Hi everyone,

As another financial year comes to an end, I hope you all managed to make a profit in this very choppy, but opportunity bound, market climate.

Today I took the opportunity to take my profits on my LGL - Lihir Gold trade today, as I wanted to take the opportunity to enter another trade as Lihir has had such a brilliant run up of late and I thought I’d just take my money and run!

Here is how the trade looked from the beginning to now;

First sold 4000 x $3.25 May08 puts for a premium of .20 cents = $800

Bought 4000 x $2.75 May08 puts for a cost of .045 cents = $180

Bought back 4000 x $3.25 May08 puts for a cost of .06 cents = $240

Sold 5000 x $3.30 June08 Puts for a premium of .17 cents = $850

Bought 5 x June08 $2.83 puts for a cost of .04 cents = $200

Sold 5 x Jun08 $2.83 puts for a premium of .08 cents =$400

Bought back 5000 x $3.30 June08 puts for a cost of .45 cents = $2250

Resold 5000 x $3.25 July08 puts for a premium of .445 cents = $2225

Bought back 5 x $3.25 July08 puts for a cost of .12 cents = $600

$800-

$180-

$240+

$850-

$200+

$400-

$2250+

$2225 -

$600 = $805 - I’m very happy with the way this trade finished up. It has been very stress free and easy money!

The new trade I  have placed is on OXR - Oxiana. This stock has been unfairly hammered of late and I wanted to take advantage of the high volatility in the option prices as well as the low value of the stock. Despite what the market is doing to the stock, the fundamentals are still the same and even more so now with the merger with Zinifex.

Here is how the trade looks;

Current price of stock at time of trade - $2.37

Sold 7 x $2.25 Aug08 OXR puts for a premium of .185 cents = $ 1295 - which is a fabulous premium considering the stock is still .12 cents away from my strike price!

The volatility in this option at the time of putting this trade on was a whopping 67.5%! That is massive considering the implied volatility is normally around 40%.

Looking at the chart there are a number of reasons I decided to enter this trade. Firstly, both the Cstats and the RSI were hitting the oversold zone, as well as this, there was substantial bullish divergence on both these indicators, which is something I look for when deciding to place a trade. Also, the stock is hitting the lower bollinger band, which tells me it may soon move away from this level. I expect that when the details of the merger with Zinifex are all sorted out, which is supposed to happen by the end of the month, this stock may rally hard as buyers come in and snap up a bargain!!

If you have any questions or comments regarding this trade, please leave a comment below or contact me here.

That’s all for now, as always Happy Trading and remember…

Mum’s the Word!