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LEAPS are longer-term puts or calls with expirations of between nine months and two and a half years.  Put LEAPS can be attractive as portfolio hedges because they lose time premium at a much slower rate than do shorter-term puts. In our screening we looked for puts that are deemed to be underpriced, according to our model, that are based on stocks expected to do worse than the market over the next six to twelve months, and that offer leverage that is more than 2 to 1 on a downward move in the stock (i.e., if the stock falls 10%, the LEAP gains more than 20%.)  Our screening came up with 18 LEAPS on 5 stocks, among them:

Company

Ticker

Stock Price

Industry

Months to Expiration

Downside Leverage

Autodesk, Inc.

ADSK

35.43

Computer Software/Services

14

2.1

Clorox Company

CLX

61.83

Household Products

14

2.8

Lincoln National Capital VI

LNC

23.58

Insurance (Life)

14

2.8

Morgan Stanley

MS

24.90

Securities Brokerage

14

2.8

 

Titanium Metals Corporation

TIE

17.32

Metals & Mining (Diversified)

14

3.0

*Prices as of Monday, November 29, 2010

The Clorox Co. (CLX) operates in four segments. Cleaning consists of laundry, home care, professional products and auto care (33% of '10 sales and 37% of pretax income). Lifestyle consists of food products and water filtration systems and filters (16%, 25%). Household consists of charcoal, cat litter, plastic bags, wraps and containers (30%, 24%). International (21%, 14%). Largest products: liquid bleach 13%, trash bags, 11%, and charcoal 11%. www.clorox.com 

Lincoln National Corp. (LNC) is a holding company, which operates multiple insurance and retirement businesses through subsidiary companies. ``Lincoln Financial Group'' is the marketing name for LNC and its subsidiary companies. Four business segments (excluding Other Operations): Annuities (25% of '09 revenues, 30% of oper. income), Defined Contribution (10%, 11%), Life Insurance (46%, 48%), and Group Protection (19%, 11%). Acq'd Jefferson-Pilot, 4/06. www.lfg.com 

Morgan Stanley (MS) is a major global, diversified financial svcs. company. Securities and asset mgmt. businesses include underwriting, trading and M&A; and other corporate, govt., and individual financial svcs.; full-svc. brokerage, asset mgmt. Business mix (incl. 0.6% elims.): Inst. Securities (54.7% of '09 net revs.); Global Wealth Management (40.2%); Asset Management (5.7%). www.morganstanley.com 

Titanium Metals Corporation (TIE) engages in the production of titanium sponge, mill products, and industrial fabrications. The company sells its products through its sales force in the United States and Europe, as well as through independent agents internationally. It serves the commercial aerospace and military, oil and gas, automotive, and power generation industries. www.timet.com .