Date updated:05-26-2007
From Barron's 5-28-07
When Records Prove Elusive.
"Speaking of options, here's a handy strategy with stocks straining at record peaks. "Collars" allow conservative investors to participate in rallies up to a certain target but limit downside risk should the market slide. You accomplish this by selling out-of-the-money calls and using the proceeds to buy protective puts, so collars require little or no out-of-pocket expense."
The following stocks offer great opportunites for collars.

-
AAPL
Apple Inc. - $196.23
- -0.38%
- $199.05
"Take the upwardly mobile Apple (AAPL), for example. With shares near 112.50, selling a 130-strike call that expires January 2009 can generate enough to buy a 110-strike put of similar duration. That allows investors to participate in a rally up to 130 but protects against declines below 110 -- or a potential annualized gain of 17.7% with potential downside of just 0.4% (thanks to a slight credit from the collar)."

-
AMGN
Amgen Inc. - $57.50
- +0.74%
- $57.08
"An Amgen (AMGN) collar, for instance, allows potential gains of 29% versus downside risk of 8%"

-
NEM
Newmont Min Cp (h - $55.83
- +0.31%
- $56.02
"Newmont Mining (NEM) has potential upside of 30% with 9% downside."

-
SPY
S&p Dep Receipts - $111.25
- -0.04%
- $111.28
"With the S&P Depositary Receipts (SPY) near 152, selling 175-strike calls that expire December 2008 will buy 135-strike puts, leaving room for an annualized gain of 10% with 5% downside risk. Here, the upward pricing slant still works in your favor but is less lopsided, since broad-market puts already are in heavier demand."

-
COP
Conocophillips - $51.84
- -0.80%
- $52.39
No Analysis added

-
LTD
Limited Brands In - $17.77
- +1.25%
- $17.50
No Analysis added

-
BEN
Franklin Res Inc - $109.05
- +0.60%
- $108.11
No Analysis added
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A. A bubble ? . . . a top? . . . crowded
trade?
Possibly . . . IF and only IF ALL the
underlying fiscal, economic, regulatory
and monetary issues have been
satisfactorily addressed.
The questions are: What specifically has
truly been addressed in a satisfactory
fashion? Also, are we able to restore or
create an adequate number of private
sector jobs that will account for those
(officially AND unoffically) currently
out of a job or working only part time?
Are we fooling ourselves or is there a
real chance that we are actually in an
era that will be characterized not as
having ended a recession but remaining
in a state of depression (similar to the
Great Depression but with the experience
of inflation for real assets)?
One key factor at this juncture, imho,
is the national debt clock that is not
likely to slow its cuurent ascent, much
less reversing anytime in the near
future. . . which is akin to a economic
death march.
A drop in gold to $1,000 of course is
possible . . . which would be a good
support level as well as another
opportunity to 'buy in' to what the
future could very well be.
A. The only one I own : SLX,
too hard pick a winner out all of them
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