2006 Dogs of the DOW 


The following trades have been selected using the Dogs of the Dow theory. For those of you unfamiliar with the theory, here are the key criteria.
1. Must be a DOW component
2. Calendar year performance(the worst performers) for the prior year       
    are used
3. Highest dividend yield
4. Lowest Price to Earnings ratio 
5. Worst two performers are omitted from the list, in this case, General Motors and   
    AT+T

It should be noted that all of the following recommended trades are utilizing the JANUARY 2007 LEAP options.  The recommended trades are as follows....

1.  Verizon-VZ Buy the Jan07 $35 Calls at $1.30
2.  Merck-MRK Buy the Jan07 $35 Calls at $2.45
3.  Philip Morris-MO Buy the Jan07 $80 Calls at $6.00
4.  Pfizer-PFE Buy the Jan07 $25 Calls at $2.05
5.  Citigroup-C Buy the Jan07 $50 Calls at $3.10

***Important note. These trades are using straight calls.  It may be advisable to utilize a call spread.  I will also monitor the orders to get my clients the best fill prices possible. The option prices I have provided would be the maximum I would advise my clients to pay for these positions and every effort should be made to try for a slightly cheaper fill price.  

***For the more aggressive accounts, you may want to select a General Motors at the money option, however this one may actually turn out to be a dog. So beware!

***For the more conservative account, you may want to replace either the MRK or PFE with the AT+T.  This is because, both Merck and Pfizer are somewhat similar businesses that had very similar root problems which lead to the weak performance in 2005.  Therefore you may not want the overlap.  If you were to ask me which to replace, I would keep the Merck and replace Pfizer with AT+T.

Call 1-866-898-3388 for more info. Thanks and good luck with the Dogs!




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