We bought into an avalanche and hold 800 shares with an average cost of 5.97 that will likely come down to 5.72 when calls we shorted against the stock for 0.25 expire worthless. I now expect AG to fall to the 4.57 target in the days ahead, but I think it’s unlikely to go any lower. At that point the stock will have lost 46% of its value in about six weeks. I plan to stick with my position, but if you don’t have the stomach or the resources to hold the stock for a further decline of 56 cents, you should blow out the position at will. If I trade against mine, I will say so in the chat room. Considering that bullion is getting obliterated yet again tonight, the stock could gap down to the target or close to it on the opening bell. _______ UPDATE (August 21, 1:59 p.m. EDT): To subscribers who are long stock and short Aug 31 5.5 calls as detailed above, I recommend bidding 0.05 for Sep 7 6.0 calls, g-t-c. Quantity should equal your covered writes 1:1. ________ UPDATE (August 23, 8:04 P.M.): Okay, we bought the calls. Now bid 0.10 for a like number of Sep 7th 5.0 puts, good-till-canceled. [We bought ’em. Sit tight for now.] ________ UPDATE (August 28, 11:26 p.m.): Plan on covering the short August 31 5.50 calls on Friday as late in the session as possible, since we don’t want our stock called away if the options finish in-the-money. Check with your broker concerning the deadline. If the calls finish out-of-the-money, no action will be necessary. We’ll still hold the Sep 7 5/6 strangle for 0.15 in any event.
