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Opened LHG contract today, will not be opening anymore contracts for this month. I’ve got a full house of trade this month with NWS in the money and WBC paying dividends (which is not good if for me). If I clear out of this month, I will be very happy!

LHG recently raised more capital, hence the drop from $3.30 to $3.00. Its actually just a price adjustment to take into account the additional shares they have. Owners of LHG were compensated through another share scheme to even out the playing field. Even with the drop and without the adjustments, LHG has great support at $2.90 and should easily recover within the next few weeks.

Looking at the charts, there’s also plenty of support at $3.00 and $2.90, LHG has been sideway trading for nearly a year in a steady up trend. Its actually a good stock to do credit put spreads on.

Below are the numbers, its slightly more complicated for this trade because my order got filled over two prices, these sort of things can happen and does not effect the mechanics of how things work.

The Trade (LHG)
Sell May $3.07 Puts @ $0.075 & $0.07 (I got filled on two prices)
Buy May $2.83 Puts @ $0.02

Expiry = 24/05/2007
Share/Contract = 1060
Max Profit = 0.05125 [5/20*(0.075-0.02) + 15/20*(.07-.02) ]
Max Risk = 0.18875 [(3.07-2.83) - {5/20*(0.075-0.02) + 15/20*(.07-.02) }]
Return on Risk = 27.15%
Breakeven = $3.01875

I opened 20 contracts:
Reward for trade (excluding fees) $1,085.50
Reward for trade (including fees) $854.7
Value At Risk $3,775.0

The above assumes that on 24th May 2007 LHG is trading at or above $3.07
(LHG closed Friday @ 3.08)