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Strategies & Market Trends : Calls and Puts for Income -- Ignore unavailable to you. Want to Upgrade?

To: CommanderCricket who wrote (5145)	6/17/2012 11:03:58 PM
From: Jim P.	2 Recommendations Respond to of 5891

I do not own any ATLS stock. Just the option play. SD options. Sold July 6 calls naked Sold July 7 puts Sold Sept 6 puts Sold Dec 7 puts Covered June 8 puts on Friday and plan on selling August 8 puts on Monday when they start trading. Plan on rolling matching amounts of calls at $6 and puts at $8 for as long as both can be rolled forward with some time premium. I would have went to July 8 puts but there was no gain for me on premium. I was tempted to let them exercise but since earnings come out in August, I expect the time value to be worth my while on the next months options. The option trade on ATLS was special in that the company is difficult to analyze. After the company announced the spinoff, expected distribution and retained ownership...added to the retained shares of APL, you could calculate expected trading prices of the subsidiaries. This became margin of safety on trade. The yield on MLP general partners is normally much higher then the subsidiaries. Almost like alchemy when the subsidiaries yield 7 plus percent the same cash thrown back and distributed by the general partner would yield closer to 5 percent. The base value estimate I came up with for the general partner ATLS was $28 per share. This gave no value to general partner IDR's. These Incentive Distribution Rights are why general partners are given the much lower yield the the subsidiaries. My math on the growth of distributions on one leg of parent cashflow indicated in 2 years the parent would get close the the same distribution rate as APL. At least close enough to make the stock prices similar. The growth of the spinoff was totally gravy as far as my math went. I have been invested in APL for several years and thought I has a better grasp on scenarios to play out in 2013 then the market was giving credit. SD has a similar profile value wise. Undervalued and difficult to decide where it will be in 2 years. Difference to me is that yield securities have a smaller range of volatility account the yield anchors the price to some degree. SD is much more emotionally driven until the funding issue through 2014 is completed. Should be lots of money to be made on options in the mean time. I am very tempted to sell 2014 puts on SD. Jim