The Weekly Strategist – June 4, 2007

A Refresher Course on Our Options Screener This week, we offer a refresher course on our Options Screener. Since its introduction in early 2003, this web-based screener has greatly enhanced the user-friendliness and flexibility of our service. Many new subscribers (and some long standing ones) are not aware that this screener can help them find the options that suit their needs. This report shows you how.

Getting Started Simply go to the Value Line Daily Options Survey online and select the Options Screener link on the left- hand side of the page. This takes you to the page shown in Figure 1 on page 3. Our new screener searches through our entire database of 130,000-plus options. Subscribers to the Value Line Investment Survey will notice that the format is similar to Online Stock Screener, also available at www.valueline.com.

Tickers, Preset Screens and Industries We designed the Options Screener so that you can operate it without having to read extensive instructions. Here is a walk-through of what you get. You will notice that there is a box that allows you to enter the underlying stock (or ETF or index) ticker code or codes. You can enter (or copy) as many tickers as you want into this box. Just make sure to separate each ticker code with a space. You will also see a box with 11 Preset Screens. The first two VLIS 1700 and VLIS Small & Mid-Cap denote whether the underlying stocks are ranked in the regular (larger cap) edition of the Value Line Investment Survey (denoted with a Timeliness rank) or in the Small and Mid-Cap Edition of the Survey (or in the Value Line Database, both denoted with a Performance rank). You can also specify if you want just Calls or just Puts. If you want to restrict your search to Longer- Term Options (Leaps). Also among our preset screens, you will find our Selected Options for the 6 basic strategies (Naked Call Buying, Naked Put Buying, Naked Call Writing, Naked Put Writing, Writing and Married Put Buying). The box on the left allows you to select an industry - or if you wish - any number of different industries. To select more than one industry, simply press the “Ctrl” key while clicking on the desired industries.

Ranks Below these boxes are our 8 rank selectors; Common, Technical, Naked Call Buyer’s, Naked Put Buyer’s, Naked Call Writer’s, Naked Put Writer’s, Covered Call Writer’s and Married Put Buyer’s. Clicking on more than one rank in a particular row gives you all the options that meet any of the selected criteria (e.g. Common ranks of 1 or 2). Clicking on boxes in different rows will search for options that meet both criteria (e.g. Common rank of 1 and Naked Call Buyer’s rank of 1). Notice that in Figure 1 on page 3, we have selected all options with a common rank of 1 or 2 and a technical rank of 1 or 2. To the right of the Common rank boxes, you will see two boxes marked “Up” and “Down.” Click on either of these boxes, if you want only options on stocks whose ranks have changed over the past week. “Up” denotes an upgrade in rank (e.g. from a 2 to a 1), while “Down” denotes a downgrading in rank (e.g. from a 4 to a 5). Note: these common ranks are updated every Monday with the mid-day run of Value Line Options.

1 Additional Option Information In the 10 boxes below, you can select more than 40 different criteria fields for your screens. (These fields are listed in the six different groups in Figure 2 on page 4.) You can select your data field via these six groups via Click to select a field name. This will give you a separate dropdown menu for each. Alternatively, you can click on Please select a field name here. This will give you the field names in alphabetical order. You then need to select a Minimum Value and/or a Maximum Value. Click Remove in the right hand column, if you want to erase a particular selection. Notice that in Figure 3 on page 4, under Additional Option Information, we have specified that we want (1) covered call/put writes with a per-annum yield of 25% (enter .25), (2) covered call/put write protection with a minimum of 7% (enter 0.07), (3) an date of between 7/1/2007 (minimum) and 9/30/2007 (maximum), (4) writer’s under/over priced minimum of 0 (i.e. not over-priced) and (5) % in- Out-of-the- Money maximum of 0 (meaning the covered call is not in-the-money).

Display Options When you do a screening, the default display is the options ticker code plus the data fields that you have selected. For instance, if you screen for the following: Common rank 1, Technical rank 1, and Put Writer’s rank 5, the default display will return only the ticker code information plus these 3 columns of information. For more complete displays, you can use the Edit Display Option feature. Just click on it and the box shown in Figure 4 will appear. Notice you can save these display options. You can make these display options your new default by clicking on the box marked Always use saved displayed columns in result window. Also notice that you are given a choice of which field you can sort by and whether this sort will be in ascending or descending order. (In Figure 4 on page 5, we chose to display the options in descending order of Cov’d Call/Put Write Return in descending order – i.e. the highest yielding options first.)

Sample Results In Figure 5 on page x, we show a sample output. Notice that we screened xx options and sorted them by their per-annum return. You can, if you wish, sort these options by some other displayed field, such as expiration date or .

Options Profiles and Add to Portfolio As you can with our regular interactive options page, you can tag the boxes on the left of the options ticker. Then click on View Profile. Notice that you can tag all the boxes just by clicking on the option ticker box at the top of the left-hand column. You can also click on Add to Portfolio just by clicking on the link so marked. These options will then be tracked in our User Portfolio in Interactive Options.

Saving Your Screen Criteria Going back to the top of Figure 1, notice that you can save your screens (i.e. set of selection criteria) to use another day. The default name is My Screener Filter.Txt. You can save as many screens as you like, but always make sure you use a separate name and the .txt filename subscript (e.g. “CoveredCall.Txt” for the screening used in this report).

Saving Your Screenings You can also save your actual screenings as spreadsheet friendly comma separated (CSV) files. If you click on Export Results you save the output as it appears on your screen with the columns you selected in Display Options. If you click on Export as Port.Csv, you save the options in our standard spreadsheet format with all 50+ fields of data. (Note you can if you wish change the name of the file as you save it in the dialogue box that appears.)

2 Questions and Answers Q: Can I use the Screener to narrow down my search from Selected Options for the basic strategies? A: Yes. Just mark the Selected Options you want under Preset Screens and then put in your desired criteria and display options. Q: Can I use the screener to find the best options from a particular list of stocks? A: Yes you can. Simply enter or copy the stock ticker (or tickers) in the box marked Stock Ticker(s). Make sure to separate the tickers with a space. Q: Can I use the option screener in conjunction with the Value Line Stock Screener? A: Yes, with the stocks you have selected with the Stock Screener, you can automatically open you Options Screener with this selection of stocks. Q: Can I save and use different screens for different strategies? A: You can save as many different screens as you want.

Other Reports Here some other reports in our Options Reports Archive that might help you in using our Options Screener: “A Review of Option Screener Criteria,” Ot050124.Pdf; “Creating and Maintaining Multiple Option Screens,” Ot061009.Pdf; “Finding the Best Options for Your Screened Stocks,” Ot041206.Pdf. “Introducing our New Quick Screener,” Ot070710.Pdf “Some Often Overlooked Screener Features,” Ot050801.Pdf;

Prepared by Lawrence D. Cavanagh, Editor, Value Line Options [email protected]

Figure 1 - Online Options Screener - Preset Screens and Ranks

3 Figure 2 - Additional Option Information Screener Criteria

Information on Underlying Option Information (Continued) Common Price Relative Vol (opt) Common Rank Stock Down 10% Dividend Yield Stock Up 10% Historical Strike Price Technical Rank Time Premium % * Volatility Forecast Volume Writer's Option Rank Covered Calls, Married Puts and Put Writes Writers Rank Order Cov'd Call/Married Put Breakeven Writer's Under/ Over Priced Cov'd Call/Married Put Rank Order Cov'd Call/Married Put Relative Volatility Information Cov'd Call/Put Write Max Profit % Margin Cov'd Call/Put Write Protection Max% from Margin Cov'd Call/Put Write Return Yield from Margin Covered Call/Married Put Rank Order

Option Information Risk Management Buyer's Option Rank Bid/Ask % * Buyers Rank Order % In- or Out-of-the-Money Buyer's Under/ Over Priced Adjusted Volatility Forecast Change Per Point Buyer's Option Implied Vol Estimated Normal Price Percent to Double Expiration Date Prob of Strike Based On Buyer's Implied Prob of Strike Based On Forecast Recent Price Ask Prob of Strike Based On Writer's Implied Recent Price Bid Time Decay 100 Shares Writer's Option Implied Vol * Fields recently added to service: See "Bid/Ask Spreads," Ot070319.Pdf in Reports Archive

Figure 3 - Additional Option Information with Maximum and Minimum Values

4 Figure 4 - Edit Display Options

Figure 5 - Sample Screen: Common Rank of 1 or 2; Covered Call/Put Write Return Minimum 25%; Protection Minimum 7%; July through September; Not Undervalued; Not In-the-Money

5 Market Review - Week Ending 05/29/07

Volatility Market Indexes Close % Change Indexes* % Change Dow Jones Industrial 13,521.34 -0.14% 12.71 2.17% Nasdaq 100 1,899.79 -0.87% 17.57 9.33% S&P 500 1,518.11 -0.20% 13.53 3.60%

Performance Tables Common Ranks Count Percent Market Neutral Hedges Rank 1 -0.29% 11137 8.22% Rank 2 -0.02% 27156 20.04% Long/Long Hedge 5.02% Rank 3 -0.36% 69169 51.06% (Buy Rank 1 Calls and Puts) Rank 4 -0.68% 19868 14.67% Rank 5 -0.43% 8147 6.01% Short/Short Hedge 0.93% (Write Rank 5 Calls and Puts) Call Buyer's Ranks Rank 1 1.83% 4631 6.94% Long/Short Call Hedge 1.56% Rank 2 -3.12% 10927 16.39% (Buy Rank 1 Calls/Write Rank 5 Calls) Rank 3 -3.14% 51127 76.67% Long/Short Put Hedge 4.38% Call Writer's Ranks (Buy Rank 1 Puts/Write Rank 5 Puts) Rank 5 1.29% 5117 11.48% Rank 4 2.79% 8591 19.27% Combined Hedges 2.96% Rank 3 1.65% 30871 69.25% (Buy Rank 1 Calls and Puts/ Write Rank 5 Calls and Puts) Covered Call Ranks Rank 1 0.55% 3809 9.42% Rank 2 0.11% 7856 19.42% Rank 3 -0.12% 20116 49.73% Rank 4 -0.35% 6085 15.04% Rank 5 -0.59% 2582 6.38%

Put Buying Ranks Rank 1 8.31% 2983 4.42% Rank 2 3.59% 9262 13.72% Rank 3 1.79% 55255 81.86%

Put Writer's Ranks Rank 5 0.58% 6986 14.13% Rank 4 -0.28% 11330 22.92% Rank 3 -1.42% 31112 62.94%

Married Put Ranks Rank 1 -0.02% 3166 4.69% Rank 2 -0.09% 8895 13.18% Rank 3 -0.28% 31455 46.60% Rank 4 -0.32% 17511 25.94% Rank 5 -0.05% 6473 9.59%

* - VIX for the S&P 500, VXN for the Nasdaq 100 & VXD for Dow

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