Quantifying the LEAP: TSL Trina Solar Co.
At the risk of defeating my purpose of Long Term Holding of
the LEAP strategy, here is a fine tuning of the TSL trade - a stock that has
run up recently. It sacrifices Risk for Reward by rolling up Puts and Calls with
the stock, and moving out in time to
2016 as well.
DEBIT CREDIT
Aug. 2013: Bought 500 TSL at $8.97 :
$4494
Sold
5 2015 Leap Calls - 10-strike: $1211
Sold 5 2015
Leap Puts - 7 strike: $937
Oct 29: With stock "Leaping" to 15,
Rolled 7-strike
Puts up to 10: 493 (net
of 936-443)
Nov.18: Rolled Calls from 10-strike to 15 596 (net of 4093 -3496,
and out to
2016 releasing
$2500 call
If called in Jan.2016 at 15: 7500
TOTAL: $5090 $10,141
Current position: In
the money covered calls, with stock at $16.77. Per cent profit if called away
at 15 or above: 99% over 2 1/2 years (without further tweaking- TSL pays no
dividends; most commission costs are included).
If stock settles
between $10 and 15 ON! January 2016 expiry date, keep all option money, but
paper loss of $2500 on stock - $5 on 500
shares. Put on another Leap Strangle at current prices, e.g. $12 Call and $7
Put for 2018.
If TSL falls below
$10 in 2016 expiry, you will have to buy back Put or take on 500 shares stock and
do another OTM strangle.
If done in an IRA
account, one must allow for the cash up front requirement of the puts - $7 X
500 ; in a margin account marginability of the stock bought plus Put and Call
receipts should cover margin req., although minimum account margin ($5000?) is
also required in an account.
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