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 |

21-08-07

Dendreon position closed with a profit of 36%.

The order to sell 20 puts September 2007 with a strike of USD 2.50 on goldmine CRYSTALLEX (KRY - USD 2.95) was filled at our price of USD 0.30. By selling those puts, we entered the obligation to buy 2.000 stocks at USD 2,50 if case KRY would trade below that price towards mid September. Our savings account is credited with USD 600 (20*100*0.30). The amount of USD 5.000 is put aside as a guarantee (100% margin rule) in order to meet our financial obligation in case we would be assigned. As the maturity of the option is only 1 month away, we can make 12% on our committed capital in 1 month time ( 600/5.000), or a fenomenal 140% on annual calculations.. KRY is allowed to fall 18% further (from 2.95 to 2,50) before we start earning less. Only at prices below USD 2.20 (2.50 minus the received premium of 0.30) the profit is gone. This means that KRY can drop another 25% from the current level before we would end up with a loss.

Last Friday our covered calls on biotech firm DENDREON (DNDN - USD 7.61) matured worthless. Back in May we got executed on our short USD 7.50 put position in the stock. As a result we had the buy 1.000 stocks at a price of USD 7.50. We received USD 1.10 per share for those puts. Once assigned, we sold august USD 7.50 calls for a premium of USD 0.90. By doing so we agreed to sell DNDN at USD 7.50 if the stock would trade higher, which it didn’t. Taking into account both received premiums (matured puts at 1.10 and matured call at 0.90), our break-even buy level of DNDN is actually USD 5.50 (USD 7.50 - USD 1.10 - USD 0.90). In this Option Portfolio we don’t like to keep assigned stock too long. As soon as they reach the buy level again and are uncommitted by options, we will unload the stocks. As the calls on DNDN matured last Friday, the stocks are now available to be sold. We give an order to sell 1.000 DNDN at USD 7.55. If done, we make USD 2.050 (1.000*(7.55-5.50) on the position (option premiums included).  That is 36% in 3 months. Not bad at all. We will consider selling puts on DNDN again once the order is filled.

20:48 Gepost door in Orders | Permalink | Commentaren (1) | Tags: dndn, kry |  Facebook |

16-08-07

Gold & FX

Goldstocks were amongst the biggest losers over the last sessions.  Yesterday, we already sold puts on Golden Star Resources (GSS – USD 3.16 – TTD: + 7 %)).  Another gold mine, CRYSTALLEX (KRY – USD 2.75 – YTD: - 24%) was beaten down.  Since April the stock has lost half of its value. In the beginning of the year we successfully sold puts on the stock.  They all matured worthless because the stock moved higher (chart :  http://stockcharts.com/charts/gallery.html?kry).  Around the current stock price we think there is again some value is selling USD 2.50 puts. We pass on the order to sell 20 puts December 2007 with strike USD 2.50 at a limit of  USD 0.25.   The actual option price can be retrieved here: http://finance.yahoo.com/q?s=KRYUZ.X.  When the order is executed, we receive USD 500.  Our margin (100%) is USD 5.000.  This implies 10% yield in 1 month.  We only lose in case KRY would trade below USD 2.25 by the 21st of September.  KKR is `allowed`to sink another 18% before position turns red.

 

14:24 Gepost door in Orders | Permalink | Commentaren (0) | Tags: kry |  Facebook |