagdale wrote in a note today that he’s confidentDiamond Foods’ (DMND) internal accounting investigation won’t turn up wrongdoing and will be concluded rather quickly.“

This note caused DMND shares to jump 14.01 (52.77%) to close at 40.56 / share.

DMDN shares are well positioned for a further significant upside move or, in the case of bad news, a sudden downside collapse. To play the price movement in GRPN share, I set up a long ratioed (.73 call/put) June ’12 60/17.50 options strangle:

DMND Jun 16 ’12 60 call
DMND Jun 16 ’12 17.50 put

We now come to GRPN. When the GRPN IPO hit the market in November 2011, GRPN shares hit a high of $31.14 per share and proceeded to fall until they hit a low of $14.85 on 11/28/2011. Obviously, as has been true with most recent IPOs, being one of the first share buyers was not a good strategy. However, like some other IPOs, GRPN shares have been rebounding nicely since the last days of November and closed at $23.48, up $1.21 (5.43%) on 12/09/2011.

I have been using option spreads to trade around the GRPN stock price recovery because there is always the chance that this highly volatile stock could plunge to even lower lows or break out above its $31.14 November high.

Groupon’s float is about 35 million shares. GRPN has also been aggressively shorted. These facts contribute to the recent powerful recovery in the price of GPRN.

To play this price movement in GRPN shares, the most recent position I set up is a long ratioed (.58 call/put) April ’12 22/9 options strangle:

GRPN Apr 21 ’12 22 call
GRPN Apr 21 ’12 8 put

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by Bill Baker, J.D. -
SINL Editor and Publisher -

Xi ( ξ ) is the 14th letter of the Greek alphabet. ξ will be used in SINL to represent the total of the initial premium paid for the call and put options used in an option spread position, where we are long the options. ξ can be used for one-to-one or ratioed long option spreads. For example:

in the case of a one-to-one spread,

1). we purchase 10 call options and pay a premium of 2 for the call options

2). we purchase 10 put options and pay a premium of 4 for the put options

The Xi for that spread would be 6

in the case of a ratioed spread,

1). we purchase 15 call options and pay a premium of 2 for the call options

2). we purchase 10 put options and pay a premium of 4 for the put options

The Xi for that spread would be [(15/10x2) + (10/15x4)] or 5.66666

in the case of a ratioed spread,

1). we purchase 10 call options and pay a premium of 2 for the call options

2). we purchase 15 put options and pay a premium of 4 for the put options

The Xi for that spread would be [ (10/15x2)+ (15/10x4)] or 7.33333

The Xi for a long option spread position can be useful as a quick reference point to determine whether or not a spread position is making money.

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by Bill Baker, J.D. -
SINL Editor and Publisher -

Although it may still be awhile until the eurozone debt crisis is resolved, co-ordinated monetary policy moves by the U.S. Federal Reserve System and its European counterparts are causing the equity markets to rally.

A November 30, 2011 Financial Times story by Michael Mackenzie, Ajay Makan and Robin Wigglesworth titled, Action by central banks lifts rally hopes observed:

“…..the central bank action is designed to head off a liquidity crunch for the eurozone’s commercial banks rather than tackle the causes of the crisis.”

Protecting against a liquidity crunch is powerful medicine to help insulate banks against the Euro bad debt contagion.

Canadian Bank stock prices have been depressed in large part by the largely unfounded fear that these banks have significant exposure to the eurozone debt crisis. Yes, they have exposure to this situation. No, the exposure is not significant.

When choosing options on Canadian Banks, you want to buy time and cover your downside risk if equity markets deteriorate. Option plays in Canadian banks that might make sense given the current investment climate include:

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TD 11/30/2011 close price 70.91

11/30/2011 close prices

call leg ideas:

Buy 10 || TD Apr 21 ’12 $75 || Call b. 2.70 | a. 2.95 |
Buy 10 || TD Apr 21 ’12 $77.50 || Call b. 1.80 | a. 2.00 |
Buy 10 || TD Jul 21 ’12 $80 || Call b. 2.15 | a. 2.35 |

put leg ideas:

Buy 15 || TD Apr 21 ’12 $47.5 || Put b. 0.70 | a. 0.85 |
Buy 15 || TD Apr 21 ’12 $50 || Put b. 0.90 | a. 1.05 |

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RY 11/30/2011 close price 45.99

11/30/2011 close prices

call leg ideas:

Buy 10 || RY Apr 21 ’12 $50 || Call b. 1.35 | a. 1.50 |
Buy 10 || RY Jul 21 ’12 $50 || Call b. 2.05 | a. 2.25 |

put leg ideas:

Buy 15 || RY Apr 21 ’12 $35 || Put b. 0.75 | a. 0.90 |
Buy 15 || RY Apr 21 ’12 $30 || Put b. 0.35 | a. 0.45 |

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BMO 11/30/2011 close price 58.65

11/30/2011 close prices

call leg ideas:

Buy 10 || BMO Jun 17 ’12 $60 || Call b. 3.10 | a. 3.40 |
Buy 10 || BMO Jun 17 ’12 $65 || Call b. 1.25 | a. 1.45 |

put leg ideas:

Buy 15 || BMO Jun 17 ’12 $40 || Put b. 0.70 | a. 1.10 |
Buy 15 || BMO Jun 17 ’12 $35 || Put b. 0.40 | a. 0.60 |

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BNS 11/30/2011 close price 50.37

11/30/2011 close prices

call leg ideas:

Buy 10 || BNS Jun 17 ’12 $55 || Call b. 1.85 | a. 2.05 |
Buy 10 || BNS Jun 17 ’12 $60 || Call b. 0.60 | a. 0.90 |

put leg ideas:

Buy 15 || BNS Jun 17 ’12 $35 || Put b. 0.90 | a. 1.10 |

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DISCLAIMER

Opinions expressed in this SINL article are those of the author of the article and independent of any subject company (i.e., a company whose stock underlies any stock option position presented in this article). All information is obtained from the public domain and is deemed reliable but is not guaranteed as to accuracy, reliability, or completeness.

The information contained in this article is provided to readers and purchasers for informational purposes only and is provided “as is” without warranty of any kind, either expressed or implied, including, but not limited to, the implied warranties of merchantability and fitness for a particular purpose. The entire risk as to the quality and performance of the information contained in this article is with the reader or purchaser of this article. Past performance may not be indicative of future performance and does not guarantee future results.

The subscriber or reader of this article, and not the author of the article or SINL, assumes the entire cost of the trading and/or other implementation of investment strategies subscriber or reader chooses to engage in. Neither the author of the article nor SINL is responsible for phone line transmission or other equipment failure.

Trading stocks and or stock options is a high risk investment strategy. Therefore, due diligence must be exercised and additional research should be conducted before acting on any information contained in this article.

If you have not invested in stock options or are a novice stock option investor we STRONGLY SUGGEST that you thoroughly familiarize yourself with the information contained in the booklet titled, CHARACTERISTICS AND RISKS OF STANDARDIZED OPTIONS which can be found online on the Chicago Board Options Exchange WWW site at:

http://www.optionsclearing.com/about/publications/character-risks.jsp

This article is an information service and is neither a recommendation nor an offer to buy or sell securities. The publisher of this article is not a broker and is not acting in any way to influence the purchase of any security.

Information contained in this article is not intended to be used as the primary or sole basis of investment decisions nor should it be construed as advice designed to meet the particular investment needs of any investor or trader.

The author of this article will disclose if they have positions in stock or stock options that are presented in this article.

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