Sold March 40 Calls of LDK Solar (LDK)

We sold LDK March 2008 40 Calls at $3 per share. As with the previous call options we wrote last year, these are also covered, as we own the underlying stock in our portfolio. We are betting on the stock’s stagnancy for the next 36 days.

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).
Either scenario lowers our cost basis by $3 per share although taxes would take away its due.

Below are our updated stock positions:
































































StockBuy DateBuy PriceCurrent PriceCurrent % Of PortfolioUnrealized % ReturnCurrent Yield
Philip Morris (MO)1/4/200546.5472.859.5956.533.90
Kraft Foods (KFT)1/4/200521.1129.562.6840.003.30
Plum Creek Timber (PCL)5/12/200535.540.307.9513.513.60
Pfizer (PFE)2/6/200625.1522.745.98(9.60)5.60
ICICI Bank (IBN)5/18/200627.5757.7011.39109.260.80
Taiwan Semi (TSM)7/27/20068.719.756.4111.933.60
Advantage Energy Fund (AAV)11/2/200611.2210.614.54(5.47)16.80
SunTech Power (STP) 3/14/200736.73456.3222.53None
Central Europe & Russia Fund (CEE)6/28/200751.549.906.57(2.22)17.90
Patni Computers (PTI)8/10/200720.8513.234.35(36.60)0.80
Itron Inc. (ITRI)11/07/200785.0180.305.28(5.65)None
Anthracite (AHR)11/09/20077.976.904.54(13.42)15.60
ClickSoftware (CKSW)11/09/20074.613.132.06(32.10)None
Harvest Energy (HTE)11/28/200721.0124.986.5718.8716.30
iRobot (IRBT)12/18/200718.6519.444.164.23None
MCG Capital (MCGC)12/21/200711.8612.554.955.8514.00
LDK Solar (LDK)01/22/200830.4935.677.0416.98None
Cash


8.09

Total Portfolio



10.93



  • 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.

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