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Positive Outlook From LDK Chief Boosts Solar Stocks And Options

 May 31, 2011 01:28 PM
 


LDK Solar Co. Ltd. (LDK) – The prospects look brighter for solar panel maker according to its president who told Taiwanese electronics website DigiTimes that the industry hit its low point in the first quarter. LDK's chief also told the website not only to expect a second-quarter rebound but that the industry was not playing out investors' currently pessimistic scenario. Adding fuel to a rally across shares in the renewable energy sector was confirmation from Germany that its last nuclear power station would close in 2022. One investor struck to make a bullish play on LDK by writing put options expiring in less than three weeks raking in a total premium of $145,000. The investor sold 5,000 put options for 29 cents apiece guaranteeing to take delivery of 50,000 shares at $7.00 each by June 17. Just two weeks ago LDK's share price meaningfully breached $10.00 for the first time since September on fears for earnings across the industry. Last week they traded as low as $6.14 before today's rally took hold and kicked them back to as high as $7.24. Currently the speculative strategy is an at-the-money investment, but by taking in the 29 cent premium the investor is effectively lowering his buy price to $6.71 and presumably is banking on June 7 earnings to help vilify his stance.

[Related -Call Options Active in Yahoo! Inc. (YHOO)and BP plc (ADR) (BP)]

[Related -7 Deep-Value Energy Leaders With 68% Upside]

BP Plc (BP) – Shares in Europe's second-largest oil company have performed strongly in recent weeks, shrugging off a disastrous outcome with its Russian subsidiary that left it floundering without an expansion policy. Nevertheless investors have warmed to recent news of possibly less financial liability resulting from the Gulf of Mexico spillage one year ago. Shares reached the highest since May 2 on Tuesday in early going although have pared gains throughout the morning. One investor struck early to either defend against a reversal in the recent recovery or perhaps is wagering that the gains won't stick. An investor paid 17 cents to buy around 10,000 put options on the oil-giant targeting the $44.00 strike while shares traded at $46.53. With the stock back at $46.05 the puts are currently playing out and have currently added five cents. The company earlier announced a reduction in output from the North Sea Forties field for the next two months, while boosting its forecast by 16% for output during September.


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