current market Nov 7th

As i scan over the market i notice financials, particulary WM-N, IIC-T and other large financials getting smoked. Is it value time and should i be picking up calls? Nope.

The options for these will have huge time values because of the large price movements. Also i can see no near term catalyst propelling them higher? I will keep them on my watchlist, but as Buffett says you want your long term holdings to have a 'moat' besides just strong fundamentals. By 'moat' i am speaking of some sort of competative advantage. As i see it WAMU or WM-N has neither mentioned. Its a smaller financial with recent accounting fraud accusations and large outstanding residential home loans.

Enough of the bad lets see some good in this market? Well i am happy to report my account only has 2 holdings. IMG-t and BVF-t. Both have suffered slow and steady flat lines and are eroding my purchased calls time value. BUT>

BVF will hopefully paint a pretty picture with earnings out 8:30 am Nov. 8 and IMG reports next Tuesday. I may pick up some calls for IMG with NOV expiry just to play possible earnings upswing. This will consist of only a few hundred dollars capital as the risk is high due to lack of time value.

I sold out of my WAG-N calls. Time was eroding them and i should have sold when it spiked quickly above $40. Could have turned a $600+ profit on $2200 risk in less than a month, but will settle on $100 loss.. mostly due to the lovely rise in CDN $$.

Did i mention that CDN $$$? It is killing me with BVF. I would be up on that nicely but i am slightly down because the US dollar is in free fall mode. I promised myself i would transfer more of my long term RRSP holdings from CDN funds to NON US or CDN funds ie Oversea's.

I have several Oversea's funds and i am happy to report that they have all sucked this year! Why? Because all their loss and then some is because of the CDN $$. So the underlying stocks are performing ok and have little US subprime risk.

Well back to current trade ideas. I have looked at UUU. After its recent smackdown it may be a good one to try a short term (1-2 months) call write. Until today it had $10 support. Now who knows? It has a juicy time value for DEC calls with 10% downside protection on shares held.

Loblaws L-t is another beatin down dog. I may try a credit spread on this one, which would be a sold put $44 perhaps and a purchaed protective put around $40. I have to play with this one some more to see how it's risk/reward is. Until then it continues to slid and allow me a lower entry. The company has good sales but poor margins.

TDG.un and PD.un may be some other plays for covered call writing or using in the money protective puts to preserve capital. Both are drillers than are trading @ or below 2x book value and have rigs in US still working although CDN $$ is hurting them there.

Hopefully my next post will have some positive news to report.
DH