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This week, we take advantage of low implied volatilities and premium to search for underpriced, out-of-the-call LEAPS on stocks with better than average fundamental and technical outlooks. We also specified that we want the premium to be no greater than $7.00 per share and that we want the bid/ask spread to be no wider than 20%. Our search came up with calls on 24 companies, including calls on Ford Motor (F) and Macys Inc. (M).

Company

Ticker

Industry

Stock Price

Premium (ASK)

Fair Value

Leverage

Aetna Inc

AET

Medical Services

        42.06

          2.09

          2.88

             5.65

Applied Materials

AMAT

Semiconductor Equip

        15.18

          1.47

          1.98

             4.20

Ford Motor

F

Automotive

        15.48

          1.22

          2.04

             4.45

Hewlett Packard Co

HPQ

Computers/Peripherals

        40.02

          0.74

          1.77

             7.15

Intel Corporation

INTC

Semiconductor

        22.98

          1.84

          2.80

             4.95

Macys Inc

M

Retail Store

        24.17

          3.85

          6.00

             3.50

Aetna Inc. (AET) is one of the nation's leading diversified healthcare benefits companies, serving approximately 35.3 million people with information and resources to help them make better-informed decisions about healthcare. It offers a broad range of traditional and consumer-directed health insurance products and services, including medical, pharmacy, dental, behavioral health, group life and disability plans, and medical management capabilities and healthcare management services for Medicaid plans. www.aetna.com.

Applied Materials, Inc. (AMAT) primarily produces semiconductor wafer fabrication equipment. Product areas: chemical and physical vapor deposition (CVD, PVD) En++M layers conducting or insulating films on wafers; epitaxy En++M forms a pure silicon layer on which circuits are constructed; etch En++M inscribes circuits on wafers; ion implantation En++M alters conductivity of wafer regions; chemical mechanical planarization (CMP). Foreign sales: 87% of total. 2010 Research & development: 12.0% of sales. www.appliedmaterials.com.

Ford Motor Company (F) is the second-largest domestic automobile manufacturer; sales represented over 16% of U.S. car and truck market in 2010. Also it engages in vehicle leasing and rental, and the manufacturing of electronic equipment. Financial Services Group includes Ford Motor Credit and U.S. Leasing. Foreign operations accounted for about 43% of 2010 sales. www.ford.com.

Intel Corporation (INTC - Free Intel Stock Report) is a leading manufacturer of integrated circuits. Markets served: primarily makers of personal computers; also communications, industrial automation, military, and other electronic equipment. Main products: microprocessors (notably, the Pentium series), microcontrollers, and memory chips. www.intc.com.

Macy's (M) operates 850 department stores, including about 90 specialty units (furniture or clearance goods), in 45 states, the District of Columbia, Puerto Rico, and Guam at 1/30/11. Women's apparel and accessories accounted for 62% of '10 sales; men's and children's apparel (23%), and home/misc (15%). Acq. Macy's and May Department Stores in 12/94 and 8/05, resp. Nameplates are Macy's and Bloomingdale's. Marshall Fields and five May chains changed nameplates to Macy's or Bloomingdales in '06. Private-label and ``exclusive'' goods account for 19% of sales. www.macysinc.com.

 

At the time of the writing of this report, the author had no positions in any of the stocks mentioned.