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Linn Energy, LLC Message Board

  • ronharv ronharv Dec 9, 2012 5:29 PM Flag

    Puts & Calls

    Those planning to buy LINE, but only at a lower price, might consider selling puts at the price you like. You'd get to keep the put money should the PPS not drop that low or you'd buy the units if it did and still keep the put-sale money as a bonus. Or, if you're bold enough, you could sell puts for a price that's way low (say, the April 33s) and receive around $85 per each hundred-share contract, even though you really don't want to buy more units. But if the units were put to you at 33 (meaning the dist. would be 9%!), you'd have to buy them and possibly sell right away to preserve your capital. To me it looks like a good bet, but with the fiscal cliff business (even though I expect that there'll be enough GOP reps in the House who'll look to the 2014 election and vote to tax the wealthy or, at least, to continue the rates for the 98%), I don't think I have the stomach for it, even after making over 4K on my Oct 43s.

    Re covered calls, a win-win situation for long-term holders, I'd wait for a bounce to see if the Apr. 44s offer an attractive price again. I just closed my position, because making $59 on each of 117 contracts in a month seemed too good to resist. I'd certainly give it another shot on a LINE bounce to 41 or so, which could be in the cards come January. But if LINE continues to fall (and I think it's unlikely), I'll look for a straight option opportunity. Meanwhile, the distribution continues to be just dandy, and I don't think that longer-term holders have anything to fret about.

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    • I really have a tough time envisioning LINE dropping to 33 over the next 4 months, so I decided I could be comfortable selling 50 of the April 33 puts and did so at .77 and a few at .76.

      • 1 Reply to ronharv
      • Old black magic has me in its spell!

        Consumer spending is unstable
        Manufacturing index is below 50
        Layoff announcement are continuing as a result of the obama win
        Even drilling activity is focused on efficiency rather than growth
        Corn ethanol mandates were increased no reduced per the law.
        Now we have higher taxes and more regulation with a very significant chance Obama actually desires to go over the cliff as a dishonored media will pin it on the Republicans.

        Huge difference between puts and calls. But Ron^3 insists on demonstrating he does not understand. Free country.

    • Ron^3 does not understand calls or puts. Nor is he willing to take a few hours to learn the basics before 'sharing'. Very selfish behavior.

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