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GGB Closed on Friday June 19th at $10.18.

We started this trade on January 27th

We had an update here, herehere and here.

The call that we sold has been exercised, the call the we held long was used to cover the trade.  We had a gain of $1.10 on an initial capital requirement of $4.20, including all trading costs.  This represents a 5 month gain of 26% ($1.10/$4.20) or almost 63% APR.


Here is a Bull Put Spread (Linn Energy:LINE) a Credit Spread:

Sell October 2009 $20 Put on LINE (QGJVD) for     $2.05

Buy October 2009 $17.50 Put on LINE for                 $0.95

Net                         +$1.10 (less trading costs)

Max. Gain               $1.10 (less trading costs)

Max. Loss               $1.40 (+ trading costs)

Linn Energy is trading for $19.66 at the close of trading today June 15, 2009.

If Linn Energy is trading for $20.00 or more on October 17, 2009 both puts will expire worthless, we get to keep the $1.10 (less trading costs) premium.  If Linn Energy is trading for less than $17.50 we will suffer the maximum loss.  In between $17.50 and $20.00 we will have to make a calculation for the gain or loss.  I feel this is a great trade because Linn Energy is paying a +12% dividend and their earnings should be very solid as they have hedged their product for the next three years, at favorable prices.  I do not believe that Linn Energy will decline from here.

We are risking $1.40 (+ trading costs) and the return that I am looking for is about 78% in 4 months or 235% APR.