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Linn Energy, LLC Message Board

  • yelyacs yelyacs Dec 28, 2012 10:51 AM Flag

    12% yield on LINE

    with VIX up and MLP's way down, now a decent time to sell options

    Jan 2013 35 LINE put selling for 4.40 yields 12% for the year.

    with LINE at the lows of 2012, and with its price about as below LNCO price since LNCO started trading, and with much tighter option bid/ask spreads than LNCO, LINE options looking good to me today, I restarted a LINE position selling the Jan 2013 35's

    but I'm saving dry powder in case idiots in congress fail to lead and trigger a fiscal cliff sell off.

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    • hey blue ya they are naked puts. I was also considering bull put spreads (the 35/25 so I could put on more positions) or selling OTM Jan 2014 40 puts as u sugessted, but I am typically conservative with options (buying calls is not something I typically do, even though I did this morning on the dip under 35!) and I don't like the lack of volume or the wide bid/ask of the OTM Jan 40 puts, so I decided to do covered naked ATM puts, in case my forecast for a rebound is not correct- I don't want to get overextended

      oh and my post was straight off the top of my head, not cut and paste :)

      happy New Year!

      • 1 Reply to yelyacs
      • If you don't understand options you would do well to avoid them.

        In your post above you refer to "selling OTM Jan 2014 40 puts". These are in fact ITM not OTM.

        Next you refer to "covered naked ATM puts". There is no such thing.

        I agree with the idea of selling puts in general at this point. Would not buy calls. Spreads are too wide and why would you buy a wasting asset ? Sell them instead.

    • You will lose $$ based on your post. You have been placed on ignore list for posting foolish comments.

      Sentiment: Strong Buy

      • 1 Reply to vette_999
      • vette: if you are referring to me, I believe you do not understand the strategy of selling out-of-the-money puts. It is a bullish, somewhat conservative way to collect income (i.e., option premium) with lower risk (strike price is lower than current share price) and higher yield (the time decay component of the option adds premium above that of the distribution, currently 2.90/yr, implied in option price) than owning shares, with the downside of not participating fully in upside (if it happens) and only collecting income (if not put to) for the period of time of the options contract. That is why I sold fairly long dated (jan 2014) puts

        sand: totally agreed, with shares near their lows of the past 2 years (the 2011 low of 31.03 indeed an anomaly, as price started above 35 the day before and rebounded back to nearly 35 the next day), now is time to buy shares and calls and/or to sell puts. I also bought some jan 2015 calls today, giving myself a lot of time for them to reach my target of 100-200% gain

        blue: based on the recent chart pattern of LINE, the upside is much higher than the downside so now is definitely the time to sell puts. I am pleased to have sold Jan 2014 35 puts for $4.40/contract today

    • mean the JAN 2014's not the 2013's...........

    • I'm at a loss to understand your post. You wrote, "Jan 2013 35 LINE put selling for 4.40 yields 12% for the year." But the Jan 35 puts are at .50 bid and .60 ask.

    • sorry line NEAR lows of 2012, as you chartologists already know low for 2012 was 34.43, low of 2011 was 31.03. But I note these dips were extremely short lived- LINE has CLOSED under 35 only 4 or 5 times in the last 2 years, deep dips been extremely short lived