The Money Tree

Safely Generating Income in Retirement

UPDATE – NP Strategy – JAN Week 4

Posted by mounddweller on December 27, 2010

Friends,

Just a quick couple of notes on my NP Strategy selections, VRGY and LPHI. VRGY also has a $10 strike price that looks very attractive. This morning it is trading at a bid/ask of $0.10/$0.15 and has traded as high as $0.18. Anything above $0.15 would work for me. At $0.15 you would have a 1.5% ROIC with 23.5% downside protection.

Now, an update on LPHI. Earlier this morning I read the WSJ article about LPHI. It does not cast LPHI in a very favorable light. I also read the LPHI CEO’s rebuttal. My advice would be to proceed with caution. The $14.75 strike price that appeared in our selection results has a very wide bid/ask spread of $0.20/$0.75. I see that as a ‘red flag’. I am going to hold off selling any puts on LPHI until I see how this shakes out. I recommend you do the same.

Regards,
Troy

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2 Responses to “UPDATE – NP Strategy – JAN Week 4”

  1. Jacob said

    Troy,

    Good comments on LPHI. I have been in and out of LPHI for about a year now, and am pretty familiar with the company having followed it for a while. I would agree with your comments in terms of proceeding with caution. However, I would not cast the wide bid/ask as a red flag, as the options for LPHI often show very wide bid/ask spreads.

    Jake

    • mounddweller said

      Jake,

      Thanks for your insights on LPHI, especially regarding the bid/ask spreads. I had not previously followed them and thus wasn’t aware of size of their normal spread. That’s good information to know.

      Regards,
      Troy

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