20-09-07

Good and bad.

Our order to sell 5 calls PACIFIC ETHANOL (PEIX - USD 11.17) March 2008 USD 12.50 at a price of USD 1.00 was filled yesterday. We were not too bullish on the stock and wanted to earn some money on our long position (we had to buy the stock back in June at USD 15 as we got assigned on the short June 2007 puts). Today Friedman Billings downgraded the stock ( http://finance.yahoo.com/q/ud?s=PEIX) to underperform. Good news on the other hand for our junior goldmine GOLDEN STAR RESOURCES (GSS - USD 4.23). The stock jumps 15% on news it seeks a listing on the Ghana stock exchange. We are short January 2009 USD 2.50 puts. SINOVAC BIOTECH (SVA - USD 4.40), a China based biotech firm, adds another 10%. Over the last month the stock, has doubled in value. The Option Portfolio had sold puts in the beginning of the year. They have already matured worthless. The stock is still on our watchlist.

21:29 Gepost door in Orders | Permalink | Commentaren (0) | Tags: sva, peix, gss |  Facebook |

28-08-07

Back in DENDREON.

Our order to sell 20 January 2009 USD 2.50 puts DENDREON (DNDN - USD 8.07) at a price of USD 0.90 was filled last week. Till the strike of USD 2.50 Dendreon can drop by 69% from the actual levels. Even if the stock would fall by 69% by January 2009, we will still make USD 1.800 (the premium we received from selling the puts). This implies a return of 36% on the amount needed for a possible purchase of the stocks (1.800/5.000). Remember that we use a 100% margin rule for safety reasons. No leverage in this portfolio. Only in case the stock would trade below USD 1.60 in 16 months time we would make a loss on the position: in other words, DNDN is ‘ allowed’ to sink by as much as 80 % before we make a loss on the position. Here is the actual option price: http://finance.yahoo.com/q?s=ORGMZ.X.

Our portfolio is now worth almost USD 72.000 (annualized return of 15%), and invested for about 80 percent. The current holdings are concentrated predominately in 3 sectors:

1. Alternative energy with positions in EVERGREEN SOLAR (ESLR - USD 8.73), HEADWATERS (HW - USD 15.46) and PACIFIC ETHANOL (PEIX - USD 11.81);

2. Biotechnology with positions in ACADIA PHARMA (ACAD - 14.33), DENDREON (DNDN - USD 8.07) and YM BIOSCIENCES (YMI - USD 1.69);

3. Commodities with positions in COEUR D’ALENE (CDE - USD 3.31), GOLDEN STAR RESOURCES (GSS - 3.03) and CRYSTALLEX (KRY - USD 2.88).

16:29 Gepost door in Orders | Permalink | Commentaren (0) | Tags: kry, gss, hw, peix, ymi, cde, acad, dndn, eslr |  Facebook |

15-08-07

Still profit even after 40% drop in price??

Our order to sell puts on GOLDEN STAR RESOURCES (GSS - USD 3.31 - YTD 12 %), a Canadian junior miner, has been filled today. We sold 30 put contracts January 2009 with a strike of USD 2.50 at a premium of USD 0.50. In return for the obligation to buy 3.000 stocks at a price of USD 2.50, if the they would trade below that price by January 2009, our savings account is credited with USD 1.500 (30 * 100 * 0.50). The money needed for a possible purchase of the stocks (assignment), is blocked as a guarantee on our account. For this trade this margin amount is USD 7.500 (3000 * USD 2.50). We have a conservative approach and don’t like to leverage. So, we use a 100% margin. The premium of USD 1.500 represents 20% of the margin (1.500/7.500). The duration of this put is 1 year and 5 months. The return on an annual basis amounts to 14%, fully in line with our investment targets. Golden Star may fall another 20% (from 3,31 to 2,50) before the positive return diminishes. Only at a price of USD 2.00 (2.50 minus the received premium of USD 0.50) the profit is completely wiped out.. This means that GSS can fall 40% from current levels before the position turns negative. Golden Star reached a 2007 high of USD 4.95 in April. We think the recent fall in the stock price combined with the increased volatility represent an opportunity to sell some puts. We think the shares will find very good support between USD 2.50 and 3.00. Swiss bank UBS recently upgraded the stock to buy. Click here for an current option price: http://finance.yahoo.com/q?s=OCXMZ.X. A recent article on GSS can be found here: http://www.fool.com/investing/value/2007/08/10/wish-upon-a-golden-star.aspx A general GSS profile can be retrieved here: http://seekingalpha.com/by/symbol/gss.

20:37 Gepost door in Orders | Permalink | Commentaren (0) | Tags: gss |  Facebook |