Here is a quick analysis of how this could play out:
- The option expires worthless: This is a possibility only if the option is not exercised between now and March 22 and the stock closes below $40 on the date of expiration.
- The option is exercised: We will realize a total profit of roughly 40% (we purchased LDK solar 1/22/2008 at $30.49/share).
Below are our updated stock positions:
|Stock||Buy Date||Buy Price||Current Price||Current % Of Portfolio||Unrealized % Return||Current Yield|
|Philip Morris (MO)||1/4/2005||46.54||72.85||9.59||56.53||3.90|
|Kraft Foods (KFT)||1/4/2005||21.11||29.56||2.68||40.00||3.30|
|Plum Creek Timber (PCL)||5/12/2005||35.5||40.30||7.95||13.51||3.60|
|ICICI Bank (IBN)||5/18/2006||27.57||57.70||11.39||109.26||0.80|
|Taiwan Semi (TSM)||7/27/2006||8.71||9.75||6.41||11.93||3.60|
|Advantage Energy Fund (AAV)||11/2/2006||11.22||10.61||4.54||(5.47)||16.80|
|SunTech Power (STP)||3/14/2007||36.73||45||6.32||22.53||None|
|Central Europe & Russia Fund (CEE)||6/28/2007||51.5||49.90||6.57||(2.22)||17.90|
|Patni Computers (PTI)||8/10/2007||20.85||13.23||4.35||(36.60)||0.80|
|Itron Inc. (ITRI)||11/07/2007||85.01||80.30||5.28||(5.65)||None|
|Harvest Energy (HTE)||11/28/2007||21.01||24.98||6.57||18.87||16.30|
|MCG Capital (MCGC)||12/21/2007||11.86||12.55||4.95||5.85||14.00|
|LDK Solar (LDK)||01/22/2008||30.49||35.67||7.04||16.98||None|
- For SunTech Power (STP), we wrote a covered call option for 2008 March 45 on 10/15/2007 at $5 and so the price is listed as $45 as we won’t participate in the appreciation beyond that plus the premium received.
- For Taiwan Semiconductor (TSM), we wrote a covered call option for 2008 April 12.5 at $0.35 on 10/18/2007.
- For LDK Solar (LDK), we wrote a covered call option for 2008 March 40 at $3 on 2/13/2008.