16-09-07

End of the hype?

So far this year, our alternative energy stockpick PACIFIC ETHANOL (PEIX - USD 10.77) has not been our best investment. The company produces and markets renewable fuels in the western United States. It produces and sells ethanol, and provides transportation, storage, and delivery services. Since May 2006 PEIX stocks fell from USD 40 to almost USD 10 these days. The hype and the fantasy is clearly priced out. Back in December 2006 our Option Portfolio sold June 2007 USD 15 puts at USD 1.90. In June we were assigned and bought 500 stocks at USD 15. We do not expect a spectacular recovery any time soon. In order to have some income on the stock we are going to sell some calls on it. We give on order to sell 5 calls March 2008 with strike USD 12.50 at a limit of USD 1.00. If PEIX were to rise above USD 12.50 by March next year, we would then be out of position more or less flat against a loss of USD 1.165 based on actual prices (10.77 -(15.00-1.90)*500)). The actual option price can be found here: http://finance.yahoo.com/q?s=PFQCV.X.

At the same time we would like to re-enter a position in EVERGREEN SOLAR (ESLR - USD 8.71). We give an order to sell 10 puts December 2007 with strike USD 7.50 at a limit of USD 0.50. By selling these puts we are entering the obligation to buy 1.000 ESLR shares at a price of USD 7.5 if they trade below that level by mid December. On execution of the order our savings account will be credited with the option-premium of USD 500 (10*100*0.5). The 100% margin of the trade amounts to USD 7.500 (10*100*7.5). These funds are blocked on the account as a guarantee. Click here for the actual option price: http://finance.yahoo.com/q?s=QLUXU.X .

14:43 Gepost door in Orders | Permalink | Commentaren (0) | Tags: peix, eslr |  Facebook |

De commentaren zijn gesloten.