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In this screen, we searched out puts that are attractively priced for buying (a bearish strategy).  Adding put purchases to your portfolio is an excellent way to diversify your investments, and hedge against a decline in the stock market. (Bear in mind, the most you can lose is your premium.) By “attractively priced,” we mean that, according to our Value Line Options Model, these put premiums are a bargain in view of the profits you can make if the stock falls.  In our screening, we have specified that, in addition to attractively priced premiums, these puts are reasonably liquid, and have current leverage of at least 4 to 1, meaning that for every 1% fall in the underlying stock, the put is likely to make at least a 4% profit.

A search for these options with our Online Option Screener produced a list of 69 puts on 19 different stocks.  Among the puts selected, our screener found the following:

Company

Ticker

Stock Price

Industry

Months to Expiration

Current Leverage

Aon Corporation

AON

44.57

Financial Services (Div.)

3 1/4

8

Jack in the Box Inc.

JACK

21.67

Restaurant

2 1/3

7

Shaw Group

SHAW

32.90

Metal Fabricating

3 1/4

7

VCA Antech Inc.

WOOF

23.79

Medical Services

2 1/3

8

VeriSign Inc.

VRSN

33.42

Internet

2 1/3

8


Aon Corporation (AON) is a holding company whose subsidiaries operate in two segments: Risk and Insurance Brokerage Services and Consulting. Clients include corporations, professional organizations, and governments. Acquired Gil y Carvajal, 2/98; Le Blanc de Nicolay, 5/98; A.I.S., 8/98.; Hewitt Associates, 11/10. Sold Combined Insurance Company of America, 4/08; Sterling Life, 4/08; Benfield Group 11/08. Has about 36,200 employees. Internet: www.aon.com 

Jack in the Box Inc. (JACK) formerly known as Foodmaker, Inc., owns, operates, and franchises Jack in the Box quick-service hamburger restaurants. The 59-year-old chain consists of 2,206 units, of which 956 are company-operated and 1,250 are franchised (as of 10/3/10). Majority of restaurants are located in the western and southwestern markets of the U.S. Drive-thru sales account for approximately two-thirds of total sales at company-operated locations. www.jackinthebox.com 

The Shaw Group Inc. (SHAW) is a provider of engineering, design, technology, procurement, construction, maintenance, fabrication, manufacturing, consulting, and facilities management for private and government clients in the energy, chemicals, environmental, infrastructure, and emergency response markets. Five business segments: Energy & Chemicals, Power, Plant Services, Environmental & Infrastructure, and Fabrication & Manufacturing. www.shawgrp.com 

VCA Antech, Inc. (WOOF) is an animal healthcare services company. It provides veterinary services and diagnostic testing to support veterinary care; and sells diagnostic imaging equipment, and other medical technology products and related services. Operates in three segments: Laboratory (21% of sales, 42% of operating income in '09), Animal Hospital (76%, 57%), and Medical Technology (3%, 1%). www.vcaantech.com 

VeriSign, Inc. (VRSN) is the leading provider of electronic certificates and Internet-based trust services needed by web sites, enterprises, and individuals to conduct trusted and secure electronic commerce and communications. Also is leading registrar of domain names. VRSN operates in two segments: Internet Infrastructure and Identity Services, and Other Services. www.verisign.com