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Linn Energy, LLC (LINE) Message Board

  • joetong419 joetong419 Jan 17, 2012 3:08 PM Flag

    LINE after SPO...

    next dividend around the corner on or about 2/2/12.

    Hope to see LINE pps back to 37-38.

    This secondary offering made many sell their current shares - antidilutive is that why?

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    • Lex

      Looking at a put - call strategy.

      Don you ever buy the less expensive put below the put call you sold just as insurance and to limit your potential loss?

      Thx

    • roy, the worst is when your itm or atmbecome otm on a big move down. i layer to the next big itm to double down when that happens.

    • Thanks. Your right great board over there. Helped make me a nice chunk of change last year. They actually turned me on to this board. Learning a lot here as well.

      This is my first quarter in Line - hope it's as profitable as AGNC.

      Gl!

      Roy

    • Thanks Lex, I noticed the same thing. Seems you can get paid well to take a very reasonable risk on put contracts on months where the dividend is paid.

      Also noticed the same thing in AGNC though that may be changing. 28 to 30 was a very safe channel.

      Looks like the key us to find stocks channeling within a predictable range.

      Thanks again
      Roy

    • Thank you Ben - very helpful. The itm calls have made me money, I'm wary of otm options for the reasons you stated though the profit potential is enticing.

      I'm trying some ATM and just otm calls on Line this qrtr - will c how it goes.

      Gonna keep researching and will share any valuable info.

      Gl!
      Roy

    • opinion, they have about 420m to go if rlp read the prospectus quickly as to how many shares were sold und the drip feed.

    • lex, yiou are benefitting from the lower implied volatilities on the puts in the pricing. Si, the dealers would love yo see you buy cheaper puts, but it works to your advantage on selling puts. good post!

    • iRon, i bought my calls when it ws trafing at 35.80' that was the best i could fo. i am very happy now.

    • roy,

      its more about the delta, Nd the fact that deep itm pricing is not impacted as much by implied volatility. These are facts of the black shoals model. Theta is also arrested to an extent. www.ivolatility.com, has a basic free calculator that i have found invaluable for pricing and for isolating these parameters. its not a study, but goes with the territory. You will risk less dapital and make better percntage returns on otm, but you need the price to move and accelerate to the upside. The delta is less than 1. with itm and deep itm, you risk more capital and get lower percentage returns, but a delta of 1, which means for each change in the underlying shares you realize the same change in option price. Think of otm, atm, itm and long shares as a continum where the far left cost less, return more, but dont mimick the shares as well. to me, that means mire risk. many times if i feel that the stock might not move i will buy the shares for less risk, but conversely i rsk more capital by being long the shares. We have talked about this a lot on the agnc board, i am normally in the minority, but win a few converts. ephort disagees with me, but when my money is at risk, i chose the masserati calls. All you need is one experience of sitting on the otm without the movement you expected to feel the pain of decay and carnage.

    • just a fact, not a negative. its just an administrative legal procedure.

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