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Linn Energy, LLC (LINE) Message Board

  • lesspheus lesspheus Jul 10, 2013 3:33 PM Flag

    Guesses about closing for July OPEX?

    From July through January expirations I sold $24 thousand worth of LINE put contracts. My first ones to reach the expiration date are July $30 puts. Right now I am guessing that I will not get assigned, but who knows. I actually would like to get assigned and get some of this stock cheap with a hefty dividend. I think that this goes significantly higher than $30 in the next several months. I do not own any of the stock and would like to down here, but I already have plenty of exposure. If I magically knew that I would not get assigned, I would be buying shares.

    Any guesses about closing for July OPEX on Friday of next week?

    Sentiment: Strong Buy

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    • No need to be assigned if you don't want to. You can either roll the options forward for additional premium or roll forward and down to a lower strike price. I have been short options almost 50% ITM before and just kept rolling forward for more premium, never been assigned. LINE has options going out to Jan 2015 so plenty of ability to roll the puts forward, collect more premium and wait for the price to recover. You can keep doing that indefinitely. In fact that is my strategy (although I don't use upstreams for the purpose). Sell puts and roll them forward once a quarter indefinitely. It's like collecting a quarterly distribution while never having to buy units.

      • 2 Replies to lizahuang54321
      • What part of "I actually would like to get assigned" is not clear? I want to own some LINE stock on the cheap as I believe that there is far more upside than my $30 strike. I could buy back the puts and then buy the stock, but I would hate to pay the premium and transaction costs involved, so that I will not do. If I keep my puts and buy the stock, then I have more exposure than I can justify in this one name, despite the seemingly easy money.

      • Option markets are no place for people who do not understand fancy stuff like math. Nor has any service I am aware of ever proven they provide value added return adjusted for risk.

        Fine if individuals understand their company very well and do some puts or calls around what they believe is a fair value range.

        But as we have seen with line stocks can and are manipulated so time wasting human creations based on rational but not perfect math are no certainty.

        The sad truth is if Sweet Willie understood what it was doing it would by puts not sell 'covered calls'. For some reason yet to be explained by academics puts are generally cheaper that calls. Certainly selling a partnership like line to 'cover a call' has massive tax ramifications.

        Putting aside the OLB demands their flat cold dark earth occult theories are due 'respect' or represent any type of beneficial contribution.

        I do believe common sense equipped with understanding a business very well is enough for individual investors to make a point or two more than the market over time. But the academic science of investment theory shows that delusives like the OLB will do much worse than the market over time. Back fitting alone is enough but it is the tip of their mountain of personal delusions.

    • "Any guesses about closing for July OPEX on Friday of next week?"

      line will test the gap fill back to 33, unknown if it breaks out or not.

      But worse case is it does not make it above 30, and then you can roll the short puts lower and out.

      • 2 Replies to purplespyderman
      • Why would you assume it's going to even test the gap fill? The thing that brought it down, fear over an SEC investigation and ultimate reduction in dividend, is still out there, even if a lot of the frenzy in the press has subsided. Until the timing and completion of the Berry merger is resolved, I wouldn't expect several more points in this stock. But I'm still holding until the price action tells me to do otherwise.

      • Thanks. If this is is below $30 at expiration, I am happily keeping the stock, collecting the dividends, and waiting for the upper thirties, if not forty, within the next 6 months or so.

        I feel pretty safe that my August, October, and January $30 puts will not get assigned. I'm happy to collect the premiums, but I would also like to capture some of the extra upside in the stock while collecting sweet monthly dividends.

        Sentiment: Strong Buy

    • Thanks for the down vote. Seriously? What is wrong with this post?

 
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