Patrick's Rants

ANH is ex-dividend today meaning that if you buy it today you don’t get the $0.21/share dividend that pays in January. I was trying to do some research on how the dividend affects the price of put options and ran across a blog post from 2008 titled How dividends effect option pricing, which basically says the other traders have already priced the dividend into the value of the options – which very is likely to be true.
Looking at the change, or lack of change, in the price of ANH options from yesterday to today does seem to indicate that the price is already figured in, the dividend is already figured in the option premium.

Turned the Dec 17 call, closing it out for $.05. I sold the calls for $.80 minus commissions – puts me around a 1200% return. I like the 17.00 calls since the 6 month high for YHOO is 16.79. I’m looking ahead to see what I can collect for January 17.50 calls, thinking I might be able to get around $.60. The other option is to sell the next strike price up, 16.00, free up some cash and start selling the 14.00 puts.

ABAT was delisted as of 11/30/2011. The price promptly plunged from just under $1.00 to less than $.40 and I closed out the last of my holdings at $.41 for a significant loss and picked up another 100 shares of CMRG for $3.20 looking to get out at $4.20. I will be reevaluating how I manage downside risk to see if I need to make any changes in this part of my portfolio management.

ABAT filed form 8-K, basically a supplemental or informational filing stating that NASDAQ is taking steps to delist ABAT.
The main reasons stated are:

• Listing Rule 5250(a). The notice states that the Company failed to provide information requested by NASDAQ, specifically cash confirmations from the banks holding the Company’s funds prepared in the presence of personnel employed by the Company’s independent audit firm.
• Listing Rule 5250(c)(1). The notice states that the Company failed to file its Quarterly Report on Form 10-Q for the period ended September 30, 2011.

ABAT does appear to have filed a notice that its September 30, 2011 10-Q would be late. And they have filed a number of late 10-Qs without apparent repercussion.

So what’s different this time? According the this recent letter to shareholders it is the short sellers, the lawyers and a complicit NASDAQ (for believing the articles on Seeking Alpha). The stress of asking for cash balances at the banks has caused top level defections, according to the Chairman, of the CFO and the Controller. Is Chinese culture so different from ours that the Chairman’s claims have merit? Could be. It could also be that there is no cash to verify – which would be bad for all shareholders. ABAT had to meet all the NASDAQ requirements for initial listing on the exchange. NASDAQ had the duty to verify the submitted information and listed ABAT on the exchange. Now the deadline of November 30 looms large.

This reinforces my personal rule that not all my account be tied up in a single stock.

Trading has been halted on ABAT according to NASDAQ Trader.com for “more information requested”. I’m not sure where that leaves me and my 600 share position in ABAT. I’ve kept my teeth gritted through the ups and downs since April with the idea that I would “average down”. I’m sitting on about a 60% decline in the shares I own. I’m lucky and not so lucky with these shares. If ABAT never comes back to trade and becomes worthless I have no recover alternatives (unless previously threatened class action suits come to fruition) because the shares are in my IRA – meaning I have no taxable losses. Were these shares in a taxable account I would look to see them become worthless to offset other capital gains. The lucky part is that they are not yet considered worthless and since I can’t sell them I guess I’m stuck with them, for now.

Bought the Nov 17 calls back @ .18 on 11/07. Rolled forward to Dec 17 calls @ .80 on 11/08. If YHOO keeps rolling the way it is I could do this every month.

I’ve just completed my second round turn of SMRT. The first 200 shares @ 8.76 on 1/14/11 sold @ 9.84 3/17/11 for 11%. The second, shorter time frame trade, 100 @ 6.05 10/07/11 sold 7.02 10/27/11 for about 12.5%.

Yesterday afternoon, YHOO popped over 15.35, triggering a stock order to sell at 15.40. I wound 50 shares of YHOO out of my holdings.

I realized that I had not posted my YHOO turns, so here is a history on YHOO: bought 100 @ 16.15 (3/23/11) sold same @17.01 (4/7/11). Bought 100 @ 14.98 (6/23/11), bought 50 @13.83 (7/22/11). Original order: sell 150 @15.95. With nothing happening, I sold 100 Oct 11, 16.00c option for $.50 (after commissions net $39.25).