Tuesday, May 5, 2009

Violent Portfolio: Making Space for Whirlpool

Whirlpool shares have done well along with the market over the past week, offering us the ability to sell calls at $4 and yielding of almost 8% and a an effective short price of $54/share if puts should land in the money. Solid risks worth taking!

Total net investment equals $5,371 or just over 5% of the total portfolio value. Since I don't want to take too much risk, I'm going to assume that options may end in the money and in that case I have an effective investment of about zero, since WHR options will make my short position worth just over $10,000 and the BCO options will potentially be a long position worth just under $6,000. The net result is a net investment of about $1-2,000.

Keep in mind that you buy options in contract lots of x100. So my -200 position is achieved by selling 2 option contracts!

Updated portfolio, with WHR position in bold:

strategy security price Units Cost Net
Sell Short BCOQF 1.6 -200 1 319
Buy PBKS 7.95 1000 5 -7955
Sell Short MTB 48.23 -170 5 8194.1
Buy FMCN 7 1000 5 -7005
Sell Short SINA 27.5 -365 5 10032.5
Buy Put FUOVA 1 1000 1 -999
Buy JAVA 9.15 1000 5 -9155
Short Call SUQJB 0.05 -1000 1 49
Short Put SUQVA 0.35 -1000 1 349
Short Put WHRFU 4 -200 1 799

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