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LDK long combo strategy

ivestor posted on 05/07/08 at 11:25 AM

ldk at $35

sell Jan 2009 35 put @8.75

buy Jan 2009 40 call @6

net credit: 2.75

break even: 35-2.75 = 32.25 

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Posted by ivestor on 05/07/08 at 11:25 AM

Tag It | 1 user tagged it: LDK, long combo, collar

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DavidDT Trading-to-Win.com

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Posted May 07, 2008 (11:58AM)
May be I am missing something ( I am not that good with options) - what is going to happen if LDK will fall overnight to $20?
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locogmac

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Posted May 07, 2008 (12:07PM)

Then he loses. But it is a long strategy, so... But, LDK options a couple weeks ago were looking really good. LDK September 08 at $30 strike were only going for around $5.50, locking you a $35.50 price in September.

I'm long on LDK as well as options in another account thats approved for L2, I bought some June 60 calls for .10 cents, currently worth around .30 to .35 (mostly due to IV going up). I bought 20 calls at .10, so only risking a downside of $200, but the upside could be huge on a positive earnings. 

LDK has had a lot of accumulation lately, but there's still alot they have to prove to get this stock moving again. 

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ivestor

Member since: Mar 08
5 Day 0.65%
15 Day 6.82%
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3 Month -32.49%
6 Month -20.19%
1 Year 2.45%
As of: 11/20/09
How is this calculated?
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ivestor
Posted May 07, 2008 (02:43PM)
This is long synthetic strategy.   with combined delta = .7, just like stock,  every dollar movement of the stock on either side translates into $.7 win or loss, but with uncapped upside. I am bullish on LDK long term. But don't want to commit too much capital right now. Time decay helps on this strategy as well.
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DavidDT Trading-to-Win.com

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Posted May 08, 2008 (02:11AM)

Thanks you gents - as I said I am not that good with options. Still, for my taste I would rather risk entire initial capital just for long calls, knowing that it will be no more than that amount, than risk 3x downside risk - may be this particlular example is not the best... Thanks again. ( I guess I need to learn more about options strategies - my biggest problem with options - low liquidity for most)

As my example - look at AKNS today - down 20% in a blink of an eye 

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Haymore

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Posted May 08, 2008 (09:23AM)
LDK is a multi billion cap without Bear Sterns type holdings so should not move overnight or even over week too much & he has the $2.75 in his pocket if it just stays between 35 & 40
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locogmac

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Posted May 10, 2008 (09:42AM)
Well, earnings is this Monday, so it will probably move a lot. Also, although LDK is a multi billion cap, it's a solar and it has had wild swings in the past, partially due to it being in solar, and also because of it's past allegations of fradulent accounting.
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ivestor

Member since: Mar 08
5 Day 0.65%
15 Day 6.82%
1 Month -2.84%
3 Month -32.49%
6 Month -20.19%
1 Year 2.45%
As of: 11/20/09
How is this calculated?
Trades 293
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Blog Posts 2
ivestor
Posted May 21, 2008 (06:07PM)

LDK at 44.27

Jan 2009 35 put @6.8 ==> gain 2.05

Jan 2009 40 call @11.5==> gain 5.5

Total gain 7.55

current delta ~ 1

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DavidDT Trading-to-Win.com

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Posted May 25, 2008 (01:20PM)

Ivestor - congratulations!

Very nicely done indeed! 

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