I've been reading this thread for awhile, although my first time to contribute.
I, too, discovered AXC through Individual Investor magazine. It was in the high single digits, then moved to double digits. I thought it was too expensive but liked the KM technology. At current prices, however, I really like it.
Here's what I did in my retirement account, which I use for conservative investments.
Purchased AXC sometime last week at 5 7/8. Then, sold Oct 7.5 calls for a 1 1/16 premium -- net after commissions about a buck.
My downside protection is 4 7/8. That is, that's what I will own the stock for if it does nothing during that time frame. Or, look at it this way: my investment in AXC generates a cash return of 17% in just 7 months (29% annualized). That's an excellent return on a conservative portfolio.
The upside, while limited at 7 1/2, is again a terrific return on a conservative investment for just 7 months: 54% (92% annualized).
The downside, if AXC rockets past 7 1/2 by October: I lose the additional appreciation. However, I'm willing to make that trade-off when dealing with a conservative portfolio. Not necessary to get greedy: leave a little on the table for the other guy.
BTW, at this price level, patent infringement awards and a major KM deal(s) are simply a bonus.
Just some thoughts to consider. Good luck with your position. |
