“This merger reflects our desire to expand our business beyond pain management into complementary medical areas where we can be innovative and competitive,” said Endo Pharmaceuticals President and CEO David Holveck. “We believe this expansion of our product line has significant growth potential because of the therapeutic value of the Indevus product portfolio, the unique expertise of both companies, and the demographic, health care and reimbursement trends that favor the consideration of new products to address unmet needs in urology and endocrinology.”

Existing Endo Pharmaceutical shareholders looking to leverage their position to recoup these losses quickly may want to consider using long-term options called LEAPS in a repair strategy. The strategy involves building an options position around an existing stock position in order to lower the breakeven point without committing any additional capital. This can be done by purchasing one long call while simultaneously writing two calls for every 100 shares owned. The premiums collected typically more than offset the cost of the call while the 100 owned shares covers the second written call. Meanwhile, the long call’s upside will decrease the breakeven point and leverage the position.

The key is confidence that shares of Endo Pharmaceuticals will eventually recover. Shares that continue to decline will continue to lose money; the option’s premium obtained will only slightly offset the losses. However, if the stock recovers past the breakeven point, then investors have some different options. These options involve getting out of the position at relatively breakeven and re-establishing a position, whether it be by delivering the written options or simply selling them off before expiration. Either way, this strategy can help investors recover their losses more quickly.

See “Recouping Losses with the Repair Strategy” for more information on how this strategy is implemented and check out our Tools & Products for more unique ways to make money with LEAPS.

Last quarter, Dick’s Sporting Goods reported Q3 results that were in-line with analyst estimates while the retailer remains adequately capitalized. Inventories came in at 4.4% less per square foot than in 2007, which is good news when sales are expected to slow. The company expects Q4 earnings of $0.47 to $0.54 with comparable sales stores expected to drop 10% to 6% for the quarter.

Investors looking to establish a position in Dick’s Sporting Goods for the long-term have a unique opportunity to offset any near-term losses. The $15 January 2009 call options on the stock are currently trading at $0.90 per contract. This means that investors can make $90 by writing calls for every 100 shares they own. Since shares are trading at around $15 now, this represents a 5.8% return.

This return can be further boosted by using long-term options called LEAPS as a substitute for common stock when writing the call options. Currently, the $10 January 2010 LEAPS calls are trading for just $7.30 per contract. This means that investors can purchase the rights to 100 shares for $730 and write a $90 shorter-term call option to realize a return of 12.3% in just ten days!

Of course, the risk with both of these strategies is that Dick’s Sporting Goods may announce some negative news that will send shares down. So, investors executing this strategy should be willing to hold the stock long-term if necessary. In the end, this is a quick way to make some money while getting involved with DKS stock at these cheap levels.

See “A Better Covered Call Alternative” for more information on this strategy or check out our Tools & Products for more ways to make money in today’s market.

The first big change in 2009 will be a new president that has promised to bring change. Barack Obama has petitioned Congress to pass an economic stimulus plan that could top $1 trillion. The plan will increase spending on public infrastructure in order to create more than 3 million jobs while improving the quality of life for Americans. The plan will also create opportunity for a few public companies.

Vulcan Materials Company (VMC: 69.59 -0.51%) is a construction company that stands to benefit from these trends. Obama’s infrastructure plan will focus on building roads, bridges, modernizing schools and creating a clean energy infrastructure. Vulcan, a producer of construction aggregates, sees more than half of its sales come from these road and highway construction projects and stands to benefit.

A second big trend in 2009 will be the increase in oil prices as the biggest plunge in crude oil prices on record may be setting us up for a rally later this year. The so-caled forward curve of futures contracts suggest that oil prices will rise 28% to $60.00 per barrel by December. The increasing amount of supply going offline is also setting the stage for a potential shortage when oil demand rebounds.

Teekay Tankers Ltd. (TNK: 13.89 -0.57%) is one indirect beneficiary of higher oil prices that pays out a large portion of its income. The oil tanker owner and operator is structured as a Master Limited Partnership (MLP) and therefore has to pay out the majority of its net income. Currently, the stock is trading so low that the dividend yield on this payout is in excess of 30% despite strong fundamentals.

A third big trend in 2009 is alternative energy – a combination of the two previous forecasts. Obama’s new plan calls for increased spending on alternative energies while higher oil prices will also reignite demand for such products by private industry. Combined, this is good news for the solar industry in particular as it is one of the largest alternative energy segments.

LDK Solar Co., Ltd. (LDK: 13.8003 -7.01%) is a premier solar energy play that could benefit from these trends. The firm has a strong contract backlog for 2009, but expects to see some delayed shipments in light of the current global economic crisis and tight credit markets. Meanwhile, the firm continues to show a solid cash position and unused credit facilities totaling more than $380 million and $850 million, respectively.

Looking for a way to leverage your returns on these stocks? Check out “Using LEAPS as a Stock Substitute” for information on how LEAPS can help. Also, see our Tools & Products sections for e-books, software and other tools to help you boost your returns.

The key FDA decision has also created another opportunity in the firm’s call options. Traders looking to profit from a FDA approval without taking on the risk of stock ownership are flocking to buy call options. As a result, call options on Cypress Bioscience’s stock are trading at a sharp premium given the current stock price. Investors confident in an approval may want to consider writing a covered call in order to maximize their upside over the next quarter when the decision is expected to be made.

Cypress Biosciences stock is now trading $7.48 per share while the $7.50 January 2009 call options are trading at $1.10 per contract. This means that investors can purchase 100 shares of stock for $748, write call options for $110, and make an immediate 14.7% return on their money instantly! The downside is that the investor would be forced to sell their shares if the stock rose above $7.50 when the FDA decision is made.

Investors looking to increase their returns using this strategy may want to consider using long-term options called LEAPS as a stock substitute. Currently, the January 2010 $5.00 LEAPS calls are trading for $3.30 per contract. This means that instead of spending $748 to buy 100 shares, investors can purchase the long-term rights for just $330. Once the same January 2009 calls are written, this jumps the return on investment to 33% compared to just 14.7% using the underlying stock.

See “A Better Covered Call Alternative” for more information on this strategy or check out our Covered Call Calculator software for a way to quickly find opportunities like this one.

The unprecedented reduction in fertilizer use by farmers on a global basis comes largely as a result of the lack of credit. Many farmers are unable to obtain the credit needed to purchase fertilizer while others are holding out until the last second for fire-sale prices. Meanwhile, international demand has dried up thanks to a perfect storm of events – a drought in Argentina and the freezing of credit markets in Brazil and Russia.

The result had been disastrous for fertilizer companies in the fourth quarter of 2008. Nitrogen sales fell 20 percent while potash and phosphate sales declined nearly 50 percent. However, the three companies insist that the trend is demand deferral rather than demand destruction – that is, the sales will come back strong when the markets improve. The only demand destruction was seen in corn, which fell due to lower oil prices.

Many experts agree that nitrogen prices may have hit their lows as demand for the farmer’s choice fertilizer is expected to rise ahead of the growing season. Meanwhile, potash prices actually moved to a record high of $872.50 per ton at the Port of Vancouver for overseas sales. Regardless, the stocks themselves seem to correlate with corn and oil demand rather than their financial results. As a result, investors may have to wait for a recovery in these commodities before the stock soars.

One way for investors to buy into these stocks now at a fraction of the cost is through buying long-term options called LEAPS. These options provide investors with all the upside of the underlying stock at a fraction of the upfront cost. The result is a leveraged position – lower cost for the same gains – with less money at stake to lose in the event of further price erosion. The trade-off is that, if the price drops below the strike price, investors could lose their entire investment.

See “Using LEAPS as a Stock Substitute” for more information on this strategy or check out our new e-book, Trend Trading on Steroids, for our preferred strategy using LEAPS to profit off long-term trends.

The Dow Chemical Company and Rohm and Haas Company announced that financing for the deal fell through, but they would continue to work diligently towards completing the proposed transaction in early 2009. This means that many of the losses today could end up being offset in the future upon a consummated transaction assuming that the pricing remains attractive.

Concerns about the viability of this merger were already present in the options pricing over the past few weeks. The premiums being paid on long-term call options of Rohm and Haas offered large premiums – a great risk/reward for existing shareholders. The high premiums suggested that many investors were hesitant to get into the stock until the merger was completed and opted to purchase options instead. So, how can those investors remaining bullish reduce their breakeven point for free?

The repair strategy involves building an options position around an existing stock position in order to lower the breakeven point without committing any additional capital. This is done by purchasing one long call while simultaneously writing two calls for every 100 shares owned. The premiums collected typically more than offset the cost of the call while the 100 shares owned by the investor covers the second written call. Finally, the long call’s upside will decrease the investor’s breakeven point.

The viability or profitability of these positions depend on the individual investor’s entry price and other factors. See “Recouping Losses with the Repair Strategy” for a detailed look at how this strategy works and how it can be executed and checkout our Tools & Products for more ways to make money with LEAPS.

The press release drew some criticism from the investment community as it lacks some key facts. CNBC’s Fast Money noted that it contained a lot of “black holes” with no mention of “margins” and “promotional activities”. The market reacted by opening higher and then falling all the way until the close while selling continued into today’s session.

The concern is that Amazon.com’s margins may have been hurt while trying to boost its sales. The factors behind the higher shipment numbers may have more to do with tax savings, bad weather, comparison shopping and discounted prices. As a result, the actual impact of the higher top-line sales on bottom-line results remains to be seen.

So, how can investors bullish on Amazon.com participate in the stock’s upside without taking the risk of stock ownership. One way is to purchase long-term options called LEAPS or long-term equity anticipation securities. These options allow investors to purchase the rights to shares over one or two years time at a fraction of the cost of underlying stock ownership.

Currently, investors can purchase $40 January 2011 LEAPS call for just $21.85 per contract compared to $49.50 per regular share. As a result, investors can spend $2,185 for the right to buy 100 shares anytime during the next 753 days versus spending $4,950 to purchase 100 shares of the underlying stock. Investors looking for a lower breakeven and shorter timeframe can also look at the January 2010 calls.

See “Using LEAPS as a Stock Substitute” for more information or check out our Tools & Products section to find more ways to profit using LEAPS.

The Baltic Dry Index, which measures day rates for dry shipments, recently moved below 800 signaling the worst pricing since around 2002. These lower day rates are the result of reduced demand due to slowing economies around the world. Less iron ore shipments need to be made given the slower construction in both the United States and growing economies like China. However, many important players in the market are predicting a recovery.

DryShips (DRYS) is one stock that has nearly tripled from its 52-week lows on speculation that things will improve. Chief executive and 34% owner George Economou believes that the company will be able to weather the storm over the long-term. These sentiments have even led to speculation that that billionaire shipping mogul would take the firm private at its cheap valuation and take it public in a few years to yield several times the return.

Many experts believe that the current Chinese iron ore negotiations are moving in favor of dry bulk shippers. Jefferies & Co. said in a research note that a successful downward adjustment to iron ore prices in China could spur demand for the dry bulk market by increasing the number of shipments. Meanwhile, much of the capacity expected to go online has been canceled and fuel / labor prices have also decreased over the past several months.

Unfortunately, many dry shippers are highy leveraged. The risk is that dry bulk owners will simply default on their payments, go into bankruptcy, and emerge under a new name after cleaning out shareholders. It wouldn’t be anything new for DryShips, which was created from the bankruptcy of predecessor Alpha Shipping. That entity was also owned by Economou and went bankrupt in 1998 and resulted in 37 cents on the dollar being paid to creditors and most of the fleet under his ownership.

Safe bets within the sector may be those dry bulk carriers with low debt, few new builds, and limited spot market exposure. These companies include names like Eagle Bulk Shipping (EGLE), Genco Shipping & Trading (GNK), and Star Bulk Carriers (SBLK). Unfortunately, even some of these companies are struggling with Star Bulk already defaulting on a $106,500 a day long-term contract after its client filed for bankruptcy and killed the contract.

So, how can investors get involved with these companies with limited risk? One way may be through long-term options call LEAPS – or long-term equity anticipation securities. These options provide investors with the upside of stock ownership without the risk of owning the stock. Investors can purchase the right to a set number of shares at a fraction of the cost of owning the underlying shares.

See “Using LEAPS as a Stock Substitute” for more information on this strategy or see our Tools & Products section for products to help you invest with LEAPS.

A covered call involves writing calls against stock that the investor already owns in order to collect the options premiums. In this case, ROH investors that own 100 shares can write call options against the position and collect $800 per 100 shares they own. With a current market price of $63.36, or $6,336 for 100 shares, this equates to a return of roughly 12.5% in just 21 days until expiration.

The risk with establishing this position is that the underlying shares will decline and you’ll lose money on the stock that exceeds the $800 that you gain for writing the option. Moreover, if the stock goes above $65, you will be forced to sell the shares at that price and make only about $1,000 on the position. However, if the stock remains roughly the same, you’ll make about 12.5% on the firm.

Investors looking to make even more money with less money at risk may want to consider using LEAPS calls as a stock substitute. Instead of owning 100 shares for $6,336, investors can instead purchase the right to 100 shares over the next year at $55 for only $1,700 total down. This equates to a hefty 47% return on investment with the additional risk being that you could lose $900 – or 14.2% if you owned the stock itself.

See “A Better Alternative to Covered Calls” for more information on this strategy or check out our Tools & Products for more strategies that can help you make money!

The problem with the plan is that it is seen by Target as being risky in today’s environment. The new REIT may have a great renter and properties collateralized by hundreds of millions of dollars in buildings, but the retailer that is left over may be left in a weaker position. As a result, Pershing Square opted to wait until after the holiday season was over before resuming discussions.

The season is now over and investors are left with a predicament. The retail sector is expected to have one of the worst holiday seasons ever, which has pushed down shares of all retailers. However, Pershing Square’s analysis has clearly shown substantial value in Target’s real estates. So, how can investors get exposure to Target while reducing the risk of further declines in retailers?

The answer is simple: Hedge your bets using broad industry indexes! The Retail HOLDRs (NYSE: RTH) exchange traded fund is considered to be the best retail industry index. Investors looking to hedge against a decline over the long run may want to purchase LEAPS puts to hedge out their retail exposure. Currently, the $70 January 2011 LEAPS puts are trading for just $14.90 per contract. This means that investors can purchase roughly 100 contracts to offset every 200 shares of Target.

The resulting position is one that is hedged against a decline in the retail sector. As a result, investors can only make money when Target outperforms the retail sector as a whole and lose money when Target underperforms the retail sector as a whole. Since Target’s real estate is undervalued, this outperformance will occur when the value is unlocked over the next two years.

See “Using LEAPS as a Hedge” for more information on this strategy or take a look at our Tools & Products for more ways to make money!