/NG/Grass – That's my long-term bullish premise, we'll be selling more and more of our gas overseas thanks to LNG exports and that will drive our prices up and global prices down.
ALB/Stock – I like them because they are a solid stock with a Lithium kicker and that was a nice pullback considering they made $4.50 last year which was up 10% from 2016 and no reason to think they won't beat $5 this year so reasonably priced now at $106.66.
For the LTP:
- Sell 5 ALB 2020 $100 puts for $15.50 ($7,750)
- Buy 15 ALB 2020 $110 calls for $19 ($28,500)
- Sell 10 ALB 2020 $130 calls for $12.50 ($12,500)
Our net on this trade is $8,250 but notice we have 5 naked longs. The intent is to, when ALB pops, sell 10 of the June $130s, now $2.10, for $4 (price of the $120s) or better. If we get a really good move up to $120+, then we'll cover the other 5 2020s. On the downside, we can always sell 10 lower 2020 calls and use that money to roll down our $110s to the $100s (now $24) and at 5 more. On the upside, we have a $30,000 spread so, even if we sell no more calls, $21,750 (263%) upside potential at $130.
