Today I BTO 1 ACI Dec09 12.50 Put in an IRA account at 2.60.  I then placed a GTC STC order for the same ACI Put at 3.30.  I’m looking for a relatively quick turn around on this one.  If this works out I will net about $52.52 for a 19.54% (not annualized) return.

I don’t normally buy Puts because I don’t like the declining time value and I am just more of an optimist. However, I have finally decided that with the market continuing to go down I should take advantage of it.  I didn’t need to look any further than my own portfolio to identify candidates.  I had lots of choices but I picked ACI today.

The story is actually a little funnier than I depict.  I first BTO 1 ACI Dec09 12.50 Put at 2.55 and placed the GTC STC order at 2.00.  One doesn’t need to be a financial wizard to realize how poor that trade was.  Actually, I made the trade early in the morning (about 6:45 am - I live in California).  I had meant to STC at 3.00 but just made a typo and since it was early I didn’t notice the error.  Luckily, the STC was executed at 2.50 and the error only cost me 22.49.  If I had entered 3.00 as I had intended I would probably have been executed today as the end of day bid was 3.00 so it may turn out that it will cost me more.

Today, I BTC 2 ACI Jan09 35 Puts and STO 2 ACI Jan10 35 Puts for a net deposit of $421.00 in my taxable account.  If put to me today my basis would be 29.54 for these ACI shares.

This is my taxable account and I am still trying to generate cash and postpone potential Put assignments by rolling out upcoming Puts.  All other things being equal I would probably be okay owning ACI.  I tend to think that coal will continue to be a major fuel for electrical generation.  On the negative side is that if Obama is elected I understand that he is does not think much of coal.  Even so, it is one of our most abundant domestic energy sources and its time will come sooner or later.

On Friday, 9/26/08, I BTC 2 ACI Jan09 40 Puts and STO 2 ACI Jan10 40 Puts in my taxable account for a net deposit of $481.00 in my taxable account.

I wouldn’t mind owning some ACI but this is my taxable account and I am still working on reducing margin exposure in it.  ACI does pay a dividend of .09 per quarter which is about 1.19% and has pretty good option premium but I just don’t want to spend the cash on it right now when I can generate cash without increasing my potential liability.

If put to me right now my basis for these ACI shares would be 32.62 which is just below its closing price of 32.89 today.